jlipson at HILLBARLOW.COM
Fri Oct 17 14:06:59 PDT 1997
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Subject: Re: Neutrality
Author: Jonathan Lipson at HILL&BARLOW
Date: 10/16/97 5:58 PM
I have written an article that the good students of the University of Miami Law Review tell me will be coming out very soon entitled "First Principles and Fair Consideration: The Developing Clash Between the First Amendment and the Constructive Fraudulent Conveyance Laws." As someone who has spent more time than is healthy thinking about your question, you can imagine that I have all kinds of things to say about it.
First, it seems to me that the nut of the issue comes down to whether there is some kind of calculus one could perform differentiating between "economic" value and "constitutional" (free exercise) value. The Court wrestled with this in a different context in the Hernandez case, holding there was no section 170 (charitable contribution) deduction for Scientologists who paid for "auditing and training sessions," which they believed were central to their religious beliefs. 490 U.S. 680, 685, 692 (1988). The majority therefore essentially agreed with the IRS that these payments had "economic" value, although it is not entirely clear why that should be so. They seem an awful lot like pew rents or the purchase of high holy day tickets to me. Indeed, Justice O'Connor makes this point in her thoughtful dissent. Id. at 70-710. Those representing religious defendants (donors or donees) in fraudulent conveyance or preference actions (the two chief recapture mechanisms in bankruptcy) have latched onto Hernandez. Except for the Young case (82 F.3d 1407), the argument has met with little success.
I argue in the article that, as a general matter, courts shouldn't dismiss the economic value of the things religious donors receive too lightly. It's not clear why there are not economic components to many aspects of the services religious institutions provide (day care, counseling, meals, a warm place to spend a few hours) that a donor would presumably have to pay fair value for on the open market. In many cases, therefore, courts would need not reach the (more difficult) question whether purely religious services have economic value (with its obvious entanglement problems).
Nonetheless, I also argue that to the extent a religious donor receives only "religious" benefit (and I admit I don't know how exactly to distinguish between the "economic" and the "religious"), the first amendment and/or the RFRA should provide no protection. First, the free exercise clause has never been used to permit someone to trample "private" rights (i.e. the rights of the donor's creditors). If insolvent religious donors could pay their churches but not their creditors, the free exercise clause would effectively be used to defeat the "private" rights of creditors to repayment. Second, I think Professors McConnell and Posner are correct that laws that merely increase costs to religious adherents are not constitutionally infirm if they also apply in the same manner to the irreligious. McConnell & Posner, An Economic Approach to Issues of Religious Freedom, 56 U. Chi, L. Rev. 1, 35 (1989). This is substantiated by the line of cases (Braunfield, Lee, Hernandez) holding that the mere imposition of cost creates no free exercise problem, at least so long as the cost-creating statute is not aimed at (or effects only) the religious.
Third, there is the collateral problem of the free exercise rights of the donor's creditors. Under well established commercial law principles, an insolvent holds money in trust for her creditors; what money she has is, in a sense, not hers at all, but her creditors'. If this is so, permitting the insolvent religious donor to spend it on her church means that is indirectly forcing her creditors to support religious beliefs they may find repugnant. I can't see how the free exercise rights of a religious donor's creditors matter less than the rights of the donor herself.
I'm always happy to palm off drafts of the article. Let me know privately (jlipson at hillbarlow.com) if you'd like it. ______________________________ Reply Separator _________________________________
Subject: Re: Neutrality
Author: Law & Religion issues for Law Academics at Internet Date: 10/15/97 10:57 PM
A trustee in bankruptcy follows the following policy: churches and synagogues that exchange value for a tithe or offering (Scientology, The Way Bible Institute, synagogues that sell tickets for high holydays, etc) are not the object of recapture efforts in bankruptcy. Churches and religious congregations that simply require tithing as a religious practice, but for which there is no immediate exchange of value, are targetted for recapture efforts.
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