Habel v. Industrial Development Authority of City of Lynchburg

• Decision Date: 11 January 1991
• Docket Number: Nos. 900482,900498,s. 900482
• Parties: , 65 Ed. Law Rep. 621 Nathanael B. HABEL, et al. v. INDUSTRIAL DEVELOPMENT AUTHORITY OF the CITY OF LYNCHBURG. Lewis T. STONEBURNER, Guardian Ad Litem, etc. v. INDUSTRIAL DEVELOPMENT AUTHORITY OF the CITY OF LYNCHBURG. Record
• Court: Virginia Supreme Court

Page 516

400 S.E.2d 516

241 Va. 96, 65 Ed. Law Rep. 621

Nathanael B. HABEL, et al. v. INDUSTRIAL DEVELOPMENT AUTHORITY OF the CITY OF LYNCHBURG.

Lewis T. STONEBURNER, Guardian Ad Litem, etc. v. INDUSTRIAL DEVELOPMENT AUTHORITY OF the CITY OF LYNCHBURG.

Record Nos. 900482, 900498.

Supreme Court of Virginia.

Jan. 11, 1991.

Lewis T. Stoneburner (E. Olen Culler, Thomas J. Schilling, Press, Culler, Jones, Waechter & Stoneburner, Richmond, on brief), for appellant Habel, et al.

Benjamin T. Riddles, II (Vivian Katsantonis, Watt, Tieder, Killian & Hoffar, McLean, on brief), for appellants Stoneburner, etc.

John E. Hubbard (Michael G. Connery, Omaha, Neb., Theordore J. Craddock, Lynchburg, Kutak, Rock & Campbell, Omaha, Neb., Caskie & Frost, Lynchburg, on brief), for appellee.

Present: All the Justices.

WHITING, Justice.

In this proceeding to validate a political subdivision's proposed bond issue to benefit an educational institution, the principal inquiry is whether the bond issue would violate the Establishment of Religion Clause of either the United States or Virginia Constitution. To decide this issue, we must consider whether the educational institution's activities are "pervasively sectarian."

In October 1989, "as a prerequisite to obtaining federal tax exemption for the interest paid" on the proposed bonds, Code § 15.1-1378.1, the Industrial Development Authority of the City of Lynchburg (IDA) and the Lynchburg City Council held public hearings and thereafter approved the issuance of not more than $60,000,000 in Educational Facilities Revenue Bonds (the bonds). This bond issue would enable Liberty University (Liberty) to acquire and construct academic and administrative facilities in the City of Lynchburg.

On October 30, 1989, pursuant to the provisions of Code § 15.1-214, IDA filed this judicial proceeding against "the taxpayers, property owners and citizens" of Lynchburg to establish the validity of the proposed bond issue. Richard D. Thompson, guardian ad litem for interested and affected parties who might be under disability, together with three of those defendants, Nathanael B. Habel, Jeff D. Somers, and N. Haynie Kabler (collectively taxpayers), opposed the bond validation.

On April 5, 1990, after extended hearings and argument, the trial court validated the proposed bond issue, as provided by Code § 15.1-220. The taxpayers and the guardian Liberty is a church-related, accredited, nonprofit, private university. In October 1989, its faculty and student handbooks contained a number of statements setting forth what Liberty required of its faculty and students. ² Among the requirements were adherence to a detailed and specific religious doctrine and compulsory attendance at six weekly religious services. Three of these services were chapel services held at Liberty, and three were church services of Thomas Road Baptist Church, the local church that was primarily responsible for founding Liberty.

ad litem appeal. ¹

Faculty members were obligated to conform to Liberty's doctrinal statements in teaching their courses and in publishing articles in their respective academic fields. Students were required to participate in "Christian Service" projects each term and to attend weekly dormitory prayer meetings conducted and supervised by an elaborate system of "prayer leaders" and "spiritual life directors," comprised of 604 of approximately 1,600 dormitory students. There were other references to religious requirements and activities in these handbooks and in other Liberty documents.

On November 21, 1989, after IDA and the city council approved the proposed bond issue, Liberty's trustees directed the deletion and amendment of a number of its religious requirements and statements.

First, we must decide which group of Liberty's policies is to be considered in our decision--those in effect in October 1989 when IDA and Lynchburg City Council approved the bond issue, or those in effect in 1990 when the trial court heard this matter. Because an industrial authority's decision to issue bonds under the Industrial Revenue Act is a legislative act, Industrial Dev. Auth. of Richmond v. La France Cleaners and Laundry Corp., 216 Va. 277, 281, 217 S.E.2d 879, 883 (1975), we "consider all competent evidence adduced at trial concerning facts and circumstances existing at the time the legislative action was taken." Id. at 282, 217 S.E.2d at 883 (emphasis added). Therefore, we must decide whether the evidence supports the trial court's decision in light of Liberty's statements of its purposes and policies in effect in October 1989.

Issuance of the proposed bonds would involve a governmental act because IDA is a political subdivision of the Commonwealth of Virginia. Mayor of Lexington v. Industrial Dev. Auth. of Rockbridge County, 221 Va. 865, 870, 275 S.E.2d 888, 891 (1981). Accordingly, we must determine whether, as contended by the taxpayers and the guardian ad litem, the proposed bond issue would violate the Establishment of Religion Clause of either the United States or Virginia Constitution by impermissibly involving the government in the support of a sectarian religious activity.

Article I, § 16 of the Constitution of Virginia provides in pertinent part that "[T]he General Assembly of Virginia shall not ... confer any peculiar privileges or advantages on any sect or denomination." We have not had occasion to construe this article in the context of the issues raised in this case. However, we find the Supreme Court's construction of the Establishment of Religion Clause of the First Amendment, "Congress shall make no law respecting the establishment of religion," helpful and persuasive in this case in construing the analogous state constitutional provision.

The Supreme Court has suggested application of a three-pronged guide to decide whether a particular statute, as written or as applied, would pass muster under the First Amendment in the face of a challenge such as that mounted in this case. "First, the statute must have a secular legislative purpose; second, its principal or primary effect must be one that neither advances nor inhibits religion; finally, the statute must not foster 'an excessive government Here, we consider whether the bond issue would have the "principal or primary effect" of advancing religion. Governmental "[a]id normally may be thought to have a primary effect of advancing religion when it flows to an institution in which religion is so pervasive that a substantial portion of its functions are subsumed in the religious mission." Hunt v. McNair, 413 U.S. 734, 743, 93 S.Ct. 2868, 2874, 37 L.Ed.2d 923 (1973).

entanglement with religion.' " Lemon v. Kurtzman, 403 U.S. 602, 612-13, 91 S.Ct. 2105, 2111, 29 L.Ed.2d 745 (1971) (citations omitted).

The Supreme Court has sustained similar financing arrangements for other church-related colleges. Hunt v. McNair, 413 U.S. 734, 93 S.Ct. 2868, 37 L.Ed.2d 923 (1973); Tilton v. Richardson, 403 U.S. 672, 91 S.Ct. 2091, 29 L.Ed.2d 790 (1971). In Hunt, however, the Court noted that the church-related college imposed no religious qualifications for faculty membership or student admission. 413 U.S. at 743-44, 93 S.Ct. at 2874-75. In Tilton, the Court observed that none of the involved church-related colleges compelled attendance at religious services and that the colleges subscribed to a set of well-established principles of academic freedom. 403 U.S. at 686-87, 91 S.Ct. at 2099-2100.

In Roemer v. Board of Pub. Works of Md., 426 U.S. 736, 96 S.Ct. 2337, 49 L.Ed.2d 179 (1976), the Court considered the application of a statute that provided for state grants to private colleges, including church-related colleges. There, four church-related colleges were held eligible for the grants where the evidence showed that attendance at their religious services was not compulsory, principles of academic freedom prevailed, and student admission and faculty employment was not restricted to those who adhered to the faith of the related church. Id. at 755-58, 96 S.Ct. at 2349-50.

In contrast, Liberty's published policies required its faculty and students to attend church and chapel six times each week, its faculty and students were required to subscribe to Liberty's doctrine, and its faculty's academic freedom was circumscribed by Liberty's doctrinal statements. The testimony of witnesses that some of these policies were not enforced before October 1989 has little value because the instances of nonenforcement were not publicized to students or faculty.

The policies described earlier, as well as other Liberty policies, provide undisputed evidence of Liberty's "pervasive aim [of] equipping of young people for evangelistic ministry in the local church," as stated in its 1989-90 brochure entitled "Undergraduate Studies Liberty University." The pursuit of this aim makes Liberty "an institution in which religion is so pervasive that a substantial portion of its functions are subsumed in [its] religious mission." Hunt, 413 U.S. at 743, 93 S.Ct. at 2343. Thus, the proposed bond issue would violate the Establishment of Religion Clauses of the United States and Virginia Constitutions.

We conclude that the trial court was plainly wrong in validating the proposed bond issue. Accordingly, the judgment of the trial court will be reversed and final judgment invalidating the bond issue will be entered here.

Reversed and final judgment.

APPENDIX

On October 5, 1989, Liberty's faculty handbook provided that

[f]or over twenty years Dr. Jerry Falwell and the people of Thomas Road Baptist Church have had a vision to provide young people with quality Christian education. The results of their vision have been the founding of four schools: Lynchburg Christian Academy, Liberty University, Institute of Biblical Studies, and Liberty Baptist Theological Seminary.

....

In the context of the fundamentals of the historic Christian faith, students at Liberty University are provided...