Court Opinion

ID: 9738621
Source: CourtListenerOpinion
Date Created: 2023-08-26 19:58:46.337265+00
Date Added: 2024-06-11T07:24:07.365215
License: Public Domain

HENDERSON, Justice
(dissenting).
I respectfully dissent.
The object and purpose of the Wisconsin Evangelical Lutheran Synod, as set forth in its constitution, is to “extend and conserve the true doctrine and practice of the Evangelical Lutheran Church.” One method of achieving this is by “establishing and main*853taining theological seminaries, colleges, academies, schools, and other institutions.” The Synod believes a theological basis exists for its schools. It holds the conviction that training of the youth involves both education and religion and the two are so closely interwoven that they cannot be separated. They operate school programs in accordance with their beliefs.
The Synod has 1105 churches of which 330 operate elementary Christian day schools. St. Martin’s Evangelical Lutheran School, appellee, is one of these 330 elementary schools. The Synod also maintains two types of secondary schools: (1) Area high schools, designed to provide a Christian education to students at this level, and (2) Academies, structured to provide secondary education for individuals planning to enter the preaching or teaching ministry of the Church. Northwestern Lutheran Academy, appellee, is one of four such academies maintained by the Synod. The Synod has both teaching and preaching ministers. These ministers and teachers receive similar religious training; both receive, they sincerely believe, a divine, life-long call to serve their church and God. The Synod considers the female teachers to be part of the ministry and they have responsibilities equal to that of the male teachers. Courses offered at the school and at the academy are taught from a religious viewpoint based upon scriptural convictions held by members of the Wisconsin Evangelical Lutheran Synod. The school is financed 100% by the local congregation. The Synod owns, operates, and finances the academy.
Both the school and the academy are exempt from income taxation under Section 501(c)(3) of the Internal Revenue Code. In the past, they have also been exempted from Federal Unemployment Tax Act (FUTA) coverage by SDCL 61-1-10.4(3), which corresponds to 26 U.S.C. Section 3309(b)(3). SDCL 61-1-10.4, until recently, provided in pertinent part:
61-1-10.4 EXEMPT EMPLOYMENT BY CHURCHES, INSTITUTIONS AND STATES. — [f]or the purposes of Sections 61-1-10.2 and 61-1-10.3 the term “employment” does not apply to service performed:
(1) In the employ of
(a) a church or convention or association of churches, or
(b) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or primarily supported by a church or convention or association of churches (emphasis supplied); or
(2) By a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry or by a member of a religious order in the exercise of duties required by such order; or
(3) In the employ of a school other than a state school which is not an institution of higher education prior to January 1, 1978.
The Unemployment Compensation Amendments Act of 1975, P.L. 94-566, 90 Stat. 2667, removed the subsection (3) exemption. Memoranda were thereupon sent to state employment security agencies by the U.S. Department of Labor, directing that all “church-related nonprofit elementary and secondary schools” be required to participate in the program. I am not bound by the interpretation of a bureaucrat in a government agency in Washington, D.C.
At a hearing conducted by the Field Service of the South Dakota Department of Labor, Unemployment Insurance Division, it was held that both schools were employers subject to S.D. unemployment insurance laws. Neither am I bound by a state employee’s interpretation of congressional action. That determination was appealed and a hearing was held on July 19, 1978, before a Labor Department appeals referee. In his decision, entered September 15, 1978, the referee affirmed the initial determination that the schools were employers subject to coverage. To put it another way, each echelon of bureaucracy within the Department of Labor upheld itself. The circuit court, on appeal, reversed the referee upon the basis that the decision was affected by error of law in a misapplication of law and clearly erroneous in light of the entire evi-*854deuce in the record. I would affirm the circuit court.
Counsel for appellees contend that they are exempt under SDCL 61-1-10.4 because of their relationship to a church. The state maintains that the repeal of the subsection (3) exemption for non-public schools was aimed at church schools as well as secular schools. The appeals referee concluded that a “church,” as used in the statute, was synonymous with a “house of worship” rather than an organization of worshippers. This interpretation is most untenable when noting the context in which “church” is used. SDCL 61-l-10.4(l)(a) speaks of services performed in the employ of a church. If the term “church” in isolation is ambiguous, the context of this statute absolutely forecloses equation with a physical plant. Clear error was committed when the appeals referee defined the term in such a manner as to make the statute absurd and ineffectual under any circumstance. When subsection (3), relating to private school coverage was repealed, Congress had a perfect opportunity to modify or remove the church-related exclusions. That was not done. The fact that the definition of church embodies an organization, rather than an edifice, strongly indicates that SDCL 61-1 — 10.4(1) exemptions remain valid and useful. In 1954, the question of defining the' term “church” arose before the U.S. Senate. The Senate Finance Committee in its report observed:
Your committee understands that ‘church’ to some denominations includes religious orders as well as other organizations which as integral parts of the church are engaged in carrying out the functions of the church whether as separate corporations or otherwise. It is believed the term church should be ail inclusive. (Senate Report No. 1622, 83rd Congress, 2nd Session, page 30) (emphasis added)
In 1955, the staff of the Joint Conference Committee published its explanation of the Internal Revenue Code of 1954, entitled, “Summary of the Provisions of the Internal Revenue Code of 1954 (H.R. 8300) as Agreed to by the Conferees.” On page 19 the staff explained:
The term church is intended to include religious orders as well as other organizations which, as integral parts of the church, are engaged in carrying out the functions of the church, whether as separate corporations or otherwise.
With respect to FUTA, the legislative history gives no support whatever to a narrower definition of the term “church” other than being all inclusive and including integral parts of the church, such as the parochial school. Congress, when passing FUTA amendments, clearly understood its interpretation of the word “church.”
The question thus becomes whether either or both of the schools fall within the subsection (1) exemptions. St. Martin’s Evangelical Church School is not a separate entity of St. Martin’s Evangelical Church. Appellants are attempting to cleave the school from the church and this cannot be done. The appeals referee found that while the school was state certified the school was supervised by a board of education elected from and by the local congregation. South Dakota requires accreditation of any school serving children under the age of sixteen in lieu of attending public schools. Inasmuch as religious schools must be state certified, this state requirement should not be the basis for labeling them strictly educational. Finance and supervision provide the critical nexus between church and school, which places the latter squarely within the SDCL 61 — 1—10.4(l)(b) exemption for services performed in the employ of an organization. The school is operated primarily for religious purposes and is operated, supervised, controlled or principally supported by the church. This is the heart of my dissent. The congregation of St. Martin’s Church supports public schools, located within a reasonable proximity, through the payment of taxes; the only rational reason that it would bear the additional burden of operating and financing a private school would be for religious purposes. A clear error was committed by the appeals referee in concluding that the primary purpose of the school was not religious.
*855Northwestern Lutheran Academy’s teaching faculty comes 50% from the teaching ministry and 50% from the preaching ministry. Of the students at the academy, 46% go on to become teachers or pastors. The academy’s remaining 54% nevertheless receive courses of instruction with religious overtones. Again, it must be recognized that public secondary schools exist in reasonable proximity and are supported by taxes paid by members of the Synod. It is obvious that these members send their children to a school which embraces their religious beliefs and where their children will be taught Christian values. The academy exists only for church purposes. The fact that the state imposes state certification does not change the character of. the academy which is to propagate the faith of the Synod, and it is manifestly wrong for a state agency to subordinate that mission.
Any attempt to subject appellees, who are religious organizations operating religious schools, to an unemployment compensation law would be an impermissible entanglement between the church and state contrary to the First Amendment to the Constitution of the United States and Article VI, Section 3 of the South Dakota Constitution which provides for freedom of religion. The First Amendment provides in part: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . . .”
Under the unemployment compensation law, an employee who is laid off from work is entitled to unemployment compensation benefits, but an employee discharged for misconduct may be denied benefits. The majority opinion alludes to the fact that the only two ways a teacher may be released for cause is by teaching false doctrine and by misconduct as outlined by appellee’s own standards. It concludes that since rules relating to dismissal are regulated by internal doctrinal standards controlled by the church, there would only be minimal entanglement because the state has only to determine whether the employee was fired or laid off. This matter of potential entanglement cannot be so cursorily treated. Let us hypothesize that the Synod discharged an employee citing the reason as teaching contrary to school doctrine or misconduct, but the employee contends that the real reason for the discharge was due to budgetary concerns, and therefore, he or she was merely laid off. This employee could request a hearing to determine if he or she was entitled to full benefits. Granted, while the entanglement would not reach the proportions as that found in N.L.R.B. v. Catholic Bishop of Chicago, 440 U.S. 490, 99 S.Ct. 1313, 59 L.Ed.2d 533 (1979), such a hearing would nonetheless involve the question of whether the teacher did or did not teach contrary to Synod doctrine or on what basis, according to doctrinal standards, the employee’s action constituted misconduct. The hearing examiner would have to rule on these matters of religious belief and misconduct, which is the kind of entanglement prohibited by the First Amendment to the Constitution.
The power to tax, surveil, and supervise this program is the power to destroy parochial schools. This program is another insidious spoke in the web of entanglement which chokes the free spirit of religious schools and their ability to function in their dedication to God. If religious schools are mandated into state and federal programs which exact money from them at governmental statutory whim, they shall die. They cannot coexist with governmental interference and over-lay. Our forefathers fled to these shores that they might worship as they please and to raise their children in their own religious faith. I do not believe in a system of government, congressional acts, state statutes, or legal interpretations by the judiciary that would destroy that dream. The Constitution is a bulwark against state invasion of religiously based schools. In it, I abide.
I do not believe that Congress intended the tax to be applicable to the services of church operations run directly by the church with its own employees. For a persuasive case in point, with the same basic issues and statutes and a result contrary to the majority opinion, see The Lutheran Church, Missouri Synod, et a 1. v. State of *856California Employment Development Department, et al., (Case No. CV79-0162-MRP before the United States District Court, Division of California, Opinion rendered September 21, 1979).