Thursday, October 30, 2008

The Chancellor of the Diocese of Fort Worth misleads members of the Diocese

The Stand Firm blog has this posting about advice from the Chancellor of the Diocese of Fort Worth.  The Chancellor who is unnamed in the post concludes that there is no violation of a fiduciary duty to any entity by voting to take a church or diocese out of the Episcopal Church.  I have written often over the last few years that this is in fact not true.  The Chancellor uses some neat statements of the law and some assumptions that most do not agree with and comes to the conclusion his Bishop wants.  There are many problems with this conclusion.

First, it makes the assumption, without support, that "The Episcopal Diocese of Fort Worth are not trustees of a valid trust in favor of TEC."  This may be true but cases all over the country are finding exactly the opposite.  To treat this as a given when it is still up in the air in many places including, I believe, Texas is a big leap.  The validity of the Dennis Canon is not the subject of this response and the existence of a fiduciary relationship does not determined exclusively by the validity of the Dennis Canon.

The true problem is the the Chancellor from the Diocese of Fort Worth ignores Texas law and the Canons of the Diocese of Fort Worth. 

The Chancellor from the Diocese of Fort Worth puts large stock in this section of Texas law:

E. A director is not deemed to have the duties of a trustee of 
a trust with respect to the corporation or with respect to any 
property held or administered by the corporation, including 
property that may be subject to restrictions imposed by the donor or 
transferor of the property.
The Chancellor from the Diocese of Fort Worth claims this means there is no trust.  All this section means is that the non-profit corporation act does not create a trust.  It does nothing to negate trusts that may be created in other ways.

Under Texas law the directors of a non-profit corporation and church corporations are covered by the act have a duty to the corporation.  Specifically:

director shall discharge the director's duties, including the 
director's duties as a member of a committee, in good faith, with 
ordinary care, and in a manner the director reasonably believes to 
be in the best interest of the corporation.
So what does that mean?  For our purposes it clearly means that the directors have a fiduciary relationship and duty to the corporation. Which begs the next question, what is the corporation?  The corporation or any corporation is defined by its articles of incorporation.  [small caveat - some parishes in Fort Worth may not be incorporated however there is some reason to believe the analysis would apply to them too.]  The parishes that are incorporated under Texas law are bound by this section of Texas law.  
The Canons of the diocese of Fort Worth allow incorporation. Specifically:



The articles of incorporation must expressly provide that such corporation is subject to, and its powers and rights shall be exercised in accordance with, the Constitution and Canons of the Episcopal Church in the United States of America and the Constitution and Canons of this Diocese.

 You will notice that the Canon requires that the articles of incorporation make the corporation (read parish) subject to the Constitution and Canons of the National Church.  The Canons further require that new parishes will abide by the Constitution and Canons of the National Church.



We, the undersigned, do associate ourselves together for the purpose of maintaining the worship of God and the preaching of the Gospel, according to the doctrine, discipline and worship of the Episcopal Church in the United States of America, in the town of _________________________, in the State of Texas, and do promise to abide by and conform to the Constitution and Canons of the General Convention and of the Diocese of Fort Worth.

You see the problem with the analysis of the Chancellor of the diocese of Fort Worth is that he does not account for the fiduciary duty of the vestry members in the first act moving away from TEC.

The parishes (corporations) as they existed before "the troubles" were formed under articles of incorporation and canons that had the parish a part of TEC and they agreed to abide by the Constitution and Canons of TEC.  Any act that a vestry member contemplates that removes this or violates this, violates their fiduciary duty to the corporation/parish as formed.  They may feel they have a valid reason for violating the duty, but this is a completely different question.  The Chancellor of the Diocese of Fort Worth would suggest that there is no duty and this is simply incorrect.  

I don't know if the articles of incorporation of the parish/corporations in Fort Worth have been amended but that doesn't matter.  Amending the articles of incorporation in this way would violate the duty owed to the original corporation.  

Whether this was an oversight or something worst on the part of the Chancellor of the Diocese of Texas it is misleading and not helpful. If vestry members in Fort Worth were truly looking for some guidance as they make some difficult decisions, they didn't get it.

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