Church Law and Tax 1992-03-01 Recent Developments

Denominations – Legal Liability

Richard R. Hammar, J.D., LL.M., CPA

• A Pennsylvania court addressed the issue of a denomination’s liability for an injury occurring on an affiliated church’s property. A young child was injured in 1984 when a tombstone fell on her in a cemetery owned by a Lutheran church. The child’s parents sued the Lutheran Church in America (LCA) along with the Central Pennsylvania Synod of the Lutheran Church in America. The parents claimed that the LCA and Synod were legally responsible for the injury since the church that owned the cemetery had closed in 1971 and title to its assets had reverted to the LCA and Synod. As owners of the property, the LCA and Synod were responsible for the child’s injuries on the basis of their “negligent maintenance” of the cemetery. The parents relied on the following paragraph in the LCA Constitution (and a similar paragraph in the Synod Constitution):

A synod may declare a congregation within its jurisdiction defunct if such congregation has disbanded, or it has ceased to maintain religious services according to the tenets and usages of the Lutheran Church, or if its membership has so diminished in numbers of financial strength as to render it impractical for such congregation to fulfill the purposes for which it was organized, or to protect its property from waste and deterioration. In such case, or if a congregation departs from membership in this church without the consent of a convention of the synod, all property of the congregation, real, personal and mixed, shall vest in the synod, its successors or assigns.

The local church that established the cemetery voted in 1971 to merge with another Lutheran church. All of the church’s assets were transferred to the new church. A trial court concluded that the LCA and Synod were not responsible for the child’s injuries, since ownership of the cemetery had passed to the new church rather than to the LCA or Synod. The case was appealed to a state appeals court, which also ruled in favor of the LCA and Synod. The appeals court observed:

In order to predicate liability against the Synod and the LCA, evidence was necessary to show that these two hierarchical church entities had the right to control the manner in which cemetery property was maintained. This required evidence of either (1) an actual transfer of property from the congregation to the hierarchical church body, or (2) clear and unambiguous documentary evidence or conduct on the part of the congregation evincing an intent to create a trust in favor of the hierarchical church body. The claim against the LCA and the Synod is based upon the contention that [the local church] closed its doors and that its assets thereupon passed to the Synod and the LCA. It is based upon the general rule of law that a congregation belonging to a hierarchical membership cannot sever itself from the parent body without forfeiting its assets. However, this rule of law is not without exceptions. Thus, the local congregation and the parent church body may agree that the local church property is to remain subject to ownership and control by the local congregation. The general rule has no application, moreover, where two congregations of the same hierarchical body join by merger. In cases of merger, title to congregational assets passes to the surviving corporation. In the instant case, it is clear that [the local church] did not forfeit title to its assets to the parent bodies. [The two local churches] were joined by merger into one congregation … and title to the assets [of the one local congregation] passed to the surviving congregation.

The court emphasized that the LCA and Synod could not become owners of local church property unless they specifically declared a local church to be defunct. The LCA and Synod never took this step since there was no need to do so in light of the merger of the local churches. The court concluded: “Because [the local church] did not sever its relationship with the Synod or LCA, but merged with another Lutheran church of the same synod, its assets were not forfeited to a parent body but passed to the surviving congregation by merger. It is the surviving body which controlled those assets on the date of the [child’s] unfortunate accident and to which [the parents] must look for damages in the event negligent maintenance of the cemetery is found to be related causally to such injuries.” This case is important for a couple of reasons. First, it indicates the legal effect of a merger. The liabilities of a church that merges with another church can become the liabilities of the new church. This is an important consideration that must be kept in mind when contemplating any merger. Second, it illustrates the potential liability of a religious denomination for the obligations of a local church that has closed. Many denominations have provisions in their constitutions or bylaws specifying that title to a defunct local church reverts to the parent denomination. This case indicates that such provisions may result in liability on the part of the parent denomination for the obligations of the defunct church. While this may not be the case in the event of a merger, church leaders must recognize that mergers are relatively uncommon. It is far more common for a local church to simply close its doors than to merge with another congregation. Denominational leaders need to be aware of the legal liabilities they may be assuming in such cases. A review of denominational constitutions and bylaws would be appropriate. This case suggests that this liability can be avoided if the reversion of a defunct church’s property to a denomination is conditioned on some act by the denomination (such as a formal declaration or ruling that the local church is defunct, as was required by the LCA Constitution). Kelly v. Lutheran Church in America, 589 A.2d 1155 (Pa. Super. 1991).

See Clergy—removal, McElroy v. Guilfoyle, 589 A.2d 1082 (N.J. Super. 1990).