Neutrality

[Jonathan Lipson]

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Subject: Re[2]: 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.
  Neutrality?
  Equal protection violation
  Jim Henderson
 ACLJ

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