Key point 10-16.7. Donors may be able to recover designated contributions to a church if their contributions were not applied to the designated purpose, so long as doing so would not implicate religious doctrine.

A Michigan appeals court ruled that the civil courts are not barred by the First Amendment's religion clauses from resolving a donor's claim that the church failed to apply his designated contribution to his designated purpose, so long as religious doctrine was not implicated. The chairman of a church's board of trustees (the "plaintiff") donated more than $41,000 into a restricted fund whose purpose "was to raise money to expand the church and build a fellowship hall." Several years later, the plaintiff sued the church, claiming that the donated funds had not been used to build a fellowship hall, that the funds were used for other purposes without plaintiff's permission, and that the plaintiff unsuccessfully asked for a return of the money numerous times.

The lawsuit claimed that the plaintiff was entitled to a refund of his donation on the basis of several grounds, including conversion, breach of contract, and fraud and misrepresentation.

A trial court dismissed the lawsuit, and the plaintiff appealed. A state appeals court began its opinion by noting:

It is well settled that courts, both federal and state, are severely circumscribed by the First and Fourteenth Amendments to the United States Constitution and … the Michigan Constitution in resolution of disputes between a church and its members… . Jurisdiction over disputes between churches and their members is limited to property rights which can be resolved by application of civil law. A court loses jurisdiction over disputes when resolution requires the court to entertain "questions of religious doctrine or ecclesiastical polity."

In this case, the court concluded, "resolution of the plaintiff's claims does not require a court to analyze questions of religious doctrine or ecclesiastical polity. The claims are based on the alleged facts that the restricted fund had a designated purpose of expanding the church and building a fellowship hall, that plaintiff donated money into the fund for that purpose, and that plaintiff's donations were not used for the designated purpose."

The court analyzed each of the plaintiff's claims:

Looking to the substance of the specific claims, the conversion claims add additional allegations that plaintiffs were entitled to return of their money, asked for return of the money, and did not receive the money. The contract claims add the allegation that there was an agreement that the donated money would be used for the sole purpose of building a fellowship hall. The fraud claim adds the allegation that defendants made a material misrepresentation that induced them to donate the money… . Under the alleged facts, the dispute does not require a court to analyze questions of religious doctrine or ecclesiastical polity. Rather, resolving the issues merely involves property rights and applying civil law.