DIOCESE OF NEWARK v. BURNS, 83> <N.J>. <594 (1980)

THE DIOCESE OF NEWARK, THE TRUSTEES OF THE EPISCOPAL FUND AND DIOCESAN

PROPERTIES OF THE DIOCESE OF NEWARK, AND THE RIGHT REVEREND GEORGE E. RATH,

PLAINTIFFS-RESPONDENTS, v. WILLIAM F. BURNS, AND THE RECTOR, WARDENS AND

VESTRYMEN OF SAINT MARK'S CHURCH IN ORANGE, NEW JERSEY,

DEFENDANTS-APPELLANTS.

The Supreme Court of New Jersey.

Argued April 21, 1980 —

Decided July 24, 1980.

Appeal from Superior Court, Appellate Division.

Page 595

Bruce D. Shoulson argued the cause for appellants

(Lowenstein, Sandler, Brochin, Kohl, Fisher & Boylan,

attorneys; Bruce D. Shoulson and Robin A. Rolfe, on the

briefs).

Eugene M. Haring argued the cause for respondents (McCarter

& English, attorneys; Eugene M. Haring and Gita F.

Rothchild, on the brief).

Adrian M. Foley, Jr., submitted a brief on behalf of amicus

curiae The Roman Catholic Diocese of Newark (Connell, Foley &

Geiser, attorneys; Robert J. Kelly, on the brief).

The opinion of the Court was delivered by SULLIVAN, J.

This case is before us on certification of defendants' appeal

pending unheard in the Appellate Division. 82 N.J. 268 (1979).

The factual background and issues involved are almost identical

to those considered in The Protestant Episcopal Church v.

Graves, 83 N.J. 572 (1980), also decided today. Plaintiffs

herein are the Diocese of Newark of the Protestant Episcopal

Church (Diocese), the Trustees of the Episcopal Fund and Diocesan

Page 596

Properties and the Diocesan Bishop. Defendants are St. Mark's

Church in Orange, New Jersey, its rector, wardens and vestrymen.

As in Graves, the essential facts are not in dispute. St.

Mark's Church was originally incorporated in 1827 as "a

congregation of Christians of the Protestant Episcopal church."

In 1832, St. Mark's reincorporated under the act of February 17,

1829 entitled "An Act to incorporate religious societies

worshipping according to the customs and usages of the Protestant

Episcopal Church" and, pursuant to the provisions of that act

changed its corporate name to "The Rector, Wardens and Vestrymen

of St. Mark's Church in Orange, New Jersey."[fn1] Following the

division of New Jersey into two dioceses of the Protestant

Episcopal Church, St. Mark's became a part of the Diocese of

Newark.

St. Mark's acquired its first piece of property about 1828 and

built its church on the site. Thereafter, additions were made to

the church building and additional property acquired. St. Mark's

now owns approximately three acres of land on which is located

the church, rectory, a frame house and parish hall. Financing of

the acquisitions and construction was by local funds only. None

of the deeds of conveyance to St. Mark's make any reference to a

trust in favor of the Diocese or the Protestant Episcopal Church.

Until 1977, St. Mark's, in accordance with Episcopal law,

participated fully in Diocesan and Church activities. It sent

delegates to the Diocesan Convention and regularly paid its

Diocesan assessments and quotas. Following the enactment of the

1877 supplement to the laws regulating the affairs of the

Protestant Episcopal Church, L. 1877, c. 56, now N.J.S.A.

16:12-4, St. Mark's, in conformity with the requirements of that

statute, generally sought Diocesan consent to the transfer and

mortgaging of its real estate.

Page 597

Over the years, St. Mark's had received numerous donations and

bequests of funds some of which were delivered to the Trustees of

the Diocesan Episcopal Fund for management. It is undisputed that

the funds belong to St. Mark's and that of the approximately

$192,000 (at cost) presently held by the Trustees, only $3,788.98

thereof is subject to an express reversionary interest in favor

of the Protestant Episcopal Church.

In 1977, as a result of the same doctrinal disputes as

precipitated the Graves litigation,[fn2] the Wardens and

Vestrymen of St. Mark's notified the Diocese that St. Mark's was

terminating its affiliation with the Diocese and the Protestant

Episcopal Church. Pursuant to resolutions adopted by the vestry

and congregation, St. Mark's affiliated itself with the Anglican

Catholic Church, a denomination other than the Protestant

Episcopal Church, and demanded the return of funds being held by

the Diocese for the benefit of St. Mark's. Bishop Rath

immediately "inhibited" defendant Rev. Mr. Burns, the Rector of

St. Mark's, from performing priestly duties and thereafter

deposed him. See Graves p. 575. A substitute priest was sent to

St. Mark's by the Bishop but was refused admittance and denied

permission to officiate at parish services. This suit followed.

It sought an injunction against defendants prohibiting them from

exercising control over parish property and a declaration that

all property of St. Mark's was held in trust for the use and

benefit of the Diocese of Newark and the Protestant Episcopal

Church.

The case was tried over a period of six days, at the conclusion

of which the trial judge ruled in favor of plaintiffs. He held

that the individual defendants had no interest in the real or

personal property of St. Mark's and "that title to all of said

properties is in St. Mark's." The judgment also provided that the

Rev. Mr. Burns, having been deposed as a priest of the Protestant

Episcopal Church, was not entitled to the office of Rector of St.

Mark's and that the other individual defendants,

Page 598

having renounced their affiliation with the Diocese and Church,

were not entitled to vote or hold office in St. Mark's Church.

Defendants were enjoined from exercising any control over parish

property and prohibited from interfering with the use of the

premises or with the conduct of the affairs of defendant

corporation by plaintiffs or such persons designated by

plaintiffs.

As noted, defendants' appeal was certified while pending

unheard in the Appellate Division. Defendants' argument on appeal

is similar to that made by the appellants in Graves. Defendants

argue that such hierarchical structure as the Protestant

Episcopal Church has, extends only to doctrine. In the absence of

trust provisions, defendants claim that the authority of the

hierarchy does not encompass local church property, which remains

in the control of the local congregation. It is contended that

the offices of Rector, Wardens and Vestrymen of St. Mark's Church

are not vacant and that the Church hierarchy does not have the

right to determine the eligibility for such offices.

Additionally, they assert that the principle of compulsory

deference to the determination of a hierarchical church body in

property disputes has never been the law in New Jersey and that

this Court should adopt the neutral principles of law approach

for resolving church property disputes.

All of these contentions as well as the ancillary points raised

by defendants have been considered and disposed of in our opinion

in Graves. There we approved the hierarchical church approach

utilized in Watson v. Jones, 13 Wall. 679, 20 L.Ed. 666

(1872). Applying that approach to this case, plaintiffs are

entitled to the relief granted. As the trial judge noted, the

title to all property real and personal remains in St. Mark's

Church which was and still is incorporated as an affiliated

member of the Protestant Episcopal Church. The Rev. Mr. Burns has

been deposed as a priest of the Protestant Episcopal Church and

is ineligible to serve as rector of St. Mark's. Likewise, the

other individual defendants have disaffiliated themselves from

the Protestant Episcopal Church and thereby automatically

terminated their eligibility to hold office as Wardens and

Vestrymen of St. Mark's.

Page 599

As was noted in Graves, the individual defendants are free to

disassociate themselves from the Protestant Episcopal Church and

join another denomination. No court can interfere with or control

such an exercise of conscience. However, they may not take the

church property with them. The judgment of the trial court is

affirmed for the reasons set forth herein and in our opinion in

Graves, also decided today.

[fn1] In 1961 the corporate name was changed to read "West

Orange" instead of "Orange."

[fn2] The disputes involved, inter alia, ordination of women to

the priesthood and changes in the Book of Common Prayer.

SCHREIBER, J., dissenting.

I dissent essentially for the same reasons expressed in my

dissent in the companion case, Protestant Episcopal Church v.

Graves, 83 N.J. 594 (1980), decided this day. Moreover, to the

extent that the majority relies upon statutes enacted after the

Act of February 17, 1829, L. 1828, p. 71, under which St.

Mark's was reincorporated in 1832, such reliance would appear to

be misplaced. The reserved power to modify a corporate charter

which retroactively affects rights of stockholders inter se and

with the corporate entity, does not appear to have come into

existence until February 14, 1846. L. 1846, p. 16, § 6. See

Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat.)

518, 4 L.Ed. 629 (1819).

For affirmance — Chief Justice WILENTZ and Justices SULLIVAN,

CLIFFORD and POLLOCK — 4.

For reversal — Justices PASHMAN, SCHREIBER and HANDLER — 3.

Page 600