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Decision No. 399

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October 15 1975
In Re: Petition from the Eastern Pennsylvania Annual Conference for a Declaratory Decision on the Interpretation of Paragraph 1435.1 of the 1972 Discipline

Digest of Case

An obligation incurred by a local church under a bail bond agreement would be a current expense and Paragraph 1435.1 of the 1972 Discipline prohibits a local church from placing a mortgage on its real property for such purpose.

Statement of Facts

Concerned citizens in Berks County, Pennsylvania, which is situated within the bounds of the Eastern Pennsylvania Annual Conference of The United Methodist Church, have incorporated a not for profit organization under the name People's Bail Reform Project, Inc. Similar organizations have been incorporated and are operating in a number of other communities. The purpose of the organization is to provide bail bonds for persons who have been arrested and placed in the Berks County Prison while awaiting trial, because they do not have the financial resources to provide or secure bail for themselves. The People's Bail Reform Project gets its resources in two ways. First it seeks donations to provide for its own operational expenses and to establish a contingency fund to be used when bail must be forfeited because the person for whom the organization has provided bail fails to show for court proceedings. Second, the assets necessary for the bail required for the accused persons is provided by persons and organizations who agree to permit their own unencumbered property, real or personal but mostly real, to be used as collateral for the bail bond. When real property is thus used, it is mortgaged as security for the bond and the mortgage continues in effect until the final disposition of the case by the court. On Thursday, June 13, 1974, in the session of the Eastern Pennsylvania Annual Conference, on motion of Mrs. Barto, the following motion was adopted: "Be it resolved that the Eastern Pennsylvania Conference Session at Albright College, June Session 1974, petition the General Conference in a memorial to have The United Methodist Church property restriction removed in order to allow bail collateral using real property. "We move referral of this resolution to the Board of Trustees and the Commission on Christian Social Concerns, for study and recommendation to be brought to the 1975 Annual Conference." At the 1975 session of the conference on Thursday, June 12, Mr. Kenneth Texter reported the action and recommendation of the Conference Board of Trustees relative to the bail bond matter as follows: "The Board of Trustees of the Eastern Pennsylvania Conference as directed by the Barto motion, 1974 Journal, Vol. 2, page 438, has studied and considered the request for 'petitioning the General Conference to have The United Methodist Church property restriction removed in order to allow bail collateral using real property,' and makes the following recommendation: "We recommend petitioning the Judicial Council of The United Methodist Church for an interpretation of Par. 1435.1 in the 1972 Book of Discipline of The United Methodist Church, specifically to determine whether or not bail bond is to be considered as Current Expense of the local Church." The recommendation of the Board of Trustees to petition the Judicial Council was approved by the conference and so comes to the Judicial Council. JURISDICTION The Judicial Council has jurisdiction under Paragraph 1515.2(i) of the 1972 Discipline. ANALYSIS Paragraph 1435.1 of the 1972 Discipline which the Council is asked to interpret reads: "No real property on which a church building or parsonage is located shall be mortgaged to provide for the current (or budget) expense of a local church, nor shall the principal proceeds of a sale of any such property be so used. This provision shall apply alike to unincorporated and incorporated local churches." The petition from the Eastern Pennsylvania Conference asks for an interpretation, "specifically to determine whether or not bail bond is to be considered as Current Expense of the local church." The Council has been furnished with adequate information regarding the structure, purposes and operational procedures of the People's Bail Reform Project, Inc. We are not called upon to make any judgment of the worthiness of its program. We are asked only to give an interpretation of the one sentence in Paragraph 1435.1. By commonly accepted accounting procedures and practices, expenditures of organizations are divided into two general classifications, Capital and Current. Each of these, of course, may have many sub-divisions. The expenditure of funds, if such should be necessary, to pay for a forfeited bail bond could in no way be considered as a Capital expenditure for a local church. It would not have even a remote relation to the Capital Assets of the Church. Such an obligation would be current and payable on demand of the Court as soon as the person bonded failed to appear for a required court procedure relating to his case. The remoteness of the probability that the church will be called upon to make such an expenditure because of the safe-guards provided in the agreement with the People's Bail Reform Project, Inc. in no way alters the nature of the expenditure should the church be required to make it. Not only is the church prohibited from having a mortgage placed on its real property for such purposes but in addition it is prohibited from selling any such property which it may own and using the proceeds for any current expense obligation.

Decision

An obligation incurred by a local church under a bail bond agreement would be a current expense and Paragraph 1435.1 of the 1972 Discipline prohibits a local church from placing a mortgage on its real property for such purpose.

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