Decision Number 145

The Constitutionality of Paragraph 1612 (3) of the 1956 Discipline Referring to the Restric- tion on Loans of Pension-Related Funds to Local Churches and Its Applicability to the West Texas Conference Endowment Association

Digest

Paragraph 1612 (3) of the 1956 Discipline is constitutional and is binding on the West Texas Conference Endowment Association charged with the administration of the pension-related funds in its hands.

Statement of Facts

In 1917 the West Texas Annual Conference authorized the creation of the West Texas Conference Endowment Association for the purpose of acquiring and administering funds, the income from which was to be used solely "to assist in maintaining, providing and caring for the Conference Claimants of the West Texas Annual Conference of the Methodist Episcopal Church, South."

Across the years this Corporation has performed the purpose for which it was created, and in doing so has from time made loans to local churches taking deeds of trust on Church property to secure the same. It is asserted that this is perfectly legal under the Texas law and under the charter of the corporation.

In 1956 the General Conference passed an act in conflict with this procedure. Paragraph 1612 of the 1956 Discipline reads as follows:
FINANCIAL POLICY

"The following rules shall apply to financial administration of Annual Conference pension and pension-related permanent funds:

"(1) .... "(2) .... "(3) No local church or organization thereof shall be eligible to obtain a loan in any amount from such funds."

At its regular session, the Southwest Texas Annual Conference passed a resolution requesting the Judicial Council to make a ruling in the nature of a Declaratory Decision determining whether Section (3) of Paragraph 1612 of the 1956 Discipline is constitutional, and if it should be held constitutional then determining whether or not it is binding on the West Texas Conference Endowment Association charged with the administration of the pension related funds in its hands.

Jurisdiction

The Judicial Council, under Paragraph 914 (8), takes jurisdiction in this case.

Analysis and Rationale

The Constitution in Paragraph 8, Article IV, gives the General Conference full legislative power over all matters distinctively connectional. In sub-section (3) of this same paragraph, the General Conference has power "to define and fix the powers and duties of Annual Conferences. . . ."

Paragraph 1612, which is in question, deals with the rules applying to the "financial administration of Annual Conference pension and pension-related permanent funds." This is clearly a connectional matter. It also relates to the powers and duties of an Annual Conference, since this association was organized by the West Texas Annual Conference. It is therefore clearly within the power of the General Conference to enact the legislation under consideration.

The West Texas Conference Endowment Association was formed to assist in maintaining, providing and caring for the Conference Claimants of that Conference by accumulating and administering funds, the income of which were to be used for the above mentioned purpose. These funds are therefore "pension-related permanent funds."

The evidence indicates that some of these funds were loaned to local churches and deeds of trust taken on the Church property to secure the same. While this is asserted to be perfectly legal under the Texas law and under the charter of the Corporation, it is in violation of the provision in Paragraph 1612 (3) of the 1956 Discipline, which provides "no local church or organization thereof shall be eligible to obtain a loan in any amount from such funds."

We hold that Paragraph 1612 (3) is constitutional, and since the West Texas Conference Endowment Association is a Conference-created organization dealing with pension-related permanent funds, the provisions of Paragraph 1612 (3) are binding on the West Texas Conference Endowment Association charged with the administration of the pension-related funds in its hands.

Decision

It is the decision of the Judicial Council that Paragraph 1612 (3) of the Discipline of 1956 is constitutional, and that it is binding on the West Texas Conference Endowment Association charged with the administration of the pension-related funds in its hands.

February 8, 1958

Concur In Part and Dissent In Part

In concurring with the majority of the Council with respect to taking jurisdiction in this case which involves the request of an Annual Conference for a decision on a constitutional question, we recognize that the language of the Discipline, especially that of Paragraph 914 of the 1956 Discipline, is capable of more than one interpretation. This should be clarified by a revision of the legislation by the General Conference.

Since this is a question of the procedure by which a constitutional question reaches the Judicial Council and does not involve the power of the Judicial Council to decide such questions properly before it, and pending such revision and clarification of the procedures by which constitutional questions may reach the Judicial Council, we feel that questions of such importance to the life of the church should have the consideration of the Council. We therefore concur both in taking jurisdiction in this case and in the Decision reached.

Signed L. A. Welliver A. Wesley Pugh J. Russell Throckmorton

Dissenting Opinion

Ivan Lee Holt, Jr., and Donald A. Odell dissent from this Decision for the reasons noted in the Dissenting Opinion to Decision No. 136.