When the U.S. Supreme Court ruled in 2000 that the Boy Scouts of America could set rules as a private organization, even if that meant excluding homosexuals, the Philadelphia chapter disagreed with the exclusionary policy.

The local group, the Cradle of Liberty Council, thought scouting should be open to everyone. And the council even adopted a resolution saying it opposed any form of discrimination.

But retired Cradle of Liberty CEO Bill Dwyer told a federal court jury Tuesday that he and other leaders realized "in our heart of hearts" that "we couldn't repudiate totally the national position. They would put us out of business."

Dwyer's testimony came on the first of the U.S. District Court trial focusing on the city's effort to evict the local group from the headquarters it built and has occupied, rent-free, for 81 years on city-owned property near 22d and Winter Streets.

Jason P. Gosselin, who represents the Cradle of Liberty Council, told the jury in his opening address that the city's effort is unconstitutional, and motivated only by hostility to the anti-gay viewpoint expressed by the Scouts' national leadership policy.

"They wanted to force Cradle of Liberty to say something that Cradle of Liberty doesn't have to say," said Gosselin, who said the local scouts cannot be forced to "repudiate a policy that the Supreme Court says is protected."

David Smith, a lawyer for the city, told the jury of six women and two men that the city initially accepted the local group's statement that it opposed discrimination - until learning that the chapter used the national group's employment application, which stated that homosexuals, atheists and agnostics would not be hired.

Local leaders were "speaking out of both sides of their mouths," said Smith, who said the city began to "look more carefully" at the longstanding practice that allowed the local group to have its headquarters rent-free.

The national Scouts were unhappy with the local group, Smith said, and that the local group should have had "the courage of its convictions" and denounced the national policy. Instead, he said, the local group gave in to "heavy-handed coersion by the Boy Scouts of America."

Ultimately, Smith said, the city gave the scouts three options: pay fair-market rent, move out or "have the courage of its convictions and agree" to affirmatively acknowledge the city's anti-discrimination policy.

Under questioning by Gosselin, Dwyer testified that as the dispute with the city escalated, the city made it clear that if the local group repudiated the national policy, the matter would have been resolved.

"We would have liked to have done that, but we knew we couldn't," he told the jury.

In its decision 10 years ago this month, the nation's high court ruled that the Boy Scouts can bar homosexuals from being troop leaders. The decision came in the case of an assistant scout leader in New Jersey who had been expelled for being gay - and had been seeking reinstatement.

Testimony is set to resume this morning in the trial before U.S. District Judge Ronald L. Buckwalter.