NEWS FEATURE: Presbyterians suing for colonial-era contributions

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c. 1998 Religion News Service

PHILADELPHIA _ Long before the American colonies were united the Presbyterian Ministers’ Fund provided a slice of the capital that would lay the groundwork for a new nation.

It loaned cash to the Continental Congress to help fund the battle for independence. It provided ransom money to free ministers taken hostage by Indians on the frontier west of Philadelphia.

And it sold life insurance policies for struggling clergymen to provide relief for their widows and orphans.

Now almost 250 years after the charter of what would one day become the nation’s oldest insurance company, the Presbytery of Philadelphia wants to reclaim the fund’s original contributions made by Presbyterians in the United Kingdom and the colonies, totaling more than 6,000 British pounds _ worth an estimated $21 million today.

In a case that spans three centuries of American and Presbyterian church history and delves into the birth of the American insurance industry, the presbytery is suing Provident Mutual Life Insurance Co. over the donations to what it calls a historically charitable fund.

It says the money helped create a fund that assisted underpaid ministers and was never intended to line the coffers of the commercial insurance company that acquired the Ministers’ Fund in 1994.”It was a benevolent fund to support the people spreading the message of God,”said presbytery’s attorney Francis Clark in opening arguments in the Philadelphia Court of Common Pleas on Wednesday (Dec. 2).

Organized by the Presbyterian Synod of Philadelphia in 1717 and incorporated in 1759 by Thomas and Richard Penn, sons of Pennsylvania’s founder William Penn, the Fund for Pious Uses, as it was originally known, also helped build churches and supported missionaries serving in frontier settlements.

From its modest beginnings the fund evolved into a highly successful insurance company. Known as Covenant Life Insurance Co. at the time of the merger, it served 60,000 policy holders, most of them religious professionals, and boasted a $50 million surplus built from the original donations.

Although the fund had changed its name and expanded its base of policy holders to include lay people of all denominations, it remained true to its original mission: to provide low-cost life insurance and annuity polices for underpaid ministers, the presbytery says.

In its complaint the group charges that Provident breached its agreement with the Synod of Philadelphia by using the fund’s charitable assets and the surplus for commercial activities and by dismantling a business that served the financial needs of the clergy.

But Provident Mutual, a Quaker-run insurance company with 300,000 policy holders based in Berwyn, Pa., argued the fund was operated for centuries as a life insurance company, not a charitable enterprise.”The idea that this was a charitable, beneficial organization is utterly false,”said Laurance Shiekman.”It was a business _ not a charity _ and whatever connection there once was between the corporation and the church disintegrated 245 years ago.” Shiekman also argued that if the donation was presumed to be charitable, the presbytery should not be entitled to receive interest on the funds.”I don’t know of any case in Pennsylvania that permits someone to get interest on charitable donations,”he said.”And I know of no piece of paper that says anyone was to get a return on anything.” The presbytery, however, said the fund maintained a strong church connection over the years. The corporation’s presidents were Presbyterian ministers or laymen. The majority of members on its governing body were Presbyterian ministers and the fund’s presidents regularly briefed the annual General Assembly of the Presbyterian Church _ now the Presbyterian Church (U.S.A).

In broad-ranging testimony that sounded more like a theological debate or American history roundtable discussion than a trial over an insurance company’s assets, witnesses for the presbytery cited passages from centuries’ old documents and fielded an array of questions about Presbyterian church history, including about Rev. Charles Beatty’s historic trip to Britain in the 1760s to solicit donations for the fledgling fund.

Lawyers for Provident, however, argued the fund’s original donations were likely exhausted within a few years of its creation by costs incurred by the Synod during Beatty’s trip and in ransoms paid to hostile Indians.

Three ordained ministers, all of them Ministers’ Fund policy-holders, who testified for the presbytery Wednesday told the court that up until the merger the fund continued to offer the least expensive insurance available, along with financial counseling services geared toward the special needs of ministers.

The Rev. Charles Hammond, a former chief executive of the Philadelphia Presbytery, said he took out his first policy while in seminary and bought additional policies for his family later because of the cost and the fund’s philosophy.”I do not have confidence that a large corporation driven by profit motive has the interest of policy holders at heart,”he said.

Russell Bishop, a former Baptist minister and second generation policy holder who became a salesman for the fund, testified he was drawn to its”religiously-oriented sales force and strong sense of mission and history.” He said an estimated 80 percent of the sales representatives were ordained clergy who understood an unusual niche market.”Ministers are a special breed, not a lot of background in finance, they are treated differently under tax laws and they are ambivalent about money,”he said.”They are not taught about personal budgets in seminary.” Among the witnesses scheduled to testify as the trial progresses is a forensic economist who will place the current value of the original donations _ adjusted for 3 percent annual inflation _ between $21 and $22 million. Provident plans to call a University of Delaware professor to discuss colonial religious history.

The presbytery said if it wins the case it will use the award to support a variety of charitable activities, including assisting ministers of any faith who are in need and providing grants to charities.


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