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

October 16, 1996

SCOTTS AFRICAN UNION METHODIST PROTESTANT CHURCH

v.

CONFERENCE OF AFRICAN UNION FIRST COLORED METHODIST PROTESTANT CHURCH A/K/A AFRICAN UNION METHODIST PROTESTANT CHURCH THE CONFERENCE OF AUFCMP CHURCH, APPELLANT



On Appeal from the United States District Court for the District of New Jersey

(D.C. No. 92-CV-00880)

Before: SLOVITER, Chief Judge, ROTH and McKEE, Circuit Judges

SLOVITER, Chief Judge.

Argued: February 5, 1996

Filed October 16, 1996)

OPINION OF THE COURT

At issue is the ownership of certain real property in Camden, New Jersey. The district court held that Plaintiff Scotts African Union Methodist Protestant Church ("Scotts Church") was the valid titleholder to the property in dispute, rejected the counterclaim filed by Defendant Conference of African Union First Colored Methodist Protestant Church ("the Conference") to quiet title to the same property, and enjoined the Conference from claiming any ownership interest therein. The Conference appeals.

I. Background

Scotts Church was incorporated in 1915 as a nonprofit corporation under New Jersey's Act to Incorporate Associations Not For Pecuniary Profit, ch. 181, 1898 N.J. Laws 422, repealed by New Jersey Nonprofit Corporation Act, ch. 127, 1983 N.J. Laws 397 (codified at N.J. Stat. Ann. Section(s) 15A:2-1). It had acquired property on Kaighn Avenue in Camden, New Jersey around 1904, and conducted religious services and other activities there until 1974. In 1974, Scotts Church sold the Kaighn Avenue property and used the proceeds to purchase property on Baird Boulevard in Camden, with title in the name of Scotts Church.

At some point in time left unspecified in the record, see App. at 11; Joint Final Pre-Trial Order at 2-4, Scotts Church became a member congregation of the Conference. The Conference is the administrative body of a religious organization known as the African Union Methodist Protestant ("AUMP") Church. *fn1 The AUMP Church is a regional association of several local churches located in the mid-Atlantic states and tied by their common adherence to the AUMP denomination and doctrine. The association was incorporated in Delaware in 1941 and changed its name to "The Conference of African Union First Colored Methodist Protestant Church" in 1953. Def. ex. 15. The Conference claims itself the successor to the Union Church of Africans, which was incorporated in 1813, although that was an issue of fact determined against the Conference at trial. *fn2

The Conference is defined in the Book of Discipline, see infra, as an "administrative body in the [structure] of the AUMP Church," Pl. ex. 5 at 157, although there is some ambiguity in the record as to whether the Conference and the AUMP Church are distinct entities. We need not resolve this question for purposes of this appeal. The Conference and the AUMP Church are governed by The Book of Discipline of the African Union First Colored Methodist Protestant Church and Connection in the United States of America and the World ("Book of Discipline" or "Discipline"), which contains rules and procedures that serve as corporate bylaws of the Conference and Scotts Church. Scotts Church regularly has sent delegates to Conference meetings involving local church participation. It additionally has concluded annual "pastoral contracts" with pastors selected for it by the Conference, whom Scotts Church agreed to compensate and retain on a yearly basis.

The pastoral contracts concluded for the 1990-91 and 1991-92 years state that the trustees of Scotts Church "will be responsible as to all mentioned in the Book of Discipline according to the 1958 AUFCMP Church, Inc., and any/all revisions made to the Book of Discipline, entitled the Duties of the Trustees." Def. exs. 3, 4. The contracts also provide that the pastor of Scotts Church "is responsible to Trustees of the above said mentioned Church, of the first part, [and] will be responsible as to all mentioned in the Book of Discipline according to the 1958 AUFCMP Church, Inc. and any/all revision[s] made to the Book of Discipline, entitled The Duty of Ministers in Charge." Id.

On January 19, 1991, the Conference held a meeting at which the attendees approved a resolution entitled "Church Property" ("Property Resolution"). The present dispute between Scotts Church and the Conference implicates three portions of the Property Resolution's text in particular. The first is a paragraph entitled "Titles to Properties" and provides in relevant part:

[T]itles to all properties held . . . by a local church . . . shall be held in trust for The African Union Methodist Protestant Church and subject to the provisions of its Discipline. Titles are not held by The African Union Methodist Protestant Church or by "The General Conference of The African Union Methodist Protestant Church," but instead by the incorporated conferences, agencies, or organizations of the denomination, or in the case of unincorporated bod[i]es of the denomination, by boards of trustees established for the purpose of holding and administering property. Def. ex. 1 at C-1.

The second portion of the 1991 Property Resolution, a group of paragraphs under the heading "Trust Clauses in Deeds," requires in part that "all written instruments of conveyance" by which church properties are held or acquired for worship purposes contain the following language:

In trust, that said premises shall be used, kept, and maintained as a place of divine worship of the African Union Methodist Protestant ministry and members of The African Union Methodist Protestant Church, subject to the Discipline, usage, and ministerial appointments of said church as from time to time auth[or]ized and declared by the General Conference and by the Annual Conference within whose bounds the said premises are situated. This provision is solely for the benefit of the grantee, and the grantor reserves no right or interest in said premises.

Id. This "Trust Clauses in Deeds" portion of the Property Resolution also provides that where a deed exists without the required trust clause language, the local church nevertheless owes a "responsibility and accountability" to the AUMP Church if it has affirmed its affiliation by accepting a Conference-appointed pastor. Id. at C-2. For purposes of his decision, the magistrate judge assumed that this "responsibility and accountability" language was intended to compel a local church to hold its property in trust for the Conference even where the governing deed omitted the required trust clause. App. at 21.

Finally, a paragraph of the Property Resolution entitled "Incorporated Local Church Property -- Title and Purchase," provides:

[T]he title to all property, now owned or hereafter acquired by an incorporated local church . . . shall be held by and/or conveyed to the corporate body in its corporate name, in trust for the use and benefit of such local church and of The African Union Methodist Protestant Church.

Def. ex. 1 at C-11. According to an affidavit and testimony from Bishop Delbert Jackson, Presiding Prelate of the Conference, the Property Resolution became an amendment to the Book of Discipline upon adoption. See Summ. Judg. Op. at 20; Trial Transcript at 41; see also Appellant's Brief at 8.

Some three months later, at a meeting held on April 6, 1991, the Conference approved a "Signature Resolution" which provides that "ministers in charge of [the local] churches shall be empowered to sign official documents pertaining to the individual local church and The Conference." Def. ex. 2; App. at 21-22. According to Bishop Jackson's affidavit, the Signature Resolution, like the Property Resolution, constituted an amendment to the Book of Discipline upon adoption. See Summ. Judg. Op. at 21.

The Conference promptly used these two resolutions as ostensible authority to take title to property held by the local churches, a move that we are told generated a number of lawsuits. *fn3 At the April 6, 1991 meeting, the Conference -- invoking its newly adopted Signature Resolution -- instructed Scotts Church pastor Dr. Eva M. Walters to sign a quitclaim deed transferring Scotts Church's Baird Boulevard property to the Conference. Dr. Walters signed the deed, which states that "the trustees of the SCOTTS AFRICAN UNION METHODIST PROTESTANT CHURCH have caused its name by Reverend Dr. Eva M. Walters, its Pastor, to be hereunto set." Pl. ex. 3. The deed was recorded on April 26, 1991.

Scotts Church's certificate of incorporation dated 1915 provides that its trustees "shall not dispose of any real estate so acquired by them as Trustees, except [as] such act be authorized by a vote of two thirds of the members of said Church Body." Pl. ex. 1. Neither the trustees nor the members of Scotts Church approved the transfer of the Baird Boulevard property, and on March 26, 1992 -- by a 24-0 vote of its members -- Scotts Church opted to disaffiliate itself from the Conference.

Scotts Church filed suit in January 1992 in the Chancery Division of the Superior Court of New Jersey, Camden County, seeking a declaratory judgment that the Conference held no interest in the Baird Boulevard property and that the quitclaim deed was invalid, as well as injunctive relief preventing the Conference from asserting any ownership interest in the property. The Conference, alleging both federal question and diversity jurisdiction, had the case removed to the United States District Court of New Jersey. Counterclaiming to have "its" title to the Baird Boulevard property quieted, the Conference also moved for dismissal of the action, summary judgment, and imposition of Rule 11 sanctions. The Conference's motions were denied.

In ruling on the summary judgment motion, the district court addressed, inter alia, the Conference's argument that under First Amendment principles the court must give deference to the determinations of the Conference, as the highest authority in a hierarchical church. The court rejected that argument, relying on the New Jersey Supreme Court's opinion in Elmora Hebrew Center v. Fishman, 593 A.2d 725 (N.J. 1991), to hold that the courts of New Jersey would apply "neutral principles of law" to resolve this dispute rather than deferring to the church hierarchy.

The parties consented to trial by a magistrate judge (hereafter interchangeably referred to as the "trial court") pursuant to 28 U.S.C. Section(s) 636(c) who, after a one-day bench trial, determined the quitclaim deed invalid and granted the declaratory and injunctive relief sought by Scotts Church. Scotts Church had contended that the deed was invalid because Bishop Jackson had fraudulently induced Dr. Walters to sign by falsely assuring her that the Scotts Church trustees had already authorized the transfer. The magistrate judge found no evidence to support that assertion or the fact that Dr. Walters had relied upon any representation regarding the trustees' approval upon signing the deed. App. at 23.

Instead, the magistrate judge, applying "neutral principles of law" in accordance with the district court's summary judgment opinion, evaluated the relevant documents, provisions, and factual circumstances, and determined that the quitclaim deed was invalid and that Scotts Church retained title to the disputed property. The content of that determination can be described in terms of six distinct issues, though the opinion itself was not organized accordingly.

(1) Scotts Church Certificate of Incorporation

The first was the text of Scotts Church's certificate of incorporation, which dates from 1915. That certificate reads, in relevant part:

AFRICAN UNION FIRST COLORED METHODIST PROTESTANT CHURCH OF CAMDEN, NEW JERSEY.

THIS IS TO CERTIFY that we, Perry Gleaves, Leonard S. Smith, John F. Bartee, Thomas Kenaman, Enoch Grisden, Joseph Pierce, and Charles Stewart, do hereby associate ourselves into a corporation under and by virtue of an act of the Legislature of the State of New Jersey . . . .

1. The name of the association or corporation is AFRICAN UNION FIRST COLORED METHODIST PROTESTANT CHURCH OF CAMDEN, NEW JERSEY.

2. The purposes for which this association or corporation is formed are for the worship of Almighty God in accordance with the dictates of our consciences and the rules[,] regulations, doctrines, practices and beliefs of the African Union Colored Methodist Protestant Church;

To acquire and possess property, both real and personal, as Trustees as aforesaid, by gift, grant or devise and to hold same in trust for the uses and purposes of said Church Body; to mortgage and dispose of the same.

That said Trustees shall not dispose of any real estate so acquired by them as Trustees, except [as] such act be authorized by a vote of two thirds of the members of said Church Body, who shall have been members in good standing in said Church Body for at least one year before the date of the meeting at which such action shall be proposed.

That the Trustees of said African Union First Colored Methodist Protestant Church of Camden, New Jersey shall, at the time of their election, have been members of said Church in good standing for at least one year preceding their election . . . .

The successors to the Trustees hereinbefore named shall be [e]lected by ballot . . . at a meeting of the members of the Church . . . .

. . . .

4. There shall be seven Trustees of this association or corporation and the names of those selected for the first year are as follows. [The same seven names listed at the beginning of the certificate are here repeated, with ...


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