Universal Life Church, Inc. v. United States, Civ. No. S-1954.

• Decision Date: 01 March 1974
• Docket Number: Civ. No. S-1954.
• Citation: 372 F. Supp. 770
• Court: U.S. District Court — Eastern District of California
• Parties: UNIVERSAL LIFE CHURCH, INC., Plaintiff, v. UNITED STATES of America, Defendant.

372 F. Supp. 770

UNIVERSAL LIFE CHURCH, INC., Plaintiff, v. UNITED STATES of America, Defendant.

Civ. No. S-1954.

United States District Court, E. D. California.

March 1, 1974.

Peter R. Stromer, Gonzales & Stromer, San Jose, Cal., for plaintiff.

Dwayne Keyes, U. S. Atty., Richard W. Nichols, Asst. U. S. Atty., Sacramento, Cal., Harold S. Larsen, Atty., Tax Div., Dept. of Justice, Washington, D. C., for defendant.

ORDER

FINDINGS OF FACT

BATTIN, District Judge.

1. This is a civil action for the refund of $10,377.20 in income taxes for

the fiscal year ended April 30, 1969. This Court has jurisdiction pursuant to Sections 1346(a)(1) and 1346(c) of Title 28 United States Code and Section 7422 of Title 26 U.S.C.

2. The defendant, by a counterclaim, seeks recovery of $721.87 in income tax together with $507.77 in assessed interest or a balance of $1,229.64 together with interest thereon.

3. This matter came on for hearing on September 17, 1973. Peter R. Stromer appeared for the plaintiff and Harold S. Larsen appeared for defendant. Both parties waived jury trial, and, following a partial stipulation of facts, the matter was taken under advisement.

4. At pretrial, defendant conceded that plaintiff is organized and duly incorporated as a non-profit corporation pursuant to California law. Defendant further conceded that plaintiff's activities may be admittedly religious in nature but defendant contended said activities are not religious per se within the scope of Internal Revenue Code Section 501(c) (3).

5. Plaintiff's Articles of Incorporation read, in pertinent part:

This corporation is one which does not contemplate pecuniary gain or profit to the members thereof and it is organized solely for non-profit purposes. Upon the winding up and dissolution of this corporation, after paying or adequately providing for the debts and obligations of the corporation, the remaining assets shall be distributed to a non-profit fund, foundation or corporation which is organized and operated exclusively for charitable, religious and/or scientific purposes and which has established its tax-exempt status under Section 501(c)(3) of the Internal Revenue Code.

6. In its Memorandum in Support of its Requested Jury Instructions, defendant cited but two issues which it claimed as the basis for denial of plaintiff's tax-exempt status:

(1) Whether the ordination of ministers, the granting of church charters, and the issuance of Honorary Doctor of Divinity titles by plaintiff are substantial activities which do not further any religious purpose, thus disqualifying plaintiff from tax exemption; and

(2) Whether the issuance of Honorary Doctor of Divinity titles by plaintiff is an activity which is either illegal or in violation of public policy under the California Education Code Section 29007.

7. Defendant admitted in its Memorandum in Support of its Requested Jury Instructions that the ordination of ministers and the chartering of churches are accepted activities of religious organizations.

8. Oral argument was presented, in addition to the written briefs, pleadings, depositions, and exhibits, re the California Education Code Sections 29001, 29007, and 29020. Plaintiff contended and defendant opposed the contention that by virtue of Education Code Section 29020 plaintiff was excluded from the proscriptions re issuance of the Honorary Doctor of Divinity title found in Education Code Section 29007.

9. Expert testimony by way of depositions from Reverend Theodore Mackin and Reverend Lester Kinsolving have been submitted with respect to the Honorary Doctor of Divinity title, subject to defendant's objection.

10. Reverend Theodore Mackin testified by deposition that he is an associate professor of religious studies and Chairman of the Department of Religious Study at Santa Clara University, Santa Clara, California. He further designated his religious affiliation as S. J. (Society of Jesus), commonly referred to as the Jesuits. He stated that he had a certain expertise in the field of religion, especially in the field of religious studies. He stated that based upon his personal knowledge, following individual research of documentary sources and discussions with his professional colleagues, that the Honorary Doctor of Divinity is a strictly honorary religious title without academic standing. (Mackin deposition, page 5, lines 11-21.) Father Mackin further testified that the Honorary Doctor of Divinity title is not awarded by degree-conferring institutions to persons as the consequence of their having completed programs of study, within the conferring and/or other institutions, designed to earn the rank/title of "doctor". (Mackin deposition, page 6, lines 10-19.)

11. Reverend Lester Kinsolving testified via deposition that he is an ordained Episcopal priest, having been in the parochial ministry of his church for some fourteen years and was now a full-time journalist, a religion writer for the San Francisco Examiner, and a religion columnist for the National Newspaper Syndicate whose column is carried in two hundred fifty-four daily newspapers in forty-six states and Canada with a readership of over nine million. (Kinsolving deposition, page 2, lines 17-25.) He corroborated the testimony of Father Mackin as to the Honorary Doctor of Divinity title in all particulars. When asked specifically whether an Honorary Doctor of Divinity title, labeled on its face as an Honorary Doctor of Divinity (defendant's Exhibit E), came under the proscriptions found in the California Education Code, specifically Education Code Section 29007, Rev. Kinsolving replied, "Obviously not." (Kinsolving deposition, page 49, line 22.) Rev. Kinsolving further testified that the way Honorary Doctor of Divinity degrees have been used in so many instances represented a kind of stock in trade. "In other words, you almost sell them." (Kinsolving deposition, page 56, lines 4-7.)

12. Further deposition testimony was submitted into evidence, namely depositions of Reverend Kirby J. Hensley, Lida Louise Hensley, and Alexander Dias DeBettencourt. All exhibits identified in connection with the above depositions were stipulated for use herein with the exception of a Minute Book of the Board of Directors' meetings of plaintiff corporation. Pretrial ruling by Judge MacBride allowed the Minute Book, defendant's Exhibit A, to be used herein.

Kirby J. Hensley deposition

13. Rev. Hensley testified that the church was incorporated in 1962. He testified that a garage at his residence, 1766 Poland Road, Modesto, California, had been converted into a church and chapel. Meetings were held every Sunday morning, with occasional special meetings on other days and evenings. He testified that charitable efforts engaged in by the church which have been recognized by state and local governmental sources included taking people off the welfare rolls and training them in productive jobs for which state and local government paid half the wages so earned. (Kirby J. Hensley deposition, page 14, lines 4-8.)

14. Rev. Hensley further testified that the Honorary Doctor of Divinity program was developed since the church policy allowed ministerial credentials to be conferred gratis upon anyone on request and upon new ministers who were seeking information on ministerial procedures. (Kirby J. Hensley deposition, page 21, lines 18-25.) The lesson plans (defendant's Exhibits G through L) cover basic church functions, how to conduct services, marriage, baptismal ceremonies, burial services, etc. The lesson plans were mailed out or otherwise distributed on request with the Honorary Doctor of Divinity as a course of instruction in the principles of the church. Rev. Hensley further identified a Marriage Certificate, a Marriage Record, a Charter Agreement, a Charter, an Information Sheet and an issue of the church newspaper. (Defendant's Exhibits Q and R. Plaintiff's Exhibits Nos. 2 through 5.)

15. Rev. Hensley further testified that the church had volunteered its facilities for rehabilitative purposes involving people seeking employment following incarceration in prison. (Hensley deposition, page 59, lines 16-26, et seq.)

16. Further testimony re issuance of church charters (plaintiff's Exhibits Nos. 2 and 3) indicated that plaintiff required all churches chartered by it to agree to abide by the corporate laws of the State, that each church have a pastor, secretary and treasurer, that annual reports be made to plaintiff's headquarters in Modesto, California, and that any church found to violate a state law would be subject to having its charter cancelled. (Kirby J. Hensley deposition, page 61, lines 12-26.)

17. Rev. Hensley testified that his philosophy which he conveyed to all his ministers is to do whatever is right. (Kirby J. Hensley deposition, page 62, lines 9-11.)

18. When asked about the doctrine of the Universal Life Church, plaintiff herein, Rev. Hensley stated that the church is "all built around" the following principles: "The Universal Life Church has no traditional doctrine. It only believes in that which is right. We believe that everyone has a right to his own conviction, a right to express it, and we recognize everyone's belief." (Kirby J. Hensley deposition, page 62, lines 23-26, and page 63, lines 1-2.)

19. Rev. Hensley testified that he had performed marriages and baptisms and officiated at funerals and typical church functions. (Hensley deposition, page 74, line 24, and page 75, lines 24-25.) He further averred that he had always counseled and told plaintiff's ministers to do whatever's right, to stay within the confines of the law. (Hensley deposition, page 89, line 1-4.)

Lida Louise Hensley deposition

20. Mrs. Hensley testified she had been married to Kirby J. Hensley, plaintiff's president, since 1952 and had been associated with the Universal Life Church since it began in 1959. She testified that weekly services were held with a number of named individuals still in regular...