The tale, in outline, is thus. Methodism had always seen slavery as an evil in society; however, over time, it softened its stance in order to keep unity within the Methodist Episcopal Church. It continued to say that slavery was not good, but it accommodated slavery in piecemeal fashion. By the 1840s, owning slaves, per se, was not a bar to any office within the church, though itinerant clergy were not expected to have any, and bishops, certainly not expected to have any. At the same time, the ME Church was officially hostile to abolitionists within the church, seeing them as troublemakers. In this, the ME Church straddled a fence that ran all the way through American society.
A pair of cases, however, came to the 1844 General Conference that brought things to the breaking point. A minister in the Baltimore area had acquired slaves by marrying a wife who owned them. When charged in a church court for owning slaves, he replied that he hadn't bought them, that he couldn't legally free them in Maryland, and besides, there was no actual rule in the Discipline against owning them. I forget now whether he was convicted or acquitted by the local church court, but in any case, the matter was appealed to the General Conference, which had to deal with it.
At the same time, a Southern bishop named Andrew was also found to be a slave-owner. This caused quite a bit of scandal, since it crossed a line that hadn't been crossed before. Once again, his wife was the actual owner, but it appears the good bishop had bought them himself in his wife's name. In any case, Bishop Andrew offered to resign before General Conference in order to spare the church embarrassment, but he was appealed to by the Southern delegates not to. Their reasoning was a) there was no actual rule forbidding his ownership of the slaves in question, and b) to resign would make it appear there was something positively wrong in slave-owning, which would be to the disadvantage of all the Southern Methodists, by putting them in the wrong before their Northern brethren. Bishop Andrew did not resign.
General Conference shiprocked on this pair of cases. There was no way of resolving them without destroying the unity of the church. To affirm that slavery was wrong, even if tolerated, would be insulting to Southern Methodists. To allow the last line to be crossed in the acceptance of slavery would be intolerable to Northern Methodists. All kinds of maneuverings and appeals and ad hoc committees dealt with this over the most of a month (General Conference was even more a marathon back then than now). As you might think, the bishops were all for putting off a decision and forming a commission to look into the matter (nothing ever changes). In the end, the exhausted Conference approved a Plan of Separation and adjourned.
The Plan of Separation was intended to be an act of love amidst great differences. It was also hoped not to be needed. It gave Southern Methodists the right to call for separation, if they wanted to. And it asked the Annual Conferences to approve suspending one of the Restrictive Rules in order to allow for the division of assets -- particularly, the Book Concern, which funded ministerial pensions then as now -- in case the Plan was acted upon.
After General Conference adjourned, the Southern delegates stayed on for a few days to consider their options before separating. They ended up calling for a convention of Southern Methodists a year hence (May 1, 1845) in Louisville, Kentucky. Then they went home. Immediately, what had seemed to be achieved at General Conference began unraveling.
The Southerners calling for a convention before even leaving the site of the 1844 was seen as an unfriendly act by the North. The Southerners saw it as a necessity so that the South could act, Yes or No, upon the initiative given them by General Conference. Southern Methodists strongly agreed, except in those areas of Appalachia that later formed Unionist pockets in the Secession crisis of 1860-61, that they should separate. The outcome of the 1845 meeting was all but assured. The Southern Methodists would vote to separate, and appoint commissioners as indicated in the Plan of Separation to divvy the assets of the ME Church with the North.
Meanwhile, Northern Methodists were outraged at what their delegates had agreed to. Vague opposition to slavery now began to swing to the opinions previously only expressed by the abolitionists within their ranks. And the vote to approve the suspension of the Restrictive Rule to allow for division of property failed. The Southern Methodists voted for it nearly unanimously, as one might expect, but the Northern Methodists much less so. The aggregate vote was about two-thirds in favor -- but a three-fourths majority was required. This rendered the entire Plan of Separation moot, the offer of amicable division withdrawn, in the eyes of Northern Methodists. The Southerners could leave, if they liked, but only in the manner of previous schismatics.
In the end, the ME Church, South sued the ME Church in two different federal courts: New York and Cincinnati. The Plan of Separation was upheld in New York, but not in Cincinnati; however, on appeal, the North's victory in the Cincinnati case was reversed. The North, already feeling guilty for denying Southern clergy their pensions over a matter of mere money, took the civil courts' ruling as cover to do what their own understanding of the Discipline would not, and proceeded to an amicable division of the assets of the Book Concern. The matter of "border churches," however, was never settled amicably, and led to competing MEC and MEC, South, congregations in several States. Long after the Civil War was concluded, these competing forms of episcopal Methodism continued to articulate reasons why they were the real thing, and their compatriots over yonder were not.
The schism wasn't healed until the 1939 merger of the two denominations with the Methodist Protestant Church, to form The Methodist Church. The Methodist Church united with The Evangelical United Brethren Church in 1968 to form The United Methodist Church. I'll go into some of lessons to be learned from the Schism of 1844 with implications for our current situation in Part Two.