• Key point 6-05. A church name is a valuable property right that is protected by the legal principle of unfair competition. Protection also is available under federal trademark law. Church Names

• Key point 7-14. Some deeds to church property contain a “reversion” clause stating that title will revert back to the previous owner in the event that a specified condition occurs. The courts will enforce such provisions, so long as they can do so without interpreting church doctrine.

A Nebraska court ruled that a gift to a church in an elderly church member’s will had “lapsed” because the church no longer was affiliated with a parent denomination at the time of the member’s death. An elderly woman (the “decedent”) executed a will in 1991 leaving a portion of her estate to the local Methodist church that she attended. In 1994, a Methodist Conference met and voted to close the church as of June 1, 1994. The Conference also voted unanimously to sell the church property to a community nonprofit organization. The Conference stipulated that the church had two years from June 1, 1994, to reaffiliate with the United Methodist Church. Since May 29, 1994, a Methodist minister had not been assigned to the church. The Methodist minister who had been assigned to the church through May 29, 1994, testified that the church was closed as far as the United Methodist Church was concerned. Nevertheless, the record showed that some members of the congregation continued to attend services held on the church premises. None of the ministers conducting such services were affiliated with the United Methodist Church. These members of the congregation called the church the “Fairview Church.” A trustee of the church testified that the church had done nothing to reaffiliate with the United Methodist Church.

The decedent died in 1996, and a dispute arose regarding the ownership of the property that her will left to the local Methodist church. Heirs insisted that this gift had “lapsed” since the “Methodist church” no longer was in existence. As a result, they insisted that the property should be distributed to them. However, in 1997 the Nebraska Annual Conference of the United Methodist Church (Annual Conference) authorized its board of trustees to dispose of certain abandoned church properties, including the property of the Fairview Church. The governing law of the United Methodist Church provides that when local church property is no longer used, kept, or maintained by its membership as a place of divine worship, the property is considered abandoned, and the Annual Conference trustees may assume control of the property. After hearing the evidence, a trial court found that the church had “ceased to exist as an association affiliated with the Methodist Church, and such church … has been abandoned and discontinued.” The court therefore ruled that the gift to the church had lapsed and was void, and that the property should revert to the decedent’s estate to be distributed to her heirs.

The local church objected to this ruling. Its trustees insisted that the church had not lapsed or been abandoned, but continued to be used for religious purposes, and therefore the church should have received the property from the decedent’s estate. A state appeals court quoted the following Nebraska statutes:

When any religious society … shall have ceased to maintain periodic meetings for the purpose of worship or religious instruction for a period of two consecutive years, or if the governing body or congregation of the church votes to dissolve or votes to discontinue holding religious services, such society shall be deemed to have ceased to exist or to maintain its organization within the meaning of this section. Neb. Stats. 21-2801(3).

[When a church] withdraws or terminates its affiliation with a statewide denominational cooperative agency, such religious association shall be deemed to have ceased to exist or maintain its organization … and shall not be thereafter entitled to use in the name of such religious association the characteristic denominational designation or other words calculated to induce the belief that it is in any way belonging to or affiliated with the denomination maintaining such a statewide cooperative agency. Neb. Stats. 21-2803.

The court concluded that the evidence demonstrated that the local church “has been abandoned so far as its affiliation with the United Methodist Church is concerned,” and as a result, “pursuant to the statutes set forth above, the church property has become vested in the Annual Conference, and the church may no longer use in its name any reference to the United Methodist Church.” Therefore, the church to which the decedent gave a portion of her estate has been abandoned and no longer exists, and so “the devise to the church has lapsed and must be distributed” to the decedent’s heirs.

Application. Consider the following:

1. Gifts that lapse. Wills sometimes contain gifts to a church or other entity that no longer exists at the time of the decedent’s death. As the court in this case concluded, such gifts generally are deemed to have “lapsed,” meaning that the property is distributed to the decedent’s heirs or the residuary beneficiaries in the decedent’s will. Unfortunately, it is not always easy to determine whether or not a church has ceased to exist. The court in this case concluded that the “Methodist church” to whom the decedent had left property in her will had ceased to exist, and therefore the gift had lapsed even though a small congregation continued to meet regularly for worship. This illustrates that churches that disaffiliate from a parent denomination may become ineligible in some cases to receive gifts under the wills and trusts of members.

2. State statutes. Some states have statutes similar to those in Nebraska that govern to some degree the legal disposition of local church property following the discontinuance of a formal affiliation with a denomination.

3. Church names. A Nebraska statute, quoted above, specifies that a church no longer can use the name of a denomination following its disaffiliation. Estate of Schwartz v. Methodist Church, 1999 WL 111353 (Neb. App. 1999).

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