Source: http://www.copswiki.org/Common/M1486
Timestamp: 2019-04-21 09:13:49+00:00

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Director of the Employment Development Department appealed from judgments of the Superior court, Sacramento County, Irving H. Perluss, J., which determined that taxpayers were “churches” within meaning of the Unemployment Insurance Code, excluding them from coverage under the unemployment and disability insurance laws. The Court of Appeal, Blease, J., held that taxpayers which, inter alia, engaged in bible study, conducted a nondenominational ministry, and subscribed to a nondenominational Christian Statement of Faith, were “churches” within meaning of the Unemployment Insurance Code.
Douglas X. PATINO, as Director, etc., Defendant and Appellant.
Civ. 19408, Civ. 19409. | July 31, 1981. | Hearing Denied Oct. 14, 1981.
*560 **23 George Deukmejian, Atty. Gen., Edward P. Hollingshead and Derry L. Knight, Deputy Attys. Gen., for defendant and appellant. Turner & Sullivan, Richard K. Turner, Sacramento, for plaintiffs and respondents.
The Director of the Employment Development Department of the State of California (director) appeals from judgments1 which determined that taxpayers, Young Life Campaign (an evangelical Christian organization primarily concerned with adolescents) and Mount Hermon Association, Inc. (which operates a camp in the Santa Cruz mountains to which families and groups subscribing to its nondenominational Christian **24 “Statement of Faith” go for religious conferences and retreats), were “church(es)” within the meaning of section 634.5, subdivision (a), of the Unemployment Insurance Code, which excludes from coverage under the unemployment and disability insurance laws services performed for “ (1) a church or convention or association of churches, or (2) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches.”2 The director contends that the trial court erred in interpreting the term “church” to embrace taxpayers because they “perform( ) functions identical to traditional churches in purpose, Bible, creed, doctrine, and worship.” He urges us to adopt a narrower definition. We affirm the judgments.
A major element of Young Life’s activities in pursuit of its purpose is a weekly “club meeting.” It is usually conducted at a private home by a member of the Young Life staff (many of whom are ministers ordained by denominational churches), or by a volunteer leader. “Club meetings” usually begin with several songs, followed by a skit or game or other “fun time,” then perhaps some announcements or a participant’s “shar(ing of) his own faith,” and then a “club talk” or sermon by the leader, followed by more songs. The meetings are held in the evening and last about an hour.
There are also weekly “campaigner” meetings, often in a private home, at which adolescents who have progressed to the point of “accept(ing) the Christian faith” engage in Bible study, enjoy the fellowship of others sharing their commitment and discuss life and the Christian faith. In addition, **25 Young Life conducts many weekend and week-long excursions at its various camps, at which religious programs and personal counseling are combined with recreational activities. Young Life also operates five facilities caring for runaways.
Young Life subscribes to a nondenominational Christian Statement of Faith, to which all but perhaps 100 of Young Life’s total staff of 650, including all of its management and ministerial staff, as well as its board of trustees, must adhere. The board includes several pastors of denominational churches as well as laymen. Young Life does not ordain *563 ministers, but its executive director, all of its 5 divisional and 22 regional directors and a majority of its 350 area directors (local ministerial staff) were ordained, either by a denominational church or by an ordaining body such as the Evangelical Christian Alliance. Its field staff undergo a six-month graduate course at Young Life’s Institute of Youth Ministries at the Fuller Theological Seminary in Pasadena, unless they are graduates of a seminary. There are another 200 to 250 direct ministry staff. In addition, about 5,000 college students and adult volunteers, some of them ordained ministers, supplement Young Life’s field staff. These volunteers are trained by the local area directors and must subscribe to the Young Life Statement of Faith. From time to time the ordained ministers administer sacraments, such as baptism, marriage and the Eucharist.
About 60,000 adolescents participate in Young Life activities each week, some 80 percent of whom are not affiliated with a denominational church. Young Life works closely with denominational churches and encourages its participants to develop ties to them, partly because its ministry is primarily directed to adolescents (though it has recently expanded its ministry to adults). It does not seek to “convert” adolescents to the Young Life “church” or to “compete” with more traditional churches, but rather seeks to lead them to accept the Christian faith. It does not ask them, specifically, to subscribe to the Young Life Statement of Faith, but it conveys the essential content of the statement in “club talks” and counseling with adolescents interested in “commit(ting)” themselves to Christ. Young Life did not hold itself out as a church in 1972 and, in fact, in one brochure it affirmatively stated that it was not a church, because the adolescents whom it sought to reach reacted negatively to traditional churches.
Taxpayer Mount Hermon Association, Inc. (“Mount Hermon”), is a nonprofit corporation, founded in 1906 and incorporated in 1929, which operates a complex of nondenominational Christian conference centers in a forest setting in the Santa Cruz mountains. Its purpose is to propagate the Christian gospel and nurture the faith of those who have accepted it. According to its articles of incorporation, its purpose is: “ ‘(1) To organize, promote, maintain and control the Mount Hermon Summer Assembly and other meetings and conventions for biblical, missionary, evangelistic, and educational purposes; (P) (2) To organize, promote, maintain and control Missionary and evangelistic enterprises, *564 schools, colleges, hospitals, and other Christian agencies of similar character for the public spiritual and moral good.” Mount Hermon considers its rustic setting and the fact that people usually stay there for several days at a time to be useful in communicating its Christian message.
Mount Hermon operates three contiguous camps (Redwood Camp, Ponderosa Lodge and Mount Hermon Center), whose programs are directed, respectively, toward elementary and junior high school students, high school and college students, and adults. The facilities are open year-round, but are used most intensively through the summer. Programs include conferences for pastors, families and single adults, and Bible study. A typical summer family program lasts a week and involves morning services and religious discussion for adults and child-care and Sunday school classes for children, afternoon recreational activities, and an evening service. Activities at Redwood Camp **26 and Ponderosa Lodge combine recreation and religious discussions and personal counseling, moderated by counselors, most of whom are not ordained, though many are seminary students.
Sunday worship services are held year-round, usually by Mount Hermon staff members. During the summer these “typical Protestant” services are heavily attended, with 1,000 to 2,000 participants each week; during the winter the services may be attended by as few as 15 to 20 people and are sometimes permitted to be conducted by the particular conference group. Nevertheless, a number of people who live nearby attend services at Mount Hermon substantially every Sunday, some tithe to it and many people come every summer to Mount Hermon. Ministers on Mount Hermon’s staff dispense the sacraments of baptism, communion and matrimony, though Mount Hermon does not promulgate rigid forms for their dispensation, leaving that to the ministers who have varying denominational backgrounds. The ministers visit hospitals and make home visits. Mount Hermon also operates a Sunday school on the grounds for all ages.
All of Mount Hermon’s 35 staff members (which includes six or seven ministers, as well as cooks, housekeepers and administrative and clerical personnel) and its board of trustees must subscribe to a nondenominational Christian Statement of Faith. In order to use Mount Hermon’s facilities, a group must conform to the Statement of Faith, though individuals need not, since to require such adherence would defeat Mount Hermon’s evangelistic purposes. Mount Hermon *565 considers itself “interdenominational,” in that it is “concerned about the whole denominational spectrum.” It therefore declines to become involved in denominational disputes or to “convert” people from traditional churches. It numbers among its “congregation” everyone who has a “continuing interest” in Mount Hermon.
Both cases were tried, de novo, in the Superior Court of Sacramento County, as was authorized by former Unemployment Insurance Code section 1182 (now s 1241). The court ruled that taxpayers are “church(es)” within the meaning of the exemption. The director appealed.
Definitional problems lie at the core of church-state issues. As to tax (and other) matters, they are of ancient respectability. “The Bible relates that when the Pharisees asked Jesus whether it was permissible to pay taxes to Caesar, Jesus replied that one should ‘Render unto Caesar the things that are Caesar’s and unto God the things that are God’s.’ ” (Schwarz, Limiting Religious Tax Exemptions: When Should the Church Render unto Caeser? (1976) 29 U.Fla.L.Rev. 50.) In view of Christ’s tenuous relations with the Pharisees, he wisely left undefined things Caesar and things God.
A not dissimilar judicial prudence counsels against a premature and preemptive definition of “church,” for purposes of exemption from the unemployment insurance tax laws.
*566 This case touches upon the definitional core in its modern, constitutional setting. It tenders the meaning of things “church” in the unemployment insurance tax law, a term which Congress, in studied silence, left undefined.
**27 The director urges that the “church” exemption be narrowly defined to effectuate the purposes of the unemployment insurance laws. (Cf. Cal. Emp. Com. v. Butte County etc. Assn. (1944) 25 Cal.2d 624, 630-631, 154 P.2d 892 (agricultural labor exemption).) He suggests that “church” “means an assembly of persons of the same faith who worship together under standards, rites and doctrines established by the organization.” Young Life and Mount Hermon would have us put meaning into “church” by use of the “functional” criteria, applied by the trial court in the light of First Amendment concerns. We take the latter direction. This course is doubtless not comforting to the tax man, but it serves to steer clear of constitutional obstacles.
As the United States Supreme Court has (again) recently said in construing (on another point) the exemption here at issue: “A statute, of course, is to be construed, if such a construction is fairly possible, to avoid raising doubts of its constitutionality.” (St. Martin Evangelical Lutheran Church et al. v. South Dakota (May 26, 1981) — U.S. —, —, 101 S.Ct. 2142, 2147, 68 L.Ed.2d 612, 619; see also United States v. Seeger (1965) 380 U.S. 163, 85 S.Ct. 850, 13 L.Ed.2d 733; NLRB v. Catholic Bishop of Chicago (1979) 440 U.S. 490, 99 S.Ct. 1313, 59 L.Ed.2d 533). We take that advice.
The board’s decisions relied on the federal district court decision in De La Salle Institute v. United States (N.D. Cal. 1961) 195 F.Supp. 891.9 The issue in that case was **29 whether a winery operated by the *569 Christian Brothers, a Roman Catholic religious order, was a “church” within the meaning of the term as used in the Unrelated Business Income Tax Law (former 26 U.S.C. s 511(a)(2) (A): Revenue Act of 1950, ch. 994, s 422, 64 Stat. 947; repealed, Pub.L.No. 91-172, s 121, subd. (a)(1) (1969)), the first significant provision in which Congress used the phrase “church (or) convention or association of churches” (Whelan, Church in the Internal Revenue Code; The Definitional Problems (1977) 45 Ford.L.Rev. 885, 901). The court decided “the winery (was) not a church,” concluding that any religious activities connected therewith were “incidental” to its “principal (winemaking) activities”.
The trial court’s decision looked to the same “functions” adopted in De La Salle and followed by the board but refused to make them collectively exclusive. It did not accept the board’s narrow view of what is embraced by the “common understanding” of “church,” which failed to accord criterial recognition to the more unconventional aspects of taxpayers’ ministries i. e., Young Life’s concentration on youth and nondenominational character and Mount Hermon’s recreational activities.
*571 The director approaches the problem of definition with procrustean enthusiasm. To justify a “traditional” view of “church,” he suggests a definition establishing characteristics deemed collectively essential to the common understanding of the term: “ ‘(C)hurch’ for purposes of the exemption is an entity (1) organized primarily for religious worship (2) by an assembly of persons (3) of the same faith (4) who knowingly and voluntarily worship together as members (5) under and in compliance with standards, religious rites, and doctrines established by the assembly or entity for such worship. (6) The organization must have sufficiently definable organizational structure to be considered an employing unit, (7) must not advocate membership and active participation in other churches while actively participating in its activities, and, (8) its practices and doctrines must be peculiar to itself and unique to the participating assembly.” Director most strenuously contends that respondents’ nondenominational characters prevent them from being considered “church(es)”. Director points out that neither Young Life nor Mount Hermon has or claims to have “peculiar” and “unique” religious rites, practices and doctrines, and that both encourage participation in traditional churches.
The Vic Coburn case is easily distinguishable from the one before us. The Oregon court relied upon a state administrative regulation defining “church” for unemployment tax purposes as “a particular religious group organized as a congregation and conducting regular worship services.” (Or.Admin.Reg. 471-31-090(1)(a).)14 No similar regulation has been promulgated in California. Moreover, in both the Young Life and Mount Hermon cases, there is evidence that their members have a continuing commitment to and interest in the organizations.
Since there is obvious danger in any attempt to prescribe the liturgy or incidents of worship of a “church,” we conclude that the use of camping activities to “provide an atmosphere to promote the religious experience” which the organization seeks to foster is not *574 inconsistent with “church” status. The same reasoning applies to Young Life’s recreational activities.
Nevertheless, since “church(es)” are exempted from unemployment insurance taxes, determinations whether an organization is a “church” will necessarily be made, despite the difficulties of interpretation. The IRS has adopted a useful approach to such determinations, an approach which is at odds with director’s preemptive definition. Rather than defining “church,” the IRS admits its inability to formulate a definition, and applies criteria derived from the forms and practices observed in recognized churches,15 without giving controlling weight to any. (Kurtz, Difficult Definitional Problems in Tax Administration: Religion and *575 Race (1978) 23 Cath.Law. 301, 304 (from an address delivered by Practicing Law Institute Seventh Biennial Conference, Tax Planning for Foundations, Tax-Exempt Status and Charitable Contribution, New York City, Jan. 9, 1978).) At the same time, in implementing the Congressional policy of deferential treatment of “church(es),” the IRS recognizes that “few, **33 if any, religious organizations conventional or unconventional satisfy all of these criteria,”16 and it is sensitive to concerns that a stringent application of the criteria may discourage or even destroy new religions or new churches.17 (See Kurtz, supra, 23 Cath. Law. at pp. 304-305.) While this approach has all the uniformity of a Whitman’s Sampler, it does not embitter the constitutional palate.
PARAS, Acting P. J., and REYNOSO, J., concur.
1 The cases are consolidated for resolution on appeal.
2 Prior to its repeal in 1971 and its supersession by section 634.5, Unemployment Insurance Code section 634 exempted “service performed in the employ of a corporation, community chest, fund or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes ” This comported with the exemption recognized under the Federal Unemployment Tax Act (FUTA). (Former 26 U.S.C. s 3306(c)(8), as amended Pub.L. No. 86-778, s 533, 74 Stat. 944 (1960).) In 1970 Congress narrowed the exemption, as applied to the states, to bring most nonprofit employers within the coverage of their laws. (26 U.S.C. s 3309(b) (1), Pub.L. No. 91-373, 84 Stat. 695 (1970).) In response to this legislation, Unemployment Insurance Code section 634.5 was enacted in language substantially identical to the federal law. (Stats. 1971, ch. 1107, s 21, eff. Oct. 18, 1971; repealed and reenacted (without change in the provision in question), Stats. 1978, ch. 2, ss 36, 36.5, operative July 1, 1978.) The federal scheme contains a 90 per cent federal tax credit incentive to induce states to maintain their unemployment insurance programs in conformity with FUTA. (26 U.S.C. ss 3302(c)(1), 3303, 3304(a).) In California, Unemployment Insurance Code section 101 renders inoperative any contribution or payment provision of the code which falls out of conformity with the “national plan” because of a change in federal law.
4 The problem arises in a significant way because since Walz v. Tax Commission (1970) 397 U.S. 664, 90 S.Ct. 1409, 25 L.Ed.2d 697, the “wall of separation between church and state” (Everson v. Board of Education (1947) 330 U.S. 1, 16, 67 S.Ct. 504, 512, 91 L.Ed. 711), if there ever was one (see Tribe, American Constitutional Law (1978) Rights of Religious Autonomy, s 14-4, pp. 819-823), is now more in the nature of a semi-permeable membrane which filters out that which is excessive governmental entanglement with religion.
6 Understandably, none of the parties challenges the constitutionality of benefitting “churches” by exempting them from compulsory taxation and we therefore do not reach the issue. It is a subtle question, though, whether Congress may constitutionally accord an exemption to some, but not all, religious organizations, distinguishing among them based on their “church”-ness or affiliation with a “church or convention or association of churches.” (See Christian School Assn. v. Com. Dept. of Labor, supra, 423 A.2d at pp. 1346-1347 (invalidating requirement that religious schools be “operated, supervised, controlled or principally supported by a church or convention or association of churches” but upholding exemption based on remaining portion which refers to “an organization which is operated primarily for religious purposes”); see also Whelan, Church in the Internal Revenue Code; The Definitional Problems (1977) 45 Ford.L.Rev. 885, 923-928; Worthing, “Religion” and “Religious Institutions” Under the First Amendment (1980) 7 Pepperdine L.Rev. 313, 344-345, 350-353.) Because the parties have not addressed the issue and because our conclusion, infra, that taxpayers are “church(es)” within the meaning of the statutory exemption means that they are not among the class of organizations arguably unconstitutionally excluded, we have no occasion to reach this issue.
13 Webster’s Third New International Dictionary (1971) defines “sect” as an “organized ecclesiastical body” (p. 2052) and “denomination” as “a religious group or community of believers called by the same name” (p. 602). Even if we accept the premise, on the sparse evidence cited by the tax court, that Congress intended the term “church” to be synonymous with “sect” or “denomination,” nothing in the preceding definitions excludes an assembly of believers in “universal Christian beliefs” (Chapman v. Commissioner of Internal Revenue (1967) 48 T.C. 358, 364) who are “interdenominational” in the sense that they seek to transcend established denominations and their doctrinal disputes.
14 Young Life is exempt as a “church” in Oregon.
End of Document © 2014 Thomson Reuters. No claim to original U.S. Government Works.

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