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A Colorado court ruled that a church member's legal authority to inspect church records pursuant to state nonprofit corporation law ended when his membership was revoked.

Colorado
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Key point. Church members generally have no right to inspect church records unless such a right is conferred by state nonprofit corporation law, a church's charter or bylaws, state securities law (if the church has issued securities), or a subpoena. Church records enjoy no privilege against disclosure, with the exception of documents that are protected by the clergy-penitent privilege under state law.
Key point. According to the majority view, the civil courts will not resolve disputes challenging a church's discipline of a member since the first amendment guaranty of religious freedom prevents them from deciding who are members in good standing of a church.

A Colorado court ruled that a church member's legal authority to inspect church records pursuant to state nonprofit corporation law ended when his membership was revoked by the church board.

A church conducted a series of fundraising campaigns in the 1970s and 1980s that resulted in massive financial failures, multiple lawsuits, and enormous debt. A 1986 capital fundraising campaign that was launched to pay off the church's unpaid creditors resulted in a class action lawsuit. In 1991, this lawsuit was settled by agreement of a majority of the class members in exchange for the church's payment of $700,000. Despite this settlement, many of the church's original debts remained unpaid. In 1999 the church membership voted not to attempt to pay any remaining unpaid creditors.

Joel had been a member of the church since 1987. In 1998 Joel sought to inspect and copy portions of the church's financial records pursuant to a state nonprofit corporation law giving members the right to inspect corporate records at a reasonable time for a proper purpose. Over the course of several months Joel inspected and copied approximately 2,400 pages of records. He provided the church with various reasons for his many requests to inspect records, including: (1) to determine the financial abilities of the church to pay creditors; (2) to determine whether the church could be operated more efficiently so that additional funds could be made available to pay creditors; and (3) to enable him to communicate with other church members about the church's ability to pay its debts.

In 1999 Joel presented the church with yet another request for inspection of documents, but this time the church refused his request. Joel immediately sued the church, seeking a court order compelling the church to turn over the requested records. Upon learning of this lawsuit, the church board unanimously voted to revoke Joel's membership in the church. During the trial of Joel's lawsuit the church argued that its decision to revoke Joel's membership deprived him of any legal authority to inspect church records, since the right of inspection (under the nonprofit corporation law) is only given to members.

The trial court disagreed, noting that Joel had been a member at the time he made his request to inspect additional records. However, it concluded that Joel lacked a "proper purpose" to inspect additional records, as required by the nonprofit corporation law. In reaching this conclusion, the court referred to Joel's "unreasonable requests" and his dissatisfaction with the church board's decision not to launch another fundraising campaign to pay creditors. Joel appealed.

On appeal, the church claimed that a nonmember, such as Joel, could not have the required "proper purpose" to inspect corporate records. In the church's view, Joel's membership in the church was a prerequisite to a request to inspect corporate records, and so the church's decision to revoke Joel's membership deprived him of any legal authority to inspect records. Therefore, even if Joel had a "proper purpose" in seeking to inspect additional records, he was still not legally entitled to inspect additional church records. The court agreed. It observed,

To obtain records … such as those at issue here, the member's request [must be based on] good faith and a proper purpose. "Proper purpose" means a "purpose reasonably related to the demanding member's interest as a member." Thus, to obtain records, a person must be a member with a present ability to promote the welfare of the association …. [When Joel lost his membership] he could not, by definition, have any "interest as a member" sufficient to afford him a proper purpose to inspect records. Specifically, as a nonmember, [he] no longer had a member's stake in what had been done with church resources, nor any member's interest in determining church economies, nor any member's voice with which to persuade voting church members to adopt his policies …. Thus, [his] good intentions aside, he is now an outsider to the church, and any attempts to use the information contained in the church's records for his stated purposes would be futile. Accordingly, the provisions of the [nonprofit corporation statute] upon which his claim is based give him no right to judicial relief.

Joel insisted that if the expulsion of members from a nonprofit corporation cuts off their ability to inspect corporate records, then the right of inspection is meaningless. The court disagreed. The court conceded that "ordinarily, judicial recourse is available to a member of a nonprofit corporation seeking records who is subsequently expelled from membership." However, it noted that "when the nonprofit corporation is a church … the situation is different.. It concluded, "Here, the board of elders elected by the congregation is the highest church judicature and … a civil court simply has no authority to reverse its decision, no matter how arbitrary or unfair, to expel [Joel] or any other member."

The court concluded, "The church's decision to expel [Joel] is nonreviewable, and reinstatement of [his] membership would be exclusively the church's decision. Without membership in the church [he] can no longer have a proper purpose reasonably related to his interest as a member. Thus, he no longer has standing to inspect the church's financial records."

What this means for churches

This case illustrates three important points. First, members of churches incorporated under state nonprofit corporation law often are given a limited right to inspect specified church records. Second, a person whose membership in the church has been revoked may no longer have any legal right to inspect church records, even if the revocation of membership occurred after the member's initial request to inspect records. Very few courts have addressed this second point, and so it should not be assumed that courts in other states will agree with this conclusion. However, at a minimum, this case will serve as legal support for such a position. Third, the church board revoked Joel's membership in part because of his decision to sue the church.

Many churches have enacted bylaws calling for the discipline or dismissal of members who sue the church. This case suggests that such provisions will be enforced by the civil courts.

Levitt v. Calvary Temple, 2001 WL 423040 (Colo. App. 2001).

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Posted:
  • July 2, 2001

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