Church of the Brethren, South/Central Indiana District v. Roann Church of the Brethren, Inc., Roann Break-Away Group and the Roann Church, Inc.

FOR PUBLICATION Nov 17 2014, 10:27 am

ATTORNEYS FOR APPELLANT: ATTORNEYS FOR APPELLEES:

DAVID K. HERZOG BRIAN P. WILLIAMS
JON LARAMORE MICHAEL E. DIRIENZO
Faegre Baker Daniels LLP Kahn, Dees, Donovan & Kahn, LLP
Indianapolis, Indiana Evansville, Indiana

IN THE
COURT OF APPEALS OF INDIANA

CHURCH OF THE BRETHREN, )
SOUTH/CENTRAL INDIANA DISTRICT, )
)
Appellant-Plaintiff, )
)
vs. ) No. 85A02-1403-PL-166
)
ROANN CHURCH OF THE BRETHREN, INC., )
ROANN BREAK-AWAY GROUP, and )
THE ROANN CHURCH, INC., )
)
Appellees-Defendants. )

APPEAL FROM THE WABASH CIRCUIT COURT
The Honorable Robert R. McCallen, III, Judge
Cause No. 85C01-1205-PL-440

November 17, 2014

OPINION - FOR PUBLICATION

NAJAM, Judge
 STATEMENT OF THE CASE

Church of the Brethren, South/Central Indiana District (“the Denomination”)

appeals the trial court’s decision, following a bench trial, in favor of Roann Church of the

Brethren, Inc. and The Roann Church, Inc. (“the Congregation”) on the Denomination’s

complaint.1 The Denomination presents one issue for our review, namely, whether the

trial court erred when it held that the Congregation did not place its property into an

irrevocable trust, express or implied, for the benefit of the Denomination.

We affirm.

FACTS AND PROCEDURAL HISTORY

The Denomination dates to 1708, and the Congregation traces its origin to mission

work performed in Roann, Indiana, in 1835. The two affiliated with one another in the

late 1930s. In 1939, the Congregation began sending delegates to the Denomination’s

Annual Conference,2 where delegates approved matters regarding denominational polity

by two-thirds vote. The Denomination recorded and published denomination polity in its

Organization and Polity Manual (“Manual”), which could be revised yearly at the Annual

Conference. The Denomination, however, never bound local congregations to the

Manual, and it did not impose discipline for any given congregation’s disharmony with

denominational polity.

In the early 1940s, after separatist groups departed and took property from the

Denomination for secessionist uses, the Denomination became concerned about

1
Despite the Denomination’s statements in its brief, the evidence adduced at trial demonstrated
that “Roann Break-Away Group” is not an entity. Appellant’s App. at 8 n.1.
2
“The Annual Conference is the highest and final legislative authority of [the Denomination].”
Appellant’s App. at 81.
2
protecting its assets. Thus, in 1945, the Denomination issued a report that called for the

use of restrictive covenants in individual congregations’ deeds, and, in 1947, the

Denomination approved the placement of the following language into its Organization

and Polity Manual:

The commission believes that[,] for the sake of uniformity and greater
security in ownership of [the Denomination’s] property, the title to all local
church property should be held by local trustees, in trust, for the teaching
and dissemination of the gospel of Jesus Christ, according to the beliefs,
practices, and doctrines of [the Denomination], as set forth and
promulgated from time to time by Annual Conference.

***

I. Uniform Procedure in Conveyance

***

2. Restrictive covenants should be contained in all deeds of
conveyance, as follows:

a. That if the property ever ceases to be used in
accordance with the provisions set forth . . . , or[,] in cases
where the local church has been closed or the property
abandoned, the district[3] may, upon the recommendation of
the district board, assert title to the property and have the
same vested in the district board, as trustees for the district.

Appellant’s App. at 140-41. The Denomination devised a method whereby the respective

districts could investigate local churches’ deeds for the restrictive covenants and

negotiate co-ownership of property with local congregations.

Similarly, a later amendment to the Manual suggested language for local

congregations’ constitutions. It stated:

3
The district acts as an intermediary of sorts between the Denomination and the Congregation.
Several congregations form a district.
3
 CHAPTER IV

THE LOCAL CHURCH

I. Congregational Structure[]

***

C. SUGGESTED CONSTITUTION

***

4. Relationship to the Whole Church

***

b. The church denominational[]

. . . In case of strife or division, if any part of the congregation
refuses to abide by its obligation as a member of [the
Denomination], that part of the congregation, whether a
majority or minority of its membership, that continues in
unity with [the Denomination] shall be recognized as the
lawful congregation and shall continue in possession of all the
property of the congregation.

If the congregation (a) disbands, (b) departs from membership
in [the Denomination], or (c) so decreases in numbers and
financial strength as to render the congregation unable to
fulfill its purpose, the district of [the Denomination] in which
it is located, or the successor, shall have the right to take
charge and control of all property and thereafter to hold,
manage, and convey the same at the discretion of the district.
All action taken by the district relating to the property of a
congregation shall be in conformity with the provisions of
[Chapter VI of the Manual], “Property Holdings and
Financial Resources.”

***

CHAPTER VI

PROPERTY HOLDINGS AND FINANCIAL RESOURCES[]

4
 I. In the Congregation

***

A. TRUST RELATIONSHIP

All property owned by a congregation, whether incorporated or
unincorporated, shall be held, in trust, for the use and benefit and in
conformity with practices and beliefs of [the Denomination]. All
documents shall conform to the legal requirements of the various
states, territories, or other possessions of the United States or foreign
countries.

***

D. TRANSFER OF CONGREGATIONAL PROPERTY

***

3. Disorganizing or Withdrawing Congregation

If a congregation . . . attempts by either majority or
unanimous vote to withdraw from [the Denomination] district
in which it is located or otherwise ceases to exist or function
as a congregation of [the Denomination], any property that it
may have shall be within the control of the district board and
may be held for the designated purposes or sold or disposed
of in such a manner as the district board, in its sole discretion,
may direct. . . .

Id. at 85-87, 93-96 (emphasis removed). The Denomination encouraged, but did not

require, that all congregations adopt the suggested language.

In the 1980s, the Congregation acquired, by three separate warranty deeds, the

property at issue in this litigation. None of those deeds—all titled in the Congregation’s

name—contained the restrictive covenant recommended by the Denomination, and the

district never made inquiry into this issue. The Congregation purchased the property with

monies from member donations and an interest-bearing loan from the Denomination,

5
which the Congregation later repaid in full. The Congregation also possesses several

bank accounts at issue here, which are titled in the Congregation’s name. On the face of

these assets, the Denomination has no interest in the Congregation’s property, real or

personal.

Despite having not included the restrictive covenant in its deeds, in 2002, the

Congregation amended its Constitutional Guidelines and Bylaws (“2002 Constitution”) to

reflect some of the Manual’s language from Chapter IV. Specifically, the 2002

Constitution stated:

4. Relationship to the Whole Church

***

B. The Church Denominational

. . . In case of strife or division in the local church, should any part of
the congregation refuse to abide by its obligation as a member of
[the Denomination], that part of the congregation, whether a
majority or minority of its membership, that continues in unity with
[the Denomination] shall be recognized as the lawful congregation
and shall continue in possession of all the property of the
congregation.

If the congregation (a) disbands, (b) departs from membership in
[the Denomination], or (c) so decreases in numbers and financial
strength as to render the congregation unable to fulfill its purpose,
the district of [the Denomination] in which it is located, or the
successor, shall have the right to take charge and control of all
property and thereafter to hold, manage, and convey the same at the
discretion of the district. All action taken by the district relating to
the property of a congregation shall be in conformity with [Chapter
VI of the Manual]: “Property Holdings and Financial Resources”[].

Id. at 147 (emphasis removed). The 2002 Constitution did not include the trust language

from Chapter VI of the Manual, and a later provision reserved the unqualified right to

6
amend “[t]his Constitution and Bylaws . . . at Church Council by two[-]thirds vote of

members present.” Id. at 169. Further, Clifton “Corky” Cordes, the Congregation’s head

elder, a several-time delegate to the Annual Conference, and the chair of the 2010

Constitutional Committee, testified on cross-examination that the Congregation included

the word “Guidelines” in the title of its Constitutional Guidelines and Bylaws to indicate

that the Congregation could amend the document. “It wasn’t hard and fast . . . . It wasn’t

. . . something you had to abide by specifically.” Tr. at 66.

Subsequent to the adoption of the 2002 Constitution, a schism developed in the

Congregation regarding the continuation of its relationship with the Denomination.

Reflecting this growing divide, in 2010, the Congregation amended its Constitutional

Guidelines and Bylaws (“2010 Constitution”) to read as follows:

3. Relationship to the Whole Church

***

B. We belong to Christ and denominational ties are secondary.
The congregation shall covenant to faithfully support the beliefs of
the early Church founders, recognizing Annual Conference
enactments of [the Denomination] as having influence in our
congregational life. We shall remain members of [the
Denomination] or its successor as long as the denomination remains
true to God’s word. . . .

Appellant’s App. at 181 (emphasis removed). The Congregation’s purpose behind the

change was to “intentionally . . . strip[] out some of the national language [from the 2002

Constitution] because . . . [the Congregation] didn’t want the strings [to] national . . . .”

Tr. at 63. According to Cordes, the 2010 Constitution replaced the 2002 Constitution in

its entirety. The 2010 Constitution also reserved the right to amend.

7
 On March 27, 2012, the fracture within the Congregation reached its apex, and it

held a vote to determine whether it would remain affiliated with the Denomination.

Eighty-five members voted to leave the Denomination, eight voted to remain, and two

abstained. Thereafter, on April 3, the Denomination recorded an Affidavit of Transfer of

Land with the Wabash County clerk to transfer title of the Congregation’s property to the

district.4 Then, on May 21, the Denomination filed a complaint for declaratory and

injunctive relief that asked the court to declare that the 2002 Constitution created a trust

in its favor, which, under then-existing Indiana law, was irrevocable. Moreover, it sought

to enjoin the Congregation’s further use of the property. The Congregation

counterclaimed for slander of title because of the cloud on title that the affidavit created.

After mediation failed, the trial court held a bench trial on November 19 and 20,

2013, after which the court entered judgment for the Congregation on the

Denomination’s claims but rejected the Congregation’s counterclaim.5 After it lamented

that the parties—“church folk who worship God Almighty”—could not resolve the

dispute “among themselves, as Christians, without resort to Court process,” the court

found, in relevant part:

7. . . . [The Congregation] received benefits by affiliating with [the
Denomination], including but not limited to: Becoming part of a network
of like-minded churches; licensing and ordination of pastors; and providing
contract forms. Likewise, [the Denomination] received benefits from that
affiliation as well because, among other benefits, [the Congregation]
contributed monies to [the Denomination].

4
The Denomination had used this method of property transfer successfully on two prior
occasions in Indiana.
5
The Congregation does not cross-appeal the denial of its counterclaim.
8
 8. On or about 1945, at Annual Conference, a committee report
concerning [the Denomination’s] control of property was prepared. Part of
that report provided that the restrictive covenants should be included in
deed(s) to hold the individual congregations[’] church property in trust.
Additionally, [the Denomination] submitted evidence of other documents
including similar language in support of their complaint.

9. . . . Sometime in the mid to late 1980’s [sic], the congregation . . .
built its third set of buildings, which account for its current location. . . .
Three (3) separate deeds acquired the property. According to the last set of
deeds, [the Congregation] is the fee simple owner of the real estate in
Wabash County. None of the three (3) sets of deeds provide for any trust
interest in [the Denomination]. All of [the Congregation’s] assets, real and
personal, were created or acquired by local church members. The assets are
of substantial value.

10. [The Congregation’s] financial accounts are on deposit . . . , and
each is titled in the name of [the Congregation] only. In the history of [the
Congregation], none of the accounts has ever been registered in the name of
[the Denomination], nor ha[s] title to the accounts ever reflected that [the
Denomination] ha[s] an interest in the accounts, trust or otherwise.

11. [The Denomination] has never been listed as a named insured on the
real estate (or property) owned by [the Congregation] and has never had
any liability for any of [the Congregation’s] debts.

12. This entire controversy could have been avoided had [the
Denomination] simply made reasonable inquiry into the public documents
and records and ensured that [the Congregation’s] deed(s) contained trust
language or that amended deed(s) containing such trust language were
prepared and recorded. Then the intent of the parties would not be subject
to dispute. That did not occur.

***

3. [The Denomination] has failed to establish by the required burden of
proof that a trust, of whatever nature and from whatever source, was ever
created in favor of [the Denomination] as to [the Congregation’s] property,
real or personal. There is simply no credible evidence that [the
Congregation], at any time, intended to place [its] property in trust for the
use and benefit of [the Denomination]. . . .

Appellant’s App. at 8, 10-12 (emphasis added). This appeal ensued.

9
 DISCUSSION AND DECISION

Express Trusts

The Denomination first contends that the trial court erred when it found that the

2002 Constitution did not create an express trust. “A trust is a fiduciary relationship

between a person who, as trustee, holds title to property and another person for whom, as

beneficiary, the title is held.” Ind. Code § 30-4-1-1(a) (2014). “A trust in either real or

personal property is enforceable only if there is written evidence of the terms of the trust

bearing the signature of the settlor or the settlor’s authorized agent.” I.C. § 30-4-2-1(a).

“[N]o formal language is required to create a trust,” I.C. § 30-4-2-1(b), but as our

supreme court stated in Presbytery of Ohio Valley, Inc. v. OPC, Inc., 973 N.E.2d 1099,

1108-09 (Ind. 2012) (citations and quotations omitted; emphasis supplied):

[a]n express trust must be evidenced by a writing signed by the owner of
the property (i.e., the settlor). The burden of proof rests on the party
seeking to impose the trust. Certain terms are essential to the creation of a
trust and must be sufficiently definite and ascertained with reasonable
certainty from the writing(s)[;] otherwise the trust must fail: (1) the trust
property; (2) the settlor; (3) the identity of the trustee; (4) the identity of the
beneficiary; and (5) the purpose of the trust. These terms may be set forth
in multiple writings so long as they are sufficiently referred to and
connected with the signed writing such that they may be read as a single
transaction, provided that there is a clear and unequivocal demonstration of
the settlor’s intent to create a trust. Such heightened proof is necessary to
protect the sanctity of property ownership against trust claims not intended
by the settlor (i.e., the owner).

When a dispute arises in the context of church property, Indiana applies the

neutral-principals-of-law approach because it “permits greater fairness, consistency, and

equality of application to all church property disputes regardless of the structure of the

10
denominational church organization.” Presbytery, 973 N.E.2d at 1107. As our supreme

court explained in Presbytery:

The neutral-principles approach is “completely secular in operation,
and yet flexible enough to accommodate all forms of religious organization
and polity. The method relies exclusively on objective, well-established
concepts of trust and property law familiar to lawyers and judges.”

***
In the application of this approach, Indiana courts may consider
Indiana statutes, the language of the deeds and conveyances, the local
church charters or articles of incorporation, the constitution of the
denominational church organization, and any other relevant and admissible
evidence provided they “scrutinize these documents in purely secular
terms” consistent with Indiana law. Indiana courts should apply neutral
principles of Indiana trust and property law without regard to the
organizational structure of the religious denomination, whether interpreting
the language of a deed or conveyance or determining whether there exists
an express or implied (constructive or resulting) trust.

Id. at 1107-08 (quoting Jones v. Wolf, 443 U.S. 595, 603-04 (1979)) (some citations and

quotation marks omitted; emphasis supplied).

We also note that, pursuant to the parties’ request, the trial court entered findings

and conclusions, and

[w]hen a party has requested specific findings of fact and conclusions
thereon pursuant to Ind. Trial Rule 52(A), the reviewing court may affirm
the judgment on any legal theory supported by the findings. In addition,
before affirming on a legal theory supported by the findings but not
espoused by the trial court, the appellate court should be confident that its
affirmance is consistent with all of the trial court's findings of fact and the
inferences drawn from the findings. In reviewing the judgment, we must
first determine whether the evidence supports the findings and second,
whether the findings support the judgment. The judgment will be reversed
only when clearly erroneous. Findings of fact are clearly erroneous when
the record lacks any evidence or reasonable inferences from the evidence to
support them. To determine whether the findings or judgment are clearly
erroneous, we consider only the evidence favorable to the judgment and all
reasonable inferences flowing therefrom, and we will not reweigh the
evidence or assess witness credibility.
11
Capps v. Abbott, 897 N.E.2d 984, 986 (Ind. Ct. App. 2008).

The Denomination contends that, when the Congregation incorporated suggested

language from the Manual into its 2002 Constitution, the Congregation “demonstrated a

clear intent” to create a trust. Appellant’s Br. at 8. Further, it reasons, the specific

incorporated language did not include a reservation of a right to revoke, and, therefore,

under Indiana law as it existed in 2002, the purported trust was irrevocable. 6 Id. The

Denomination then concludes that the revisions reflected in the Congregation’s 2010

Constitution, as a matter of law, were an ineffective attempt to remove any irrevocable

trust language from the Constitution. Thus, it asserts, the trial court’s judgment is clearly

erroneous. We disagree.

Nothing in the language cited by the Denomination evinces a trust relationship.

This holding is supported by both the deeds, which did not contain the restrictive

covenant or trust language, and the Congregation’s 2002 and 2010 Constitutions. Indeed,

there is no indication from the 2002 Constitution that the Congregation held its property

for the benefit of any entity other than itself. Instead, as the trial court found, the

relationship between the Congregation and the Denomination involved mutual benefits,

none of which were specific to the Congregation’s land. And these cited benefits are no

different from those reciprocally flowing in a standard denomination-congregation

relationship. In other words, “the relevant language” does not implicate a fiduciary

relationship and, therefore, “is not a clear and unequivocal statement of [the

6
In 2002, Indiana law provided that one must expressly reserve the right to revoke or modify a
trust; otherwise, the trust would be construed as irrevocable. See I.C. § 30-4-3-1 cmt. (a) (2002) (repealed
2005). But a court may treat “an unrestricted power to modify” a trust “as a power of revocation.”
I.C. § 30-4-3-1(b) (repealed 2005).
12
congregation’s] intent to create a[n] [express] trust.” Presbytery, 973 N.E.2d at 1112

(quotations omitted). Moreover, when the Congregation chose to incorporate language

from Chapter IV of the Manual, it conspicuously omitted the Manual’s trust-creating

language from Chapter VI. Further, the trial court’s judgment is also supported by the

nonbinding nature of both the Denomination’s Manual and the Congregation’s

Constitutional Guidelines and Bylaws.

We are also mindful that Indiana law directs us to “look at the [purported] trust as

a whole[,] and [we] cannot take individual clauses out of context.” Fulp v. Gilliland, 998

N.E.2d 204, 207 (Ind. 2013) (quotations omitted). Thus, even if the evidence showed

that the Congregation intended to create a trust in its 2002 Constitution, that document

expressly reserved an unqualified right to amend its provisions, which was a “power to

modify” equivalent to a “power of revocation” with respect to any purported trust. I.C. §

30-4-3-1(b) (repealed 2005). Consequently, we also hold that the 2010 Constitution

revoked the purported 2002 trust.7

Implied Trust

The Denomination argues in the alternative that, absent an express trust, in light of

the parties’ relationship, the trial court should have imposed an implied trust as a matter

of law. As our supreme court explained in Presbytery:

Implied trusts are creatures of equity, imposed to do justice, and, in
Indiana, they arise in two forms: constructive trusts and resulting trusts.
Constructive trusts are generally imposed when legal title is gained through
wrongful means (e.g., fraud, duress, undue influence, theft, etc.). We need
not consider the existence of a constructive trust here because no claim is

7
We also note that, insofar as the Denomination asserts that Indiana law precluded the 2010
amendment of the 2002 Constitution, “[i]f the rules of law and the terms of the trust conflict, the terms of
the trust shall control . . . .” I.C. § 30-4-1-3.
13
 made that [Congregation] acquired its property through wrongful means.
As such, we need only consider the possibility of a resulting trust, which is
generally imposed in three circumstances: (1) where an express trust fails
in whole or in part; (2) where an express trust is fully performed without
exhausting the trust estate; (3) where property is purchased and the
purchase price is paid by one person and at his direction the vendor
conveys the property to another person. It is only the first of these
circumstances, the failure of an express trust, that is implicated by the facts
of this case. Such a resulting trust is created by operation of law to give
effect to the parties intentions when they have otherwise failed to satisfy the
statutory requirements for creating an express trust. And, as in the case of
express trusts, the party seeking to impose the trust bears the burden of
proof. As with express trusts, the settlor’s intent is crucial to the resulting
trust analysis.

973 N.E.2d at 1109.

Here, the Denomination makes three arguments: (1) the court’s finding that no

credible evidence supports the assertion that the Congregation intended to place its

property in trust is unsupported by the record; (2) that finding conflicts with the court’s

other findings and conclusions that the parties could have avoided litigation altogether;

and (3) irrespective, the court’s findings are erroneous as a matter of law.

The Denomination’s first argument is a request for us to reweigh the evidence and

judge the credibility of witnesses. But this is not our province; the trial court weighed the

evidence—including the language of the deeds, the language of the constitutions, and

witness testimony—and found that “[t]here is simply no credible evidence that [the

Congregation], at any time, intended to place [its] property in trust for the use and benefit

of [the Denomination].” Appellant’s App. at 12. For the reasons stated in the express-

trust section of this opinion, this was not clearly erroneous.

14
 Second, the court’s findings and conclusions do not conflict with one another.

The two findings and conclusions8 at issue follow:

12. This entire controversy could have been avoided had [the
Denomination] simply made reasonable inquiry into the public documents
and records and ensured that [the Congregation’s] deed(s) contained trust
language or that amended deed(s) containing such trust language were
prepared and recorded. Then the intent of the parties would not be subject
to dispute. That did not occur.

***

3. [The Denomination] has failed to establish by the required burden of
proof that a trust, of whatever nature and from whatever source, was ever
created in favor of [the Denomination] as to [the Congregation’s] property,
real or personal. There is simply no credible evidence that [the
Congregation], at any time, intended to place their property in trust for the
use and benefit of [the Denomination]. . . .

Appellant’s App. at 11-12. Finding 12 states that no evidence of intent exists, and

Conclusion 3 avers that the parties could have avoided Finding 12 by including trust

language in the property deeds, which would have made the parties’ intent clear—in

other words, evidence of intent would have existed—and annulled the need for litigation.

Thus, we are not persuaded that Finding 12 and Conclusion 3 are inconsistent with one

another.

Finally, the Denomination relies on Presbytery and cases from other jurisdictions9

to argue that the trial court’s findings were erroneous as a matter of law. The

Denomination argues that, because of the nature and duration of the parties’ relationship

with one another, the trial court should have imposed a resulting trust in its favor. In

8
The Denomination argues that Conclusion 3 is actually a finding of fact, but the trial court
incorporated all findings of fact as conclusions of law and vice versa.
9
For the reasons stated in this decision, Indiana law is sufficient to address the dispositive issues
in this appeal, and we decline the Denomination’s request for us to apply foreign law here.
15
doing so, the Denomination points to the long relationship between the parties, which

lasted more than sixty years, and to the Manual, which it characterizes as imposing a trust

“requirement.” Appellant’s Br. at 22.

But no part of the Manual imposed a requirement of any sort on the

Denomination’s individual congregations; it provided mere suggestions for local church

constitutions. And the Denomination did not discipline individual congregations for

divergence from its polity. More importantly, Presbytery does not support the

Denomination’s position. That case, a summary judgment opinion, held that there was an

issue of material fact regarding whether the congregation intended to create a trust in

favor of the denomination because “a finder of fact could find conflicting inferences from

the fact that [the congregation] remained a member of [the denomination] for nearly

twenty-five years after insertion of the trust provisions” into the denomination’s Book of

Order, which is approximately equivalent to the Denomination’s Manual here. Id. at

1113. The court stated, “It is possible that inferences . . . may be drawn to support either

of two opposite conclusions: that [the congregation] did or did not intend to create a trust

on its property.” Id.

Here, in contrast, the trier of fact weighed the evidence and inferences, and it

concluded that the Congregation did not intend to create a trust on its property. To

reiterate, the court’s reasoning finds support in the language of the deeds, which do not

contain trust language; in testimony, which labeled the Manual as nonbinding on

individual congregations; and in the language of the 2002 Constitution, which did not

create a fiduciary relationship and which, in any event, was nonbinding and revocable by

16
the Congregation. Therefore, the Denomination has not met its burden; it has not shown

that the trial court’s judgment is clearly erroneous. We affirm the trial court’s judgment

in all respects.

Affirmed.

FRIEDLANDER, J., and MAY, J., concur.

17