Tag Archives: Fletcher v. Peck

Incorporation of churches in the colonies and the new nation

Jerald Finney
Copyright © December 10, 2012

Note. This is a modified version of Section VI, Chapter 3 of God Betrayed: Separation of Church and State/The Biblical Principles and the American Application.

   “The Constitution did not separate church and state [on the state level], but it did endorse a conception of society that made separation inevitable. The protection of private rights from public action required the delineation of private and public activities. Once law separated public and private realms, churches could not [according to the way the law developed] continue their historic roles of public service. [States that relied on the political process to effectuate separation of church and state, an essentially state matter, encountered tremendous difficulty in doing so.] Politics could not determine the form that educational and welfare institutions would take in the early republic because no political consensus existed. The law could—and when state and federal courts turned to consider this issue, their decisions were informed by the same legal doctrine. Ultimately the Supreme Court did impose a model of privatization on all of the states, but its effect was more to redirect political debate than to resolve political tension” (Mark Douglas McGarvie, One Nation Under Law: America’s Early National Struggles to Separate Church and State (DeKalb, Illinois: Northern Illinois University Press, 2005), p. 13).

Incorporation of churches became an issue for the Baptists in the colonies which carried over to the states in the new nation. In the 1700s, various denominations, including Baptists, in the colony of Rhode Island “took advantage of the absence of religious establishment by incorporating to address a wide range of church goals” (Ibid., p. 98).

“Pennsylvania’s laws on religious corporations demonstrate the changing attitudes toward churches and the transformation in the tenets underlying law from the colonial era to the early republic…. In the early republic, churches were redefined, under law, as private organizations serving private and not public goals” (Ibid., pp. 98-99)  In the colonial era Pennsylvania and New York had a longer history of incorporating churches than did the other colonies. The New York legislature passed a law allowing all Protestant sects to incorporate in the 1760s. The New York Constitution of 1777 provided for “free exercise and enjoyment of religious profession and worship, without discrimination or preference” (Ibid., pp. 89, 109-110).

“[T]he developing laws of private property, enforced through contracts, were given early expression to redefine the roles of churches in American society” in a 1784 New York case involving Trinity Church who had received land in a letter from Queen Anne in 1714. The case held that “contracts made with the Crown or its agent were valid, even when made during war when the king’s authority was denied by the colonists in the midst of revolution.” “After the judicial recognition of contract rights as superior to legislative enactment, the legislature had little choice but to limit its disestablishment initiatives to comply with the prevailing contract-law doctrine.” As a result, new law was passed allowing all sects to incorporate and hold property—“the law created a new system of general incorporation for all religious bodies to follow.” All churches in the state incorporated under the new law (Ibid., pp. 112-113).

At the same time that laws providing for incorporation of churches were being made, the churches were being redefined as private entities, and care of the poor and needy was passing from the church to the state. Prior to disestablishment, taxes collected by the state were transferred to churches for salaries of pastors, building, and charities. With disestablishment, charity went with the money, that is, with the state which could collect taxes, and not with the church. Rather than perceiving churches as helping society address its concerns, churches in the 1790s were recognized as impediments to social progress as public institutions might rationally conceive of it (See, e.g., Ibid., pp. 118-119).

In South Carolina, “[d]isestablishment once more followed and conformed to the legal separation of public and private spheres.” The 1790 constitution of South Carolina guaranteed religious liberty and transformed the church into a private institution “when its power as a public institution became too threatening” (Ibid., p. 132).  After 1790, poor relief, record keeping, and education to a lesser degree passed from church responsibility to government or private citizen responsibility (Ibid., p. 148).

In Massachusetts, Isaac Backus and others were against incorporation of churches, but many Baptist churches did not heed their counsel. The issue arose because of the adoption of Article Three to the constitution of Massachusetts in 1780. Isaac Backus and other Baptists vehemently opposed its adoption. Article Three required that compulsory religious taxes be laid in each parish, as they had always been for the “support the public worship of God,” and for the “support and maintenance of public Protestant teachers of piety, religion and morality.” However, new was the requirement that “these taxes were to be laid upon all sects or for all sects.” “Any Protestant minister, of whatever sect, was guaranteed compulsory tax support and the minister of any sect could, if he received the majority of votes of a parish, become legally established” (William G. McLoughlin, Isaac Backus and the American Piestic Tradition (Boston: Little, Brown and Company, 1967), p. 147).

After adoption of Article Three, certain Baptists refused to pay the religious tax. One, Elijah Balkcom, was jailed and paid the tax under duress. He then sued the accessors for taxing him illegally and contrary to his constitutional right to freedom of conscience. Although the Baptist position prevailed in that case, another case two years later, Cutter v. Frost, reversed the Balkcom decision. The Superior Court in the Cutter case reconstructed Article Three against the intent of the legislators and said that dissenters had to file a certificate in order to have their taxes paid to their own church and that “only religious societies incorporated by law were under any circumstances entitled to legal recognition.” “To be incorporated, each dissenting congregation would have to petition the legislature to obtain a charter.” Hence the Superior Court closed the door to the liberty which Backus had proclaimed could not be shut after the Balkcom case. The Cutter decision “denied any way for the Baptists to avoid supporting the parish churches except by petitioning the legislature for incorporation.” Petitioning the government for incorporation “was an even more flagrant infringement of conscience than giving in certificates; it acknowledged the power of the State over the Church—the power to incorporate some and not others according to its own standards” (Ibid., pp. 158-163).

Another alternative, which was opposed by Backus, was proposed and tried—a taxpayer could file a certificate, pay the tax and, should the parish treasurer fail to pay the taxes to his own pastor, sue to have his taxes returned on the basis that the tax denied his constitutional right to freedom of conscience. This method was costly and time consuming and had to be done case by case. However, it was used with some degree of success.

Because of Cutter,many Baptist churches chose to incorporate. Hezekiah Smith led the movement of Baptist churches to incorporate in spite of opposition of Isaac Backus and the Warren Association. Many Baptists supported incorporation to comply with the Cutter case so that the state would return taxes paid by Baptists to their parishes, and to make possible contracts between the members of a church and its pastor, which assured a decent salary. Of course, Backus took the biblical position, seeing the relationship between pastor and other church members as spiritual. He believed that incorporation “acknowledged the right of the state to decide which churches could and could not be chartered,” and “gave all persons in the congregation [whether saved or not, thereby ‘allowing the unconverted members to outvote the converted’] the right to vote on building or repairing a meetinghouse as well as paying the minister’s salary” thereby bringing the same conflicts encountered by Congregational parishes. Other reasons for arguing for incorporation was to allow churches to hold property or endowment funds in the name of the church. Backus “pointed out that the law gave the deacons, or any other suitably appointed persons, the power to ‘receive and hold estates or donations which are given for religious purposes, and to manage the same at the direction and for the good of the church or society.’” Some Baptists incorporated, against Backus’ advice, to avoid distraint or imprisonment. The Religious Liberty Act of 1811 reversed the Cutter Case and applied Article Three to all churches whether incorporated or not (Ibid., pp. 220-223).

After the ratification of the Constitution, the United States Supreme Court, headed by Chief Justice John Marshall, relied on the contract clause of Article I Section 10 to delineate public and private actions. “[Most c]hurches adapted to the new legal environment after 1790 by reforming themselves as private voluntary associations assuming a corporate form” (McGarvie, p. 115). The primary case in the Marshall Court decisions is the Dartmouth College case in which the Court used the contract clause to prevent New Hampshire’s legislature from breaking its contract of incorporation and restructuring the organization of a private Christian school (See Ibid., pp. 12, 152-189). Prior to Dartmouth College, “state legislatures consistently repudiated school and university charters in order to redesign educational institutions to serve political ends” (Ibid., p. 165).

Britain chartered the institution in Dartmouth College as The Trustees of Dartmouth College in 1769. Under the charter, the Trustees of Dartmouth College was an independent corporation, not requiring any further “grant, license, or conformation” (17 U.S. (4 Wheat) at 522). The college was supported by both private and state funds. The college fell under the control of orthodox conservatives who wished to emphasize the God in people’s lives and to modify the curricula appropriately. Restrictions on students were increased in 1809, and “students objecting to increased restrictions rioted, becoming drunk, burning outhouses, vandalizing more orthodox students’ rooms, firing guns into the night air, and spreading garbage over the campus environs of their suspected enemies” (McGarvie, p. 167). A public and political debate ensued pitting republican enlightenment ideals against conservative religious beliefs. The establishment of religion was at the time also being hotly debated. “Republican interests focused on the trustees of the college as dangerous ideologues inhibiting the state’s progress” (Ibid., p. 169). A republican governor and republican majority were elected in the 1816 New Hampshire election. One of the first acts of the new government was to restructure Dartmouth College. Two more followed quickly. The acts amended the charter to allow the state government to restructure the charter, rename the corporation to Trustees of Dartmouth University and the name of the school, and increased the number of trustees by nine, from twelve to twenty-one, and named the governor as the source of all new trustees and of future replacements. “Even more significant was that the act created a board of overseers, appointed by the governor to govern the university, to undertake most of the responsibilities formerly held by the trustees. The board was authorized to approve or negate any action of the trustees to appoint and remove the president and officers of the university, to set their salaries, to establish professorships, to create new buildings, and to approve all faculty appointments” (Ibid., p. 171 citing Dartmouth College, pp. 540-544).

The legislature also expanded religious freedom at Dartmouth.

The trustees fought the new laws. The president of Dartmouth, Reverend Francis Brown, outlined the philosophical divide confronting the Court, New Hampshire, and the country:

“That the labours of the philosopher were so impotent, and the preaching of the apostle attended with such energy is not strange. The mind of Plato, after all his attainments, was involved in spiritual darkness. Paul, on the other hand, was irradiated with a light from heaven, strong and clear; and the same divine spirit, who at first imparted it to his own mind, accompanied it as it was conveyed from him to his fellow man…. If instead of placing Paul in contrast with Plato alone, I had supposed all the philosophers of Greece and Rome arrayed on one side against this single apostle, the general result would have been the same” (Ibid., p. 172, citing Brown, “Sermon,” pp. 19-20).

The case went all the way to the Supreme Court which denied the state the right to unilaterally reconstruct the corporation. The main importance of the case is not in the protection of contract rights, or to decide whether a governmental creation was entitled to less protection from the government than other contracts. Those issues had been resolved in prior cases (Fletcher v. Peck, 10 U.S. (6 Cranch) 87 (1810); Terret v. Taylor, 13 U.S. 43 (1815)). The main importance of the case is in the reasoning of the Court which “expressed the Court’s perception of distinct realms of public and private action, and the role of the courts in the protection of private action from public action” (McGarvie, p. 175). According to Marshall, public institutions are not defined by their purposes, but as being part of the “civil government.” He reasoned that trustees and professors have no authority in or power over civil government, that they are not public officers and have no public duties (Dartmouth College, pp. 601-602, 635, 636). Thus, certain corporations are public and others private:

“The Dartmouth College case of 1819 was the crucial national pronouncement that repositioned the churches as private entities distinct from institutions of public governance. The decision expressed a new model of civic organization conceived with the Constitution. However, the legal model considered form rather than substance, imposing a private-public distinction and designating separate forums in which the two worldviews would hold sway. In this resolution, law perpetuated the contest between the two worldviews that form the intellectual basis of American culture” (McGarvie, p. 16).
“Arising out of the disestablishment controversy in New Hampshire, this decision sounded the death knell for New England establishment and confirmed the supremacy of liberal contract-law doctrine in all of the United States. Focusing on the contract clause of the Constitution, the Supreme Court recognized distinct private and public institutions and protected the former from interference by the latter. The old question of religious or church involvement in serving the public good, particularly in public education, was at the heart of the Dartmouth case” (Ibid., p. 152).

The case had other ramifications. Marshall wrote: “Charitable, or public spirited individuals, desirous of making permanent appropriations for charitable or other useful purposes, find it impossible to effect their design securely, and certainly, without an incorporation act” (Dartmouth College, p. 637). Thus, “unincorporated charitable institutions are too vague to receive bequests of decedents, as their intentions cannot be given definite assurance of fulfillment without a corporate charter and an organization that establishes parameters for the future use of funds” (McGarvie, p. 178). The same year, Marshall found that a court of equity could not establish “a vague legacy, the object of which is indefinite” even though the intentions of a testator to leave much of his estate to the Philadelphia Baptist Association were obvious, because “a court could not create a legal entity in order to enable it to receive a bequest consistent with a testator’s intent…. Without incorporation, under which the trustees were legally committed to serve the enunciated purposes, the funds left to an association had no assurance of being used for any specific end” (Ibid., p. 179 commenting upon Chief Justice John Marshall’s opinion in Trustees of the Philadelphia Baptist Association v. Hart’s Executors, 17 U.S. (3 Wheat) 1 (1819).).

  • Also, “After the Dartmouth College decision, government could not rely upon private philanthropic associations to address public perceptions of societal needs. The public-private distinction required states to define their priorities more carefully. No longer could states delegate to private concerns the responsibility for educating young people, caring for the poor, or creating roadways, because states could no longer exercise control over how these private concerns fulfilled their duties. To continue to rely on private concerns after 1819 risked creating educational, welfare, or infrastructure systems significantly at odds with legislative perceptions of the pubic interest.…
  • “In the process, civil society was redefined, separating governmental institutions from private charitable corporations. Religiously affiliated private associations pursuing their own goals remained viable on the institutional periphery of society. Marshall’s language in the Dartmouth College case expressed a major change in attitude from an earlier era: ‘These eleemosynary institutions do not fill the place which would otherwise be occupied by government, but that which would otherwise remain vacant’” (Ibid., p. 178).

Thus, the public and private spheres were divided with private spheres free to pursue their own visions for civil society, and the electorate would determine the public course of action. Protection was provided through the enforcement of contracts, an enlightenment device. The religion of secular humanism, the “religion of the republic,” “reduced Christian doctrine to its lowest common denominator, essentially a code of moral behavior expressed in the golden rule, and positioned God as a benevolent but uninvolved creator of natural laws” (Ibid., p. 188).

Since the Constitution did not recognize God in His exalted position of Supreme Sovereign of the nation and since it created a law modeled after biblical principles, including the biblical principle of separation of church and state, but leavened by some enlightenment principles, the direction of the nation in the long run could only be a much faster downward slide than if the founding documents had been formulated totally upon solid biblical principle under God.

Churches which incorporated under enlightenment principles were no longer truly free since the state created them, was their sovereign as to the earthly matters required by incorporation, and they were bound to comply with the terms of contracts which conflicted with biblical principles.