Who owns the Church?

I've posted below a story I wrote for the October 2005 issue of Catholic World Report entitled "Who Owns the Church?" dealing with property ownership. Considering the ruling in Portland that mirrored that of the one in Spokane, I thought it might be helpful for some people. (See Ed Peters' recent posting on this issue at his canon law blog.) I can't find my article anywhere online, so here it is.

Who owns the Church?
By Thomas A. Szyszkiewicz

From Boston to Spokane, from Tucson to St. Louis, the question of who owns Church property is reverberating in the halls of justice. Do the parishes own the churches or does the bishop? Can the bishop take over parish assets if he closes a parish or do they go back to the former parishioners? Can the bishop sell the parishes in order to pay for sexual abuse lawsuits?

The question first arose in early 2004 as Archbishop Seán O’Malley of Boston announced his decision to close a number of parishes, sell their assets, and take them over in order to help the archdiocese recover from the crippling effects of the priestly sexual abuse scandal. But it became more acute later that year when the bishops of Portland, Ore., Tucson, Ariz., and Spokane, Wash., all filed bankruptcy.

Boston an intra-church matter – so far
For Boston, this has been pretty much an intra-church question, though church-state issues have been raised by some opportunistic and office-seeking politicians. Some towns where the closed churches are have considered passing taxes on those now vacant properties, but there has been no other major state or federal government intervention as of yet. (That could change, though, if a bill going through the legislature is passed that would require all churches in Massachusetts to annually file their financial reports with the attorney general’s office.)

The decision to close some parishes and take over the assets rather than merge them was to help attain a certain amount of equity, according to a press release from the archdiocese. “[M]erging parishes would keep the assets and liabilities in the local area,” the statement read, “in some cases resulting in two wealthy parishes combining to form one very wealthy parish; while if two poorer parishes are joined they could potentially only inherit liabilities to form one very poor parish.”

But that wasn’t entirely how the Congregation for the Clergy saw it. Though the Congregation was satisfied with the process Archbishop O’Malley followed in closing the churches, there was one aspect they questioned. “The Congregation has informed the Archdiocese,” the statement continued, “that in situations where the parishioners of the closed parish are directed to a new receiving parish, the Archdiocese must work with the receiving parish in order to allocate the assets and liabilities of the closed parish to the Archdiocese.”

In other words, according to an article in The Pilot, the archdiocesan newspaper, in those instances where the territory of the closed parish was divided among neighboring parishes, the archbishop has to seek permission from those neighboring parishes to take over the assets. Otherwise, the assets go to the other parishes.

This was not an official ruling, Father Mark O’Connell, a canon lawyer for the archdiocese, told CWR. Rather, “it was one bishop talking to another.” But it was how the Congregation would interpret canon law and any case that was appealed to Rome would have to go through them.
All of this goes to show that in the mind of the Church, the bishop of the diocese does not own or have ruling control over all of the Catholic property in the diocese.

But not in Washington
After the announcement was made in Boston, the Diocese of Spokane’s attorney, Shaun Cross, was hopeful. “It reaffirms the position of Bishop [William] Skylstad in that he does not own the parishes,” Cross told the Associated Press.

But Cross’s hopes were dashed. Federal bankruptcy Judge Patricia Williams ruled against the diocese saying that Bishop Skylstad owns or controls it all and so he can sell it all in order to pay the victims of sexual abuse. That ruling increases the pot of money available to victims from $25 million (an amount that includes $15 million in insurance money) to whatever the 16 schools and more than 80 parishes are worth. (Unofficial estimates put that at about $80 million, though that is most likely a low figure.)

Bishop Skylstad has appealed the decision, a process that could ultimately end up in the U.S. Supreme Court. It first goes to a federal bankruptcy appeals court, then to the Ninth Circuit Court of Appeals, a court that already has a clear bias against the Church. Estimates are that the appeals process could take anywhere from five to ten years.

Cross told CWR that he believes Judge Williams was simply wrong in her decision and ignored key questions about how the diocese holds title to the parishes (in trust, not in direct ownership), the fact that the parishes under Washington law can be considered “unincorporated associations,” and how this will effect church/state relations under the First Amendment.
Victims’ lawyers called the appeal “playing hardball” and excoriated the bishop for the appeal.
But Cross told CWR that the parties are still working on a settlement.

Corporation soul
This decision raises in earnest the question of how the Church herself looks at who owns Church property.

Church law calls parishes “juridic persons” or entities recognized in law as having a “personality.” This is kind of like corporations, according to Ed Peters, a lay canon lawyer. Juridic persons can own property, which means the parish can own property apart from the diocese, though it is always subject to the bishop.

Canon law also makes it clear that a bishop is a steward, not an owner, of all that is in his diocese. Parishes, as juridic persons, can own property outright, though they are still subject to the bishop. Yet the bishop at times needs permission of the finance council and the college of consultors in decisions regarding certain properties.

But often the way that translates into civil law is quite different from canon law. While canon law recognizes the individual parish’s ability to own things, many, if not most, dioceses operate civilly under the “corporation sole” model. This means that, for instance, the Bishop of Spokane, besides being an individual named William Skylstad, is also a corporation and owns or directs as a corporation whatever is held in title by the diocese – including the parishes.

Some history
This model came about as a quirk of history, out of a movement called trusteeism. As Catholics emigrated to the U.S. from Europe in the 18th and 19th centuries, they brought with them the influences of how things had been run in their own countries. Those influences then met with more Protestant and American democratic influences and that collision helped bring about the issue of trusteeism, said Dr. Patrick Carey, a professor of theology at Marquette University and the foremost expert on the phenomenon.

Laity set up the parishes as corporations under various state laws and got the deeds to the church properties as trustees. The trustees, Carey said, brought with them the concept of “jus patronatus” or right of patronage that was given when royalty or nobles erected churches or dioceses in their countries. The person who set it up then had the right to name the priest or bishop.

When that background was brought to the U.S., it united with the idea that the people were the kings, “therefore they should have the same rights,” Carey said.

This, of course, set the laity up for a collision course with the bishops who, in 1829, decreed during a provincial council in Baltimore that all Church property in a diocese would belong to the diocese. During further provincial and plenary councils in Baltimore, that position was strengthened.

Those decisions were the basis for the selection of incorporating under state laws as corporation soles. But even at that time, according to Father John Coughlin, OFM, a professor of canon and civil law at the University of Notre Dame Law School, some bishops presciently wondered what that civil model would do to the liability of bishops for priests who ran afoul of the law.

Those Baltimore decisions also raised issues in Rome, particularly after one Cincinnati archbishop nearly lost the entire archdiocese because his brother, the vicar general, came up with a bad banking scheme. In 1911, the Sacred Congregation for the Council (now the Congregation for the Clergy) told the bishops of the United States that they did not like the corporation sole model all that well and preferred the method of parish corporation, where each individual parish is separately incorporated in the state.

Among the methods which are now in use in the United States for holding and administering church property, the one known as Parish Corporation is preferable to the others, but with the conditions and safeguards which are now in use in the State of New York. The Bishops therefore should immediately take steps to introduce this method for the handling of property in their dioceses, if the civil law allows it. If the civil law does not allow it, they should exert their influence with the civil authorities that it be made legal as soon as possible. Only in those places where the civil law does not recognize Parish Corporations, and until such recognition is allowed, the method commonly called Corporation sole is allowed, but with the understanding that in the administration of ecclesiastical property the Bishop is to act with the advice, and in more important matters with the consent, of those who have an interest in the premises and of the diocesan consultors, this being a conscientious obligation for the Bishop in person.
(Quoted in New Commentary on the Code of Canon Law, 2000, New York, Paulist Press, page 1457.)

The New York model the Congregation favored is one where the state has written into law recognition of Roman Catholic parishes and the authority of the bishop over them. The law there allows for two lay trustees to be named to the corporate board, but those trustees serve at the pleasure of the bishop, thus avoiding the whole trusteeism question. But that is not the case in many states.

Making the changes
Unfortunately, not many bishops listened to that directive. It’s only been in recent years that some dioceses have been making the civil changes necessary to reflect canon law. One such bishop is Bishop Robert Vasa of Baker, Ore. A canon lawyer by training, he was appointed to Baker at the end of 1999 after having just completed the project of separately incorporating all of the parishes in the Diocese of Lincoln, under the direction of Bishop Fabian Bruskewitz. So he knew the advantages of this process.

In fact, on the day he went to Oregon for the press conference announcing his appointment, he asked the diocesan attorney, Vincent Hurley, how the Baker Diocese was structured. When he found out that it was a corporation sole, he told Hurley to get ready to make the switch – and he wasn’t even a bishop yet.

As they were getting the documents ready, the diocese was slapped with sexual abuse lawsuits. In September of 2002, an injunction was granted against the diocese to prevent them from transferring any assets. The plaintiffs had charged that the transfers were being done in order to devalue the assets of the diocese. But in May of 2003, a judge agreed with Bishop Vasa and allowed the separate incorporations to go through.

Rather than being a way to devalue the diocesan assets, it was instead, “the transfer of the title to the proper owner,” Bishop Vasa said.

On one hand...but on the other
But even with that, this prelate told CWR that he could persuasively argue either side of the Spokane case before the judge. And he’s not even sure what he would do if he were in Judge Williams’ seat.

On the one hand, under canon law, a bishop is subject to consult with, and at times even have the approval of, a finance council on major financial expenditures.

But on the other hand, according to Father Coughlin, the parish holds the property, not on its own, but always in subjection to the authority of the bishop. One juridic person in a hierarchical church like the Catholic Church, is always subject to another juridic person in the Church, he pointed out. So the bishop can still be tied to the parish even if it is made a separate state corporation.

And even at the top, there is still accountability. Canon 1273 states that the Pope “is the supreme administrator and steward of all ecclesiastical goods.” Ed Peters said that in no way does that mean that the Pope owns everything in the Church. “I don’t know of any canon lawyer who would interpret it that way,” he said. So even the Pope, as Pope Benedict XVI has pointed out early in his reign, doesn’t own the Church nor reign as an absolute monarch whose every whim becomes law. He is subject to the apostolic authority that has been entrusted to him.
Peters, who is also a civil lawyer, called Judge Williams’ decision “narrowly right,” since the diocese is structured as a corporation sole.

But, he added, she “has run afoul of Catholic canon law and thus has lurched into free-exercise territory, wrongly at that.”

“Bishops do not own parishes under canon law, nor do dioceses own parishes, nor does the pope own parishes,” Peters said. “Our whole religious tradition recognizes ownership of parish assets to rest in parishes.”

The judge could plausibly think otherwise, Peters said, but even if she did, she is “still wrong on the crucial question of who owns assets that some think can be used to pay the liabilities. Bishops no more canonically own parishes in their dioceses than they canonically own a Catholic hospital located in their diocese.”

One of the difficulties that could come up in the appeals process, Peters said, is that in order to alienate (i.e. sell) any asset over the amount of $3 million, the bishop has to have the approval of Rome. And what if Rome disapproves? That’s where the real church-state clash could begin.

Tucson avoids it...
In Tucson, the whole issue has been avoided, according to diocesan communications director, Fred Allison. In fact, they will be emerging from their Chapter 11 bankruptcy proceedings by October. Part of the agreement has been the reorganization of the diocese to make the parishes separate corporations.

One of the reasons it has been so smooth is the lack of participation by the group Survivors Network of those Abused by Priests, or SNAP, Allison said. Twice, Barbara Blaine, the group’s president, made appeals to the judge to be named to the proceedings, and both times the judge refused her request.

Things are going so well, according to Allison, that the annual diocesan appeal they recently completed broke a record.

...but Portland trembles
But the Archdiocese of Portland is facing a situation like Spokane’s. The judge has not yet ruled, but the archdiocese has presented its arguments to the court in much the same way as the Spokane Diocese did – that even though the archbishop is the sole corporate owner of the archdiocesan assets, he holds them in trust for the individual parishes or entities.

But Portland’s situation is even more complicated. The archdiocese was presented with two lawsuits for sexual abuse – one for $130 million and another for $25 million – whose plaintiffs refused mediation. The archdiocese is claiming assets of $19 million. If the parishes and other properties were added, estimates are that they would be worth $500 million to $600 million, though no valuations have been done yet.

Archbishop John Vlazney knew that in the current climate, he faced little to no chance of winning and that amount was overwhelming to their asset pool. Besides, said Bud Bance, the archdiocesan spokesman, if the two cases went forward and they lost, that would have left the archdiocese with nothing to pay any future claimants.

Additionally, they would have to file bankruptcy at a state court level. Being that this is Oregon, the most unchurched state in the country, the prospects there did not look good.

So the archbishop took a gamble and decided to file bankruptcy at the federal level. That stopped the lawsuits from proceeding and started the look at the archdiocese’s finances.
During the proceedings, the board composed to represent those who have claims against the archdiocese, the Tort Claimant Committee, took a novel approach at getting the issue of who owns the property resolved. The committee filed a class-action lawsuit against all 390,000+ members of the archdiocese in an effort to have the court rule on a summary judgment of who owns the assets. It was something so unusual, said Bance, that the lawyers all had to scramble to find out what to do. Almost all class-action lawsuits represent a class of people against one company or person, not vice-versa.

With the class action approach, said Bance, the individuals who have contributed to their parish now have an opportunity of sorts to speak their minds on the matter. How this will all turn out is anyone’s guess.

The Episcopalians
Disputes within the Episcopalian church over the ordination of Gene Robinson as bishop of New Hampshire has caught the church up in property disputes. As individual congregations are repulsed by the hierarchy’s decisions to alienate the church from basic Christian teaching, they have taken matters into their own hands and left the hierarchy behind.

But what happens to the properties is ending up in courts. A recent decision in southern California went in favor of a local parish as holding the rights to the property.

At this point, Father Coughlin said he is unsure if this will have any impact at all on cases effecting the Catholic Church.

And in St. Louis
In St. Louis, the question of parish ownership doesn’t revolve around sexual abuse cases. It is, rather, a vestige of the days of trusteeism.

St. Stanislaus Kostka is the Polish national parish in the city with a lay board of trustees who by civil law own the parish property. The parish started during the heyday of trusteeism when the Polish National Catholic Church separated from the Roman Catholic Church over the issue of the care of Polish immigrants.

According to some experts, Archbishop Peter Kenrick allowed St. Stanislaus the liberty of trustees in order to keep it in the fold and not follow the way of the PNCC, even though the various councils of Baltimore no longer allowed trustees.

Over the years the relationship with the archdiocese has been rocky, including a lawsuit against the board by a parishioner against the trustees in the early 20th century. Recently, though, things went from bad to worse. In the late summer of 2003, then-Archbishop Justin Rigali met with the current board asking them to come into full compliance with Church law by dissolving the board and allowing the archbishop to have complete control over the parish. They refused. The archbishop was then transferred to Philadelphia, leaving the issue with his successor.

That happened to be Archbishop Raymond Burke, “one of the most formidable canon lawyers in America,” according to Peters. The Archbishop met with the board, then with the parish. Both meetings went badly, with the parish meeting descending to shouting and name-calling on the part of the parishioners.

After numerous attempts to communicate and warnings from the Archbishop, including the removal of the pastor and the transference of the Polish ministry to another parish, he finally imposed the canonical penalty of interdict on the board. There has been talk of excommunication, but nothing has materialized on that front yet.

The issue to Archbishop Burke is the pastoral submission every parish should have to the local bishop. The issue to the St. Stan’s board is that the archbishop supposedly wants to take control of the parish, sell it and get the money it has in reserve ($1.25 million, according to the board) in order to pay for sexual abuse cases.

That allegation is categorically denied by the archdiocese. In fact, the archbishop has assured the board in writing that it would not be sold so long as there is a viable parish there.

This case is not necessarily about who owns the parish, as the board of St. Stanislaus contends. It is, rather, over who controls it. In fact, the board rewrote its charter and removed from it all references to being under the authority of the pastor or the archbishop.

When the board members appealed to the Congregation for the Clergy for the return of their pastor, they were rebuffed completely. “Through careful and premeditated revisions of the By-Laws of the civil corporation,” the secretary for the Congregation wrote in a cover letter to their decision, “you have attempted to make the role of the pastor impotent, attempted to wrest control from the local Ordinary, and attempted to transform St. Stanislaus Parish into an entity which has no resemblance to a parish as envisioned by either the tradition or current law of the Roman Catholic Church.”

A balancing act
All of this leaves a question about the claims made by groups like SNAP and Voice of the Faithful. They have constantly made statements that the bishops have to pay for what they did in transferring priests who sexually abused people from parish to parish and not removing them from ministry.

“Sadly, Skylstad is choosing combativeness over compassion, delay over closure, hardball over healing, and his own selfish needs over the needs of his diocese and its child sex abuse victims,” David Clohessy told AP after Bishop Skylstad announced his decision to appeal the ruling by Judge Williams. What those “selfish needs” are, Clohessy never defined, and the “needs of the diocese” to sell off all the parish churches and schools in order to pay for lawsuits are probably lost on the average faithful Catholic in the Diocese of Spokane.

However, it does point up the fact that if sex abuse advocates like Clohessy and Barbara Blaine are followed, then the Church would be left with no assets and no way to effectively carry out her ministry.

It also points up the fact that there is a dual thought process going on in their minds. Ever since the abuse crisis began, the cry has gone up that if the laity had had more control of the parishes, then this would never have happened. But when it is shown in canon law that the parish properties are actually owned by the parishes, not by the bishops, then that’s not correct because the bishop has to pay.

But what the rest of the Church has to come to realize, according to Bishop Vasa, is that there is a real balancing act that has to happen between the bishop, the clergy and the laity.
He is not considered a liberal by any stretch of the imagination. But he is clear that, as bishop, “I have lots of authority, but little power.” He does not, for instance, have a police officer on hand to send to a parish to enforce any directives he issued. In fact, he said he had more power when he was an assistant pastor than he does now.

When he was making his first visits around the Baker Diocese, Bishop Vasa came across a parish that badly needed a new roof on the church. When he asked the pastor why it hadn’t been repaired before, the pastor replied that it was the bishop’s problem, not his. The bishop corrected the pastor’s lack of understanding on that point. “My goal was to give the pastor and parishioners a proper sense of their responsibilities.”

So a balancing act has to be struck in the Church. While the state has the power to enforce laws, the Church has to rely on the free consent of her members to be subject to the bishop. And the bishop has to realize, as Bishop Vasa said, that he is “a servant of the Code of Canon Law, of the Pope and of the Church.”