How Not to Secede... and Transaction Costs

I've stayed mum for a few days regarding the charges against Bishop Mark Lawrence of South Carolina, and the resulting purported secession from the Episcopal Church of the Diocese of South Carolina. That's because I don't want to go off half-cocked, with an overly harsh response.

I'll leave the questions of canon law to others, who are better able to address whether Bishop Lawrence is guilty of "abandonment" or other charges.

Where he and the members of the steering committee seems to me to be in grave danger, however, is civil liability based on the granting of the quitclaim deeds to each parish within the Diocese in late 2011, and this effort to reconstitute as an independent diocesean entity. And, frankly, I don't see how they aren't on the hook for breach of fiduciary duty, fraudulent conveyance, conversion, and similar causes of action. (Civil fraud is possible, as well, but on reflection seems to me to be more of a leap--Lawrence's statements regarding his intentions as prospective bishop do not seem to me to sufficiently unambiguous, or closely enough related to his acts, to make out, absent more, a claim of fraud.)

According to the linked article above, the bishop and steering committee are relying on the All Saints decision by the South Carolina Supreme CourtNow, the South Carolina Supreme Court found in All Saints Parish, Waccamaw v. Protestant Episcopal Church, Dio. of S. Carolina (2009), that the enactment of the Dennis Canon in 1979 did not act to create a trust interest in that parish's property in the Diocese or in the national Episcopal Church ("TEC"). It found so, however, on the very unusual fact pattern before it, in which All Saints had been given, in 1903, a quitclaim deed, "transferring any interest the Diocese may have had in the congregation’s property to All Saints Parish, Waccamaw, Inc. The Diocese did not retain any interest in the property, reversionary or otherwise." The Diocese did not adopt the Dennis Canon until 1987. Thus, the South Carolina Supreme Court reasoned, "is an axiomatic principle of law that a person or entity must hold title to property in order to declare that it is held in trust for the benefit of another or transfer legal title to one person for the benefit of another. The Diocese did not, at the time it recorded the 2000 Notice, have any interest in the congregation’s property. Therefore, the recordation of the 2000 Notice could not have created a trust over the property."

In other words, the Diocese had ceded its interest in the All Saints property and disavowed it 84 years before it affirmatively adopted the Dennis Canon. Bishop Lawrence, by contrast, issued his quitclaim deeds almost a quarter of a century after the Diocese affirmatively enacted the Dennis Canon, and more than 30 years after the national church did so. Where the Diocese had no interest in All Saints to create a trust in, in view of the 1903 quitclaim deed, Bishop Lawrence took office with such a trust already in place. Therefore, All Saints does not to my mind provide any basis for immunizing the issuance of quitclaim deeds as a means of invalidating the trust held pursuant to the Dennis Canon.

I suppose one could argue that the Dennis Canon did not suffice to create a trust, in that TEC should have undergone formal proceedings in each state to create one. That would, however, seem to me to conflict with Jones v. Wolf, which described the obligation of a hierarchical trust to create a trust in the denomination fulfilled either by such processes, or, "[a]lternatively, 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." (My emphasis). TEC chose the latter course, following the guidance of a majority of the Supreme Court. It would be surprising, and reek of favoritism, were that deemed to be insufficient.

In addition to exposing the bishop and the Standing Committee to civil inability, the quitclaim deeds would, if deemed a fraudulent conveyance, be void. TEC has three years from discovery of the fraudulent conveyance claim in which to sue, and the same time frame under a fraudulent transfer theory, and so can file as late as 2014.

I don't mean through this rather dry analysis to underplay the sadness that I and many feel that such a state of affairs has been reached. And, I must confess, I am not impressed with those who claim that Bishop Lawrence's theological views justify these property dealings, which strike me as abusing the trust which Lawrence asked for on his second election as bishop, and dishonorable in the extreme, even if legal liability ends up being avoided. But there's another cost, too.

We gain much strength as a church from our willingness to meet around the altar with those whom we do not agree with. The Via Media holds Protestants and Catholics, liberals and conservatives, modernists and traditionalists together, and we often learn from each other and benefit from the insights of the others. After Mark Lawrence's deeply-laid, premeditated scheme to take the Diocese, property and all, away from TEC, much of the trust necessary to foster that balance is gone.

How on earth can we who are loyal to TEC and to that Via Media trust again?