Church’s Push to Strip Members’ Power to Vote Falls Flat on Appeal

Deviating from governing documents can expose pastors and church leaders to legal challenges.

Bio

State: Michigan
Categories: Charters, Constitutions, and Bylaws

Key point 6-02.2. Churches are subject to the provisions of their governing documents, which generally include a charter and a constitution or bylaws (in some cases both). A charter is the state-approved articles of incorporation of an incorporated church. Most rules of internal church administration are contained in a constitution or bylaws. Specific and temporary matters often are addressed in resolutions. If a conflict develops among these documents, the order of priority generally is as follows—charter, constitution, bylaws, and resolutions.

Key point 6-06.2. Officers and directors must be legally authorized to act on behalf of their church. Legal authority can be express, implied, inherent, or apparent. In addition, a church can ratify the unauthorized actions of its officers or directors, but this is not required.

Key point 9-07. The First Amendment allows civil courts to resolve internal church disputes so long as they can do so without interpreting doctrine or polity.

A Michigan court ruled that the attempt by a pastor and some church members to eliminate the voting power of members was invalid because it was in violation of the church’s articles of incorporation, and the First Amendment did not prevent the plaintiffs from challenging the unlawful actions in court since no doctrinal considerations were implicated.

Background

A church incorporated as a nonprofit religious corporation in 1968 by filing articles of incorporation with the state of Michigan.

Making a quiet change in church governance, if pursued for the wrong reasons, can erode a congregation’s trust, writes attorney and Church Law & Tax Senior Advisor Erika Cole.

Its constitution and bylaws, also drafted in 1968, specified that governance of the church would be vested in the church’s members, and that the church’s leadership would be charged with carrying out the will of the members.

The constitution and bylaws gave members of the church the right to elect who was to serve as the church’s pastor and who was to serve on the church’s governing board. These documents gave them the right to remove the pastor or members of the governing board as well, along with the right to amend or repeal the constitution or bylaws by a majority vote.

However, in 2011, the church amended its constitution and bylaws to give the governing board (now known as the board of elders) the power to choose a senior pastor who, in turn, can nominate members for election to the board of elders. The board then must approve the nominees by a majority vote.

Likewise, only the board can remove either the senior pastor or a member of the board. Lastly, only the board can amend or appeal the constitution or bylaws.

In 2019, the church’s constitution and bylaws were amended again to say that the church’s members had no voting power and that any membership vote would be advisory in nature.

Church members sue senior pastor, church

Several members (“plaintiffs”) sued in early 2020, alleging the senior pastor and church (“defendants”) adopted the 2019 amendments without the consent of the church’s members.

The plaintiffs asked the court to rule the church was organized on a “membership” basis, rather than a “directorship” basis, under the Michigan Nonprofit Corporation Act (MNCA) and that the 2019 amendments were invalid.

They also asked the trial court to order the church to adopt a new set of bylaws.

The defendants argued that, through the 2011 and 2019 amendments, the church had declared itself to be “directorship” based, and if the trial court were to declare otherwise, it would entangle itself in purely ecclesiastical questions. The defendants argued that the court should abstain from deciding this question under the “ecclesiastical abstention doctrine.”

The plaintiffs responded that the church was indisputably organized on a “membership” basis as made plain by the following provision from its corporate articles of incorporation with the state:

The doctrine, rules and discipline shall generally be based upon those of the [church] as modified and agreed upon, however, by the members of this church, and in no event shall the doctrine and business of this church be subject to or controlled by any higher church authority than the membership of this church.

Contending that the 2011 and 2019 amendments conflicted with the church’s membership-based structure, the plaintiffs argued that they were invalid. They alleged that not only did the 2011 and 2019 amendments conflict with the church’s membership-based structure, but the church’s members had never voted to approve them. So, the plaintiffs contended, 2011 and 2019 amendments were invalid for this reason as well.

The trial court ruled in favor of the plaintiffs.

The court concluded that applying the MNCA to resolve an issue involving corporate governance was not an ecclesiastical matter.

Next, interpreting the church’s articles of incorporation, the trial court concluded that the church was organized on a membership basis under the MNCA.

Accordingly, the church could not adopt bylaw provisions depriving members of their voting power, for such provisions would conflict with the church’s articles of incorporation.

The trial court entered a final order granting summary disposition in favor of the plaintiffs, declaring the 2011 and 2019 amendments null and void.

Defendants lose appeal

The defendants appealed, claiming that the civil courts were barred by the ecclesiastical abstention doctrine from resolving this internal church dispute.

The appeals court began its opinion by noting that the ecclesiastical abstention doctrine “arises from the Religion Clauses of the First Amendment of the United States Constitution.”

The purpose of the ecclesiastical abstention doctrine is “to ensure that, in adjudicating a particular case, a civil court does not infringe the religious freedoms and protections guaranteed under the First Amendment.”

And, when deciding whether the doctrine bars a particular claim against a religious entity, “what matters is whether the actual adjudication of a particular legal claim would require the resolution of ecclesiastical questions; if so, the court must abstain from resolving those questions itself, defer to the religious entity’s resolution of such questions, and adjudicate the claim accordingly.”

The court concluded:

Whether the Church was organized on a membership basis or a directorship basis was not an ecclesiastical question—it was a corporate law question. To answer this question, the trial court needed to look no further than the Church’s [articles of incorporation] and the MNCA. Resolving the parties’ dispute did not require the trial court to interpret any of the Church’s religious doctrine or to pass judgment on what it believed to be the form of corporate governance most in line with the Church’s discipline or values. It simply required the trial court to apply Michigan statutory law against the language of the [articles of incorporation]. … If there were any doubt, our Supreme Court has intimated that a question about a church’s corporate structure is not an ecclesiastical question. Borgman v. Bultema, 182 N.E. 91 (1921).

The Borgman case also concerned two groups within a church that disagreed about the church’s corporate governance structure. The defendants attempted to amend the church’s articles of association to change the church’s government structure from presbyterial to congregational.

In the Borgman case, the state Supreme Court “did not abstain from resolving whether the defendants’ attempted amendment was valid, but instead adopted the trial court’s conclusion that the church constitution called for a presbyterial form of government, and that the defendants’ attempted amendment was void since it conflicted with the church’s constitution.”

The appeals court continued: “In short, resolving whether the Church was organized on a membership or directorship basis did not require the trial court to entangle itself in any ecclesiastical or religious matter. The trial court therefore did not err by adjudicating plaintiffs’ claim.”

What this means for churches

Some churches have attempted to eliminate the members’ right to vote by amending the church’s governing documents. As this case illustrates, such actions are subject to challenge if not done in strict conformity with the church’s governing documents.

In this case, the defendants’ attempt to eliminate the voting power of members was invalid because it was in violation of the church’s articles of incorporation, and the First Amendment did not prevent the plaintiffs from challenging the unlawful actions in court since no doctrinal considerations were implicated.

Bogle v. Sewell, 2022 WL 1702365 (Mich. App. 2022).

Legal Developments

Pastor Lacked Authority to Appoint Board Members

The appointments were rescinded because they violated the church’s bylaws.

Richard R. Hammar, Attorney, CPA

Bio

State: New York
Categories: Charters, Constitutions, and Bylaws, Officers, Directors, and Trustees

Key point 3-01. In general, clergy have the legal authority to do those things specifically authorized in their employment contract, in their church’s constitution or bylaws, or by specific delegation of authority from the church board or congregation.

Key point 6-06.01. Churches select their officers and directors in various ways. For example, it is common for members of a church board to be elected by the church’s membership, while officers are elected by the board. The civil courts generally refrain from resolving disputes involving the selection of church officers and directors on the ground that the First Amendment guaranty of religious freedom prevents them from becoming involved in ecclesiastical disputes.

A New York court ruled that a pastor lacked the authority under his church’s bylaws to appoint members of the board of trustees, meaning all transactions entered into by the board had to be rescinded.

Background

This case involved a dispute as to who is in control of a church, (the “church”), a religious corporation. On March 1, 2021, the pastor of the church unilaterally appointed seven persons to the board of trustees of the church (“the new board of trustees”).

The new board of trustees elected a new pastor and voted to amend the church’s certificate of incorporation and bylaws to transfer all of the church’s property to another religious corporation.

As this case shows, fundamentals matter when it comes to sound church governance, and Church Law & Tax’s Church Governance: What Leaders Must Know to Conduct Legally Sound Church Business is a must-have for pastors and church leaders in search of answers surrounding this critical topic. Order your copy today. (Advantage Members enjoy an additional 20% off ALL store purchases.)

Original board seeks injunction

The original board of trustees (the “plaintiffs”) sought a preliminary injunction noting that under the bylaws that controlled the affairs of the church on March 21, 2021, the pastor lacked authority to unilaterally appoint the new board of trustees and that their appointments were therefore nullities (void). The plaintiffs further claimed that all the actions taken by the new board of trustees following their appointment were also nullities.

The church’s bylaws at the time the pastor appointed the new board of trustees controlled the affairs of the church. Article IV of the 1990 bylaws stated, in relevant part:

The trustees, other than the first Board of Trustees, and except as provided in any Article of these By-laws, shall be elected at the annual meeting of the voting members, and each trustee elected shall serve until the next succeeding annual meeting and until his successors shall have been elected and qualified. The board of Trustees shall be authorized to increase their number by unanimous consent.

Court: The plaintiffs “will likely prevail on their claim”

The court noted that the plaintiffs “correctly contend that there are no provisions in the . . . By-Laws which permitted the [pastor] to act unilaterally in appointing the New Board of Trustees on March 1, 2021,” and so his appointments “were therefore nullities and all the actions taken by the New Board of Trustees subsequent to March 1, 2021 were also nullities.” The court concluded:

Here, the plaintiffs established their right to a preliminary injunction. The plaintiffs demonstrated that they will likely prevail on their claim that the [pastor] acted without authority when he appointed the New Board of Trustees and that until [the church] holds another election for the purpose of electing new trustees, those persons who were Trustees prior to March 1, 2021 should remain in control of [the church].

The court made several orders, including:

The board of trustees shall consist of those trustees in office as of the date of the business meeting on March 1, 2021, and they “shall have all the authority set forth in the 1990 By-Laws to act on behalf of” the church;
The deed purporting to convey the church’s property to another religious organization is rescinded;
The new board of trustees “are enjoined from conducting and/or engaging in any business on behalf of” the church as the board of trustees of the church;
Any changes and corporate amendments made by the new board of trustees are hereby vacated;
The former board of trustees are directed to turn over all documents, papers, and effects in their possession which belong to the church to the lawful board of directors;
The former board of trustees are directed to restore the original locks to the church and/or provide keys to the locks at the church to the lawful board of trustees;
The former board of trustees are restrained from “bringing in, appointing and/or hiring any pastor, reverend or spiritual advisor to preside over” the church; and
The former board of trustees are enjoined from denying any member or trustee of the church entry to the church.

What this means for churches

This case demonstrates the fundamental principle that a minister cannot unilaterally appoint members of a church’s governing board in a manner that conflicts with the church’s bylaws or other governing documents.

And, if this principle is violated, the church may be required to rescind any and all legal obligations entered into by the purported board members following their unauthorized appointment. This obviously can lead to havoc, which is good reason for churches to be sure that contracts and other commitments are executed by persons having legal authority to do so.

Southern Baptist Church, Inc. v. Samuel, 2021 N.Y. Misc. LEXIS 6234 (2021)

Legal Developments

Court Can Resolve Church Dispute over the Election of a New Pastor

Such intervention is allowed if the court does not address religious doctrine or polity.

Richard R. Hammar, Attorney, CPA

Bio

State: Virginia
Categories: Charters, Constitutions, and Bylaws, Church Business Meetings

Key point 2-01.05. A minority of courts are willing to review the selection of ministers in limited circumstances so long as they can do so without any inquiry into religious doctrine.

Key point 6-12.01. Church membership meetings must be conducted in accordance with the procedural requirements ordinarily specified in the church’s governing documents. The most common requirements pertain to notice, quorum, and voting.

Key point 6-12.04. Most courts refuse to intervene in church disputes concerning the validity of a membership meeting that was not conducted in accordance with the procedural requirements specified in the church’s governing documents. However, some courts are willing to intervene in such disputes if they can do so without inquiring into religious doctrine or polity.

Key point 6-12.05. Some courts will supervise church elections to ensure compliance with the procedural requirements specified in the church’s governing documents if they can do so without inquiring into religious doctrine or polity.

A Virginia court ruled that it was not barred by the First Amendment guaranty of religious freedom or the ministerial exception from resolving an internal church dispute over the legality of an election.

Background

In 2017, a church’s senior pastor announced his retirement.

During a worship service on February 18, 2018, the pastoral search committee announced the name of a candidate (the “candidate”) for senior pastor.

Because two-thirds of the congregation must affirm the senior pastor, the church’s deacon board determined:

a vote would take place in March of 2018;

the church would hire a third-party vendor to count the votes; and

the deacon board would provide a list of members who were eligible to vote in the election.

The deacon board also determined that members who did not have certain membership records still would be deemed eligible to vote, and members for whom the church lacked contact information would be permitted to vote only if they appeared in person.

At the start of the election, the deacon board compiled a list of 1,302 active members eligible to vote. In reaching that number, the deacon board struck 347 members from the voter rolls because they were missing certain records. This conflicted with the deacon board’s earlier decision to deem those persons eligible to vote.

Regardless, on March 27, 2018, after the polls closed, the deacon board issued a letter to the general membership, notifying them that the candidate had not received sufficient votes to be confirmed as senior pastor.

After voting concluded and the candidate had not been confirmed, the deacon board met again to audit the church’s membership rolls. Based upon this post-election audit, the deacon board removed more members from the list of active members, which resulted in lowering the threshold for the two-thirds vote. In accordance with the new threshold, the candidate was confirmed as senior pastor.

Five members contest the election process used

On April 30, 2021, five members of the church (the “plaintiffs”) filed a lawsuit in civil court seeking the court to:

Declare that the deacon board’s alteration of the membership rolls after the election violated the church’s governing documents and, therefore, the confirmation of the candidate was invalid;

Enjoin (meaning stop) the church from holding another election without first determining appropriate rules and parameters; and

Appoint a receiver, “who can protect the interest, assets and other values . . . until such time new leadership is formally determined [by another election].”

The church asked the court to dismiss the lawsuit on the ground that the court was barred from intervening by the Free Exercise Clause and the Establishment Clause of the First Amendment to the US Constitution, as well as the judicially recognized doctrine known as the ministerial exception.

Constitutional protections

The church argued that deciding this case would require the court to violate the First Amendment because the court would need to enter the “religious thicket” and consider issues pertaining to church governance by reviewing the church’s appointment of the candidate.

The plaintiffs counterargued that the case was not barred by the First Amendment because they were merely asking the court to apply “neutral principles of law” to determine whether the church violated its own governing documents and basic democratic principles.

The court agreed with the plaintiffs and ruled that it had jurisdiction over this case. It noted that the plaintiffs sued out of a concern of whether “the Deacon Board’s decision to finalize the membership roll after the results of the 2018 election was in compliance with Bylaws, Constitution and other applicable policies.”

The court continued:

Contrary to [the church’s] claims, none of this . . . requires the Court to delve into a religious thicket by reviewing religious principles of membership. Moreover, . . . there is no allegation in Plaintiffs’ [lawsuit] of a doctrinal dispute between two factions, [the church] also lacks an internal tribunal to decide conflicts, and Plaintiffs have alleged an undemocratic proceeding. Since [the church] lacks internal tribunals to rule on such matters, civil court action is necessary to resolve this dispute. . . .

[Plaintiffs] seek judicial review of [the church’s] compliance with its own Constitution and Bylaws. . . . (“Specifically, the dispute is whether the Church complied with its own requirement [that] at least two-thirds of the entire Congregation . . . confirmed the call of [the candidate].”) . . . However, [the church] cautions that in [this] case, the Court is likely to enter the “religious thicket” because, in order to determine whether the vote was conducted fairly, [it] will need to examine [the church’s] good standing criteria, and this requires delving into what makes a good Christian.

The court disagreed with the church’s argument:

Nowhere in the [lawsuit] do Plaintiffs challenge the substantive matter of whether a member was in good standing. Rather, [they] argue that the Board of Directors manipulated the voter rolls after the election, and that [the candidate] was not confirmed by a two-thirds vote as required by the Bylaws and Constitution. Deciding this case will therefore merely involve the application of basic democratic election principles. Accordingly, the Court may decide this case.

The court concluded:

Plaintiffs seek a court declaration that the confirmation of [the candidate] and the Deacons Board’s decision to modify the membership roster after the election had concluded, violated [the church’s] governing documents and policies. Importantly, Plaintiffs do not ask the Court to inquire into [the candidate’s] “administrative pastor fitness to perform duties,” but rather Plaintiffs ask for “the protection of the court for the purpose of obtaining a fairly conducted meeting” and “in protecting civil and property rights.”

Ministerial exception

The church also claimed that the plaintiffs’ lawsuit was barred by the “ministerial exception,” which generally bars the civil courts from resolving employment disputes between churches and ministers. The court noted that the ministerial exception “protects religious institutions from secular interference with the selection of ministers.” It further noted that the Supreme Court of Virginia has recognized that the First Amendment prohibits judicial intervention when it would limit the church’s right to select its religious leaders.

The court concluded:

[D]eciding the underlying case against [the church] would not interfere with its right to select its Senior Pastor. First, the underlying case . . . is not an action being brought by a minister (or other key religious member) against the church alleging employment discrimination. Instead, this action is brought by five members of [the church’s] congregation who, on the face of the lawsuit], do not appear to hold any role in [the church] other than that of a general member. Additionally, there is no allegation that [the church] fired any of the Plaintiffs from a religious position. Here, Plaintiffs merely seek judicial review of [the church’s] compliance with its own Constitution and Bylaws pertaining to the 2018 election. Further, there is no mention of employment discrimination [in the plaintiffs’ lawsuit]. Although the language of the ministerial exception does not explicitly state it cannot be applied to other scenarios, that silence does not mean it may extend to election issues. Here, Plaintiffs only ask for democratic, neutral principles of law to be enforced. The Court is not asked to determine whether [the candidate] would make a good pastor, or if he may stay within said position. Accordingly, the ministerial exception is inapplicable to the case at hand.

The church further claimed that the plaintiffs violated the ministerial exception by asking the court to “install a receiver with ‘all powers,’ including overseeing the ‘determinat[ion]’ of ‘new leadership.’”

Again, the court disagreed, noting that the plaintiffs had merely requested the appointment of “a receiver to protect the Church’s assets until the Court fully adjudicates all issues raised herein.”

The court explained:

The “all powers” referred to in the [lawsuit] is “all powers to protect the assets of the corporation until such time as new leadership is determined.” . . . [I]t is well-within constitutional bounds for a court to appoint a commissioner “to oversee a congregational meeting, and actually to preside, if necessary.” Here, Plaintiffs ask for much less. There is no request that the receiver will lead the church in doctrinal matters, or even that they will oversee the vote.

What this means for churches

There are three points to note about this case.

First, the court concluded that the civil courts do not necessarily have to refrain from resolving internal church disputes involving the legal validity of membership meetings.

The resolution of such disputes is barred by the First Amendment only if an inquiry into church doctrine would be required. The court concluded that a civil court could resolve a lawsuit seeking to determine if a church complied with a requirement in its constitution and bylaws—that the call of a new pastor must be confirmed by a two-thirds vote of the congregation—since doing so would not implicate religious doctrine.

Second, the court rejected the church’s argument that the civil courts are barred by the First Amendment and ministerial exception from overseeing church elections to ensure compliance with the procedural requirements specified in the church’s governing documents if they can do so without inquiring into religious doctrine or polity.

And third, upon later review by a circuit judge, the election of the candidate was deemed to be “null and void,” as was the decision to modify the membership roster. The church was ordered to conduct a new election “with transparent procedures consistent with the Articles of Incorporation, Constitution and Bylaws.” However, the circuit judge rejected the appointment of a receiver because he found neither of the state’s two receivership statutes applied to the church’s situation.

Howard v. Heritage Fellowship Church, 108 Va. Cir. 260 (2021).

Legal Developments

Decision Reinforces When Courts Can—or Can’t—Resolve Church Bylaws Disputes

Many courts have concluded that the First Amendment guaranty of religious freedom prevents the civil courts from resolving any internal church conflict.

Richard R. Hammar, Attorney, CPA

Bio

State: North Carolina
Categories: Charters, Constitutions, and Bylaws, Church Business Meetings

Key point 6-06.4. Church officers and directors can be removed from office in the manner authorized by the church’s governing documents. It is common for church bylaws to give the membership the authority to remove officers and directors who engage in specified misconduct or change their doctrinal position.

Key point 6-12.1. Church membership meetings must be conducted in accordance with the procedural requirements ordinarily specified in the church’s governing documents. The most common requirements pertain to notice, quorum, and voting.

Key point 6-12.4. Most courts refuse to intervene in church disputes concerning the validity of a membership meeting that was not conducted in accordance with the procedural requirements specified in the church’s governing documents. However, some courts are willing to intervene in such disputes if they can do so without inquiring into religious doctrine or polity.

A North Carolina appeals court ruled that it could resolve a lawsuit claiming that (1) a church’s attempt to amend its bylaws was void because it was not done in accordance with the bylaws; (2) the trial court acted improperly in ordering a new church election to fill the vacant positions of deacon and trustee; and (3) the civil courts cannot resolve disputes over the selection of deacons and trustees when a church’s governing documents do not address the issue.

In 2013, members of a church (the “plaintiffs”) sued their church and its pastor. All the plaintiffs’ claims stemmed from the pastor’s management of church finances and a decision by the church in 2013 to amend the church bylaws changing various tenets of church doctrine as well as other aspects of the church’s day-to-day operations. The trial court denied the church’s motion to dismiss the case, rejecting the argument that the First Amendment barred the courts from adjudicating these claims. The court concluded that the church had “violated its bylaws in its 2013 attempts to vote on proposed amendments” and therefore those amendments were void. The trial court also found that, because the existing bylaws were “silent as to the process for removing deacons and trustees,” the trial court could not play any role in reviewing the removal of those officers from their posts. But the trial court nevertheless ordered the church to hold an election “to fill vacancies in the office of deacon and trustee . . . at the next regular business meeting of the church, but in any event, no later than ninety (90) days from the filing of this order.” The case was appealed.

The appeals court’s ruling

The appeals court began its opinion by noting that “the First Amendment of the United States Constitution prohibits a civil court from becoming entangled in ecclesiastical matters. However, not every dispute involving church property implicates ecclesiastical matters. . . . Courts may resolve disputes involving a religious institution through ‘neutral principles of law.’ The dispositive question is whether resolution of the legal claim requires the court to interpret or weigh church doctrine.”

1. Amending the bylaws

Did the trial court act correctly in striking down an amendment to the church bylaws on the ground that the amendment was not done consistently with the method prescribed in the bylaws? The court noted that while the civil courts have “no jurisdiction or right of supervision” in matters of polity, they can determine “‘whether the church tribunal acted within the scope of its authority and observed its own organic forms and rules’ with respect to ‘civil, contract or property rights.’” The appeals court added,

Put another way, when the church creates written bylaws that govern the use of church property, and other matters unrelated to church doctrine and religious practice, courts can review whether the church and its members followed the procedural rules created in those bylaws. . . . The trial court did so . . . when it declared that the means by which the church and its members voted to amend the bylaws violated the procedure established in the bylaws. We therefore affirm that portion of the trial court’s judgment.

2. The court-ordered election

The church challenged the trial court’s mandate that the church hold “an election to fill vacancies in the office of deacon and trustee . . . at the next regular business meeting of the church, but in any event, no later than ninety (90) days from the filing of this order.” The church insisted that this portion of the trial court’s order impermissibly assumes a supervisory role over church governance. The court agreed, noting that the trial court had “‘exceed[ed] its authority by . . . ordering a new vote.’”

3. Removal of deacons

The appeals court agreed with the church that the trial court properly determined it could play no part in determining whether deacons and trustees properly were removed from their posts. As the trial court held, the church bylaws “are silent as to the process for removing deacons and trustees,” and “neither party directs this court to any neutral principles of law [i.e., not involving an application of religious doctrine] that would permit this court to fill in the gaps. With no neutral principles to apply, the courts have no authority to wade into when and how these church leaders are removed from office.”

What this means for churches

This case illustrates the view of some courts that they can resolve internal church disputes if they can do so without interpreting church doctrine. Not all courts agree with this conclusion. Many have concluded that the First Amendment guaranty of religious freedom prevents the civil courts from resolving any internal church conflict. Davis v. New Zion Church, 811 S.E.2d 725 (N.C. App. 2018).

Legal Developments

Mosque Members’ Lawsuit Concerning Financial Improprieties Must Be Resolved By Binding Arbitration Due to Mosque Bylaws’ Arbitration Clause

Court concluded that the mosque’s bylaws constitute a contract between it and plaintiffs.

Richard R. Hammar, Attorney, CPA

Bio

State: New Jersey
Categories: Arbitration, Charters, Constitutions, and Bylaws

Key point 10-16.8. Churches have various defenses available to them if they are sued as a result of a personal injury. One such defense is an arbitration policy. By adopting an arbitration policy, a church can compel members to arbitrate specified disputes with their church rather than pursue their claim in the civil courts.

A New Jersey court ruled that a lawsuit that members of a mosque brought against other members as a result of alleged financial improprieties had to be resolved by binding arbitration as a result of an arbitration clause in the mosque's bylaws.

In 1989, a mosque was incorporated under the New Jersey Nonprofit Corporation Act. The mosque is a nonprofit charitable, religious, and educational organization. Its certificate of incorporation asserts its purpose is, among other things, to serve members of the Islamic faith by providing a house of worship, and its bylaws provide the different types of membership one may have in the mosque. One type is to be a member of the general assembly. The general assembly is composed of all "active members," defined as those who attend prayers regularly, participate "actively" in mosque "activities," abide by the bylaws, pay dues, and practice Islam daily. The general assembly is the highest authority in the mosque, although the Board of Trustees (board), which represents the general assembly, is the highest policy-making authority.

Several members of the mosque's general assembly sued the mosque and other members (the "defendants") alleging mishandling of mosque funds. Specifically, the lawsuit alleged that one defendant used the mosque's credit cards to pay for some of his personal expenses and the legal expenses of the mosque's imam. The plaintiffs also claim that the mosque retained a member as an insured on its health insurance plan after he ceased working for the mosque, and arranged to have the mosque pay for his children's school tuition.

The defendants asked the court to dismiss the complaint on the ground an arbitration clause in the bylaws compelled the claims in the complaint be submitted to arbitration. This arbitration clause provides as follows:

The board shall create an Islamic Arbitration Committee of 3-5 members in case of disagreement among board members or general assembly members of matters related to the center, such committee shall consist of a Lawyer, an Imam, and Community Leaders. All disputes arising hereunder shall be resolved by arbitration by the aforementioned committee pursuant to policies and procedures established by such committee from time-to-time. All parties involved shall approve of the members of the Arbitration Committee. Decisions of the committee shall be binding on all parties and may be entered in a court of competent jurisdiction.

The trial court declined to dismiss the plaintiffs' complaint, finding the allegations were "cognizable claims in a court. They deal with misuse of a corporate fund. They address those types of concerns that are standard in a corporation type dispute with regard to the conduct of the board. And those are things that clearly belong in a court to be adjudicated."

The defendants appealed, claiming that the arbitration clause required the lawsuit's claims to be submitted to arbitration.

A state appeals court began its opinion by noting that "arbitration is a favored method of resolving disputes," and that "the New Jersey Arbitration Act provides, in part, that an agreement contained in a record to submit to arbitration any existing or subsequent controversy arising between the parties to the agreement is valid, enforceable, and irrevocable except upon a ground that exists at law or in equity for the revocation of a contract."

Because of their favored status, arbitration agreements "should be read liberally to find arbitrability if reasonably possible … . If there is a valid and enforceable agreement to arbitrate disputes and the particular dispute between the parties falls within the scope of the agreement, the agreement must be enforced."

The court noted that "nonprofit corporate associations are given the utmost latitude in their regulation and management of intra-corporate affairs," and that "a voluntary association may, without direction or interference by the courts, draw up for its government and adopt rules, regulations and bylaws which will be controlling as to all questions of doctrine or internal policy." The court continued:

A non-profit organization's private law generally is binding on those who wish to remain members. Typically, a court will not intervene in the affairs of a non-profit association unless the complaining parties have suffered an invasion of their civil rights, of person or of property. Only the most abusive and obnoxious bylaw provision could properly invite a court's intrusion into what is essentially a … thicket. Ordinarily, the contracting parties, not the courts, must weigh and evaluate the wisdom of their corporate agreements and regulations. Having voluntarily submitted to the rule of the corporate majority, all members are thereby bound and are barred from seeking judicial redress unless the corporate rule or action complained of contravenes the certificate of incorporation, [state] law or a strong public policy of that state.

In the present case, the plaintiffs claimed that the arbitration provision was not contained in a contract but merely in the mosque's bylaws to which, they contend, they are not parties and thus not bound. However, the court noted, "as a matter of law, bylaws of a voluntary association become a part of the contract entered into by a member who joins the association … . Thus, the mosque's bylaws constitute a contract between it and plaintiffs."

The court ordered the plaintiffs' claims to be resolved by arbitration.

What this means for churches

This case is important because it illustrates that arbitration is a potential means of resolving internal church disputes without having to go to the civil courts. It is imperative that any arbitration provision be drafted by an attorney, since several courts have refused to enforce arbitration provisions in the governing documents of churches and religious denominations on the basis of technical defects not understood by the laypersons who drafted the provision. An attorney also will be able to apprise church leaders of the advantages and potential pitfalls of this form of dispute resolution. Matahen, et al. v. Sehwail, et al., 2016 WL 1136602 (N.J. App. 2016).

Legal Developments

The Extent of “Qualified Privilege” and the Legal Consequences of Violating Bylaws

Church Law and Tax Report The Extent of “Qualified Privilege” and the Legal Consequences of

State: New York
Categories: Charters, Constitutions, and Bylaws, Defamation

Church Law and Tax Report

The Extent of “Qualified Privilege” and the Legal Consequences of Violating Bylaws

Key point 4-02.03. A number of defenses are available to one accused of defamation. These include truth, statements made in the course of judicial proceedings, consent, and self-defense. In addition, statements made to church members about a matter of common interest to members are protected by a “qualified privilege,” meaning that they cannot be defamatory unless they are made with malice. In this context, malice means that the person making the statements knew that they were false or made them with a reckless disregard as to their truth or falsity. This privilege will not apply if the statements are made to nonmembers.

Key point 6-02.2. Churches are subject to the provisions of their governing documents, which generally include a charter and a constitution or bylaws (in some cases both). A charter is the state-approved articles of incorporation of an incorporated church. Most rules of internal church administration are contained in a constitution or bylaws. Specific and temporary matters often are addressed in resolutions. If a conflict develops among these documents, the order of priority generally is as follows: charter, constitution, bylaws, and resolutions.

Key point 6-08. State and federal laws provide limited immunity to uncompensated officers and directors of churches and other charities. This means that they cannot be personally liable for their ordinary negligence. However, such laws contain some exceptions. For example, officers and directors may be personally liable for their gross negligence or their willful or wanton misconduct.

A New York court ruled that a Jewish congregation’s board that blocked a congregational vote on the continued employment of its rabbi could be sued for a violation of the congregation’s bylaws, and defamation, and were not protected by either the “qualified privilege” or the qualified immunity from liability accorded by state nonprofit corporation law to uncompensated officers and directors. A Jewish congregation hired a rabbi for a three-year term. Two years into the term, at a meeting of the synagogue’s board, the board’s president, without providing the board members with prior notice that the rabbi’s future status would be considered, proposed that the rabbi’s employment not be continued at the end of his current term. By majority vote, the board agreed with the president’s proposal.

One month later the board held another meeting. At that meeting, members of the congregation objected to the board’s previous vote, claiming that it violated the congregation’s bylaws as well as New York nonprofit corporation law. These members called for a vote by the entire congregation as to whether to extend or renew the rabbi’s agreement to act as spiritual leader of the congregation. The board refused to allow such a vote to go forward.

Some of the board members submitted a petition demanding that the president call a special meeting of the congregation to discuss the continued employment of the rabbi following the expiration of his term, and to conduct a vote of the congregation as to the rabbi’s future status. A special meeting of the congregation was called, and the president indicated that a vote on the rabbi’s future would be held. However, at the meeting, an agenda was distributed that did not indicate that a vote would be taken. Upon realizing that the written agenda did not provide for a vote, many congregation members left the meeting. Nonetheless, at the meeting, a motion was made, and seconded, to approve a new three-year term for the rabbi. However, the board member who had been selected by the president to oversee the meeting, refused to allow a vote on the motion.

The rabbi and his supporters claim that during the meeting, a member defamed the rabbi by stating:

That [the rabbi] did not show up for morning services; that he failed to perform outreach for young families; that he used a different prayer book than the congregation; that he failed to lead Friday services when special evenings were planned for the same day; that he allowed non-kosher foods into the congregation’s kitchen and did not properly control the kosher validation of the kitchen; and, that he did not lead the Jewish High Holiday services.

The rabbi and some of his supporters (the “plaintiffs”) sued the board president and other board members (the “defendants”), claiming that their blocking of the congregational vote violated the congregation’s bylaws, and that statements made about the rabbi in one of the congregational meetings (quoted above) was defamatory. A trial court denied both claims, and the plaintiffs appealed.

Violation of bylaws

The plaintiffs insisted, and the trial court agreed, that the congregation’s bylaws authorized the congregation to vote on the extension of a rabbi’s term of employment, and therefore the defendants had acted unlawfully in blocking such a vote. It cited a section in the bylaws stating that “a rabbi shall be employed, engaged, retained and hired for a period of time and upon terms to be determined by the board of trustees and the congregation, as the rabbi and spiritual leader of this congregation. The members, at a congregational meeting, shall approve the hiring of the rabbi.”

But the defendants countered that this provision only authorized the congregation to vote on the initial selection of a rabbi, and not on the continuation of employment at the expiration of a specified term.

A state appeals court disagreed with the defendants’ position, noting that “the congregation’s bylaws did not limit the congregation’s authority to the hiring of a rabbi only, and exclude from the ambit of the congregation’s authority the power to extend or renew a hired rabbi’s contract.” The court noted that the congregation’s bylaws “broadly authorizes” congregation members to vote on “any question affecting the congregation.” The court concluded that “it cannot reasonably be disputed that the choice of spiritual leader of a congregation, and whether to renew that individual’s appointment, is a question affecting the congregation.”

Defamation

The plaintiffs claimed that the above-quoted statement about the rabbi made by a board member at a congregational meeting was defamatory. The defendants claimed that they were mere expressions of opinion, which cannot be defamatory.

The court noted that defamation consists of false statements about another, that are publicized, and that injure the victim’s reputation. The court noted that “since falsity is a necessary element of a defamation cause of action and only facts are capable of being proven false, it follows that only statements alleging facts can properly be the subject of a defamation action.” And this excludes expressions of opinion: “Expressions of opinion, as opposed to assertions of fact, are deemed privileged and, no matter how offensive, cannot be the subject of an action for defamation.”

The court concluded that the board member’s statements about the rabbi, made in a public meeting, pertained to matters of fact, not opinion: “Contrary to the defendants’ contention, these statements have precise meanings which are readily understood, and they are thoroughly capable of being proven true or false. Thus, the defamation cause of action is not subject to dismissal on the ground that the alleged statements constitute non-actionable expressions of opinion.”

Qualified privilege

The court rejected the defendants’ contention that the defamation claim had to be dismissed because the board member’s statements were protected by a qualified privilege. It noted that “courts have long recognized that the public interest is served by shielding certain communications, though possibly defamatory, from litigation, rather than risk stifling them altogether.” One example is the “common interest privilege,” which generally insulates from liability otherwise defamatory statements “made by one person to another upon a subject in which both have an interest.” This qualified privilege has been applied to communications carried out “in furtherance of a common interest of a religious organization.” The rationale for applying this qualified privilege in circumstances such as this is that “the flow of information between persons sharing a common interest should not be impeded.”

However, the qualified privilege for statements pertaining to matters of common interest is not absolute. It “may be dissolved if plaintiff can demonstrate that defendant spoke with ‘malice.'” In this regard, “malice” may be (1) “common law malice” consisting of spite or ill will, or (2) actual malice, meaning that the speaker knew that his or her statement was false, or made it with reckless disregard as to its truthfulness.

The court concluded that there was sufficient evidence of malice in this case to overcome the common interest privilege. It noted that some of the statements were demonstrably false, and were made “with common-law malice so as to overcome the common interest qualified privilege.” The statements were made “with the intent to and did undermine the rabbi’s authority as the spiritual leader of the congregation, and also to aid and further the defendants’ goal to interfere with and prevent the efforts by the rabbi and some members of the congregation to secure his continued employment.” The plaintiffs also alleged that the false statements “cast the rabbi in a negative light and reflected adversely on his competence as a rabbi, and harmed his standing and reputation with the congregants and others in the community.”

Qualified immunity of board members

The defendants claimed that they were immune from liability for either defamation or violating the congregation’s bylaws by blocking a congregational vote on extending the rabbi’s employment. They relied on the following provision in the New York Not-for-Profit Corporation Law:

No person serving without compensation as a director, officer or trustee of a corporation, association, organization or trust described in section 501(c)(3) of the United States internal revenue code shall be liable to any person other than such corporation, association, organization or trust based solely on his or her conduct in the execution of such office unless the conduct of such director, officer or trustee with respect to the person asserting liability constituted gross negligence or was intended to cause the resulting harm to the person asserting such liability.

Note the following points regarding the qualified immunity of board members:

• It applies to directors, officers, and trustees;

• Who serve without compensation;

• Of a tax-exempt organization;

• It does not apply to intentional misconduct or gross negligence.

The court conceded that the defendant board members were uncompensated and served on the board of a tax-exempt organization. The remaining question was whether the board members who blocked the congregational vote on extending the rabbi’s employment, or the board member who uttered the defamatory statement, had engaged in either intentional conduct or gross negligence since in either case there would be no qualified immunity from liability.

The court concluded that the defendant board members were not entitled to qualified immunity:

With regard to the remaining causes of action which seek money damages based on the defendants’ conduct in usurping the Congregation’s authority, the gravamen of the plaintiffs’ claims are that the defendants, “in bad faith and with malice,” usurped the congregation’s authority in “refusing to allow the congregation to” vote on the issue of the rabbi’s retention. The plaintiffs have alleged that the defendants refused to allow the congregants to vote on the matter in violation of … the congregation’s bylaws, and notwithstanding several petitions and letters delivered to the defendants requesting that the congregation be permitted to vote on the matter. Additionally, with regard to the defamation cause of action, as concluded above, the plaintiffs alleged malice. In short, essentially all of the plaintiffs’ allegations involve the intentional infliction of harm by the defendants … . Given the nature of the specific allegations as well as certain undisputed circumstances in this case, including the board’s refusal to allow the congregation to vote notwithstanding several demands, on this record, we conclude that there is a reasonable probability that the plaintiffs can establish that the defendants’ actions constituted gross negligence or were intended to cause the resulting harm … . Accordingly, at this stage, the defendants are not entitled to the benefit of the qualified immunity.

What This Means For Churches:

This case is instructive for several reasons.

First, it illustrates that a board’s disregard of a bylaw provision authorizing congregational votes on a minister’s employment may result in liability. The lesson is clear: board members, even by majority or unanimous vote, should not consider blocking a vote by the church’s membership on pastoral employment issues without first reviewing the church’s governing documents to be certain that such authority exists. If in doubt, consult with legal counsel.

Second, most states recognize a “qualified privilege” to defamation claims with regard to statements to church members having a “common interest” in the information communicated. But, as this case illustrates, this exception to liability based on defamation will not apply if the speaker acts with malice, which generally means making a statement the speaker knows to be false, or is made with a reckless disregard as to its truthfulness. So while the qualified privilege is important, and often will apply to statements made in church meetings, it is not absolute. It will not apply to statements that are made with malice. And, while the court did not address this issue, many other courts have limited the qualified privilege to statements made to church members, meaning that the privilege does not apply to meetings in which nonmembers are present.

Third, this is one of the few cases to address the application of a state nonprofit corporation law’s limited immunity provision to uncompensated board members of a religious congregation. The court concluded that the immunity provided by state law is limited or qualified, meaning that it does not apply to intentional misconduct or gross negligence. Kamchi v. Weissman, 1 N.Y.S.3d 169 (N.Y. App. 2014).

Legal Developments

Churches’ Right to Remove Clergy

Church Law and Tax Report Churches’ Right to Remove Clergy Key point 2-04.1. Most courts

State: Texas
Categories: Charters, Constitutions, and Bylaws, Clergy - Removal

Church Law and Tax Report

Churches’ Right to Remove Clergy

Key point 2-04.1. Most courts have concluded that they are barred by the First Amendment guarantees of religious freedom and nonestablishment of religion from resolving challenges by dismissed clergy to the legal validity of their dismissals.

A Texas court ruled that the civil courts are barred by the “ecclesiastical abstention doctrine” from resolving church disputes over the dismissal of ministers. In September of 2013 a pastor telephoned several church members to call a meeting for that evening. During the meeting the pastor confessed that he had taken money from the church to pay expenses for his sick mother. He asked the members if they wanted to retain him as pastor, and according to one of the attendees, most of the members present at the meeting agreed to forgive him and retain him.

One member disagreed, claiming that members had not received proper notice of the meeting. Ultimately, the pastor decided that a second meeting should be held the next evening. At the meeting the members again voted to retain him. The pastor believed that any issues related to his misappropriation of money had been resolved during these two meetings. But the following Saturday, as he arrived at church to prepare for the Sunday morning service, he was handed a letter stating that the church was terminating him for embezzling church funds. The letter was signed by two of the three board members listed in the church’s 2010 articles of incorporation filed with the Texas Secretary of State.

The pastor sued the two board members (the “defendants”), claiming that they had changed the church’s locks and unlawfully excluded him. He asked the court to issue an injunction restraining the defendants from interfering with his duties as minister. He claimed that neither defendant had the power to fire him because (1) one of the defendants had resigned from the church board, and the other had been removed, and (2) the church’s bylaws did not confer upon the directors the authority to terminate the minister.

The trial court determined that the two meetings called by the pastor did not comply with the church bylaws’ notice requirement, and that a special meeting complying with the bylaws’ notice requirement should be held. The pastor appealed.

A state appeals court noted that the so-called “ecclesiastical abstention doctrine” prevents the civil courts from “delving into matters focused on theological controversy, church discipline, ecclesiastical government, or the conformity of the members of a church to the standard of morals required of them.” The court noted that the church bylaws “contain provisions regarding the notice required for special meetings of members and directors, requiring that seven days’ notice be given at a regular worship service of the congregation or printed in the bulletin for special meetings of members.” The court noted that “no provision in the bylaws governs the basis for or manner in which a minister may be terminated,” and that “the bylaws did not specifically authorize directors to remove the minister.”

The court concluded: “The bylaws contain no provisions regarding termination of a minister. Thus, we cannot merely construe the bylaws under neutral principles of law to resolve the parties’ dispute … . Accordingly, we hold the trial court lacked jurisdiction over this dispute under the ecclesiastical abstention doctrine.”

What This Means For Churches:

The court referred to a recent ruling by the Texas Supreme Court, Masterson v. Diocese of Northwest Texas, 422 S.W.3d 594 (Tex. 2013). In Masterson, the Texas Supreme Court concluded that “whether a church’s vote to disassociate from a diocese complied with the church’s bylaws was reviewable using neutral principles of law to determine whether the church or the diocese owned the church building.” Masterson “reaffirmed that courts should defer to religious entities’ decisions on ecclesiastical and church polity questions,” but held that “courts are to apply neutral principles of law to issues such as land titles, trusts, and corporate formation, governance, and dissolution, even when religious entities are involved.” After Masterson, “it is unclear whether the propriety of the termination of a minister, which older cases seemed to suggest was a categorically unreviewable ecclesiastical question, may now be reviewed applying neutral principles of law in cases in which the question turns on the substance of a document to which neutral principles of law may be applied, such as an incorporated church’s bylaws.”

In this case the church bylaws were silent on how the pastor could be removed, and so the court could not apply neutral principles of law to interpret them. Anderson v. Truelove, 446 S.W.3d 87 (Tex. App. 2014).

Legal Developments

Removal of Church Board Members

If a church neglects to address an issue in its governing documents, state nonprofit corporation law will provide the answer.

Richard R. Hammar, Attorney, CPA

Bio

State: Florida
Categories: Breach of Contract, Charters, Constitutions, and Bylaws, Officers, Directors, and Trustees

Key point 6-02.2. Churches are subject to the provisions of their governing documents, which generally include a charter and a constitution or bylaws (in some cases both). A charter is the state-approved articles of incorporation of an incorporated church. Most rules of internal church administration are contained in a constitution or bylaws. Specific and temporary matters often are addressed in resolutions. If a conflict develops among these documents, the order of priority generally is as follows—charter, constitution, bylaws, and resolutions.

Key point 6-06.4. Church officers and directors can be removed from office in the manner authorized by the church's governing documents. It is common for church bylaws to give the membership the authority to remove officers and directors who engage in specified misconduct or change their doctrinal position.

A Florida court ruled that state nonprofit corporation law governed the removal of board members in a church that did not address the issue in its governing documents.

A pastor and a member of a church's board of directors (the "defendants") attempted to remove the four other members of the board (the "plaintiffs") and replace them with new members. When the ousted board members discovered what had happened, they entered into protracted negotiations to resolve the dispute without recourse to litigation. When that failed, the former board members sued the defendants, alleging breach of contract, breach of fiduciary duty, and fraud. A trial court dismissed the case on the basis of the "ecclesiastical abstention" doctrine which generally bars the civil courts from resolving internal church disputes. The court noted that any attempt on its part to resolve the dispute "would necessarily and excessively entangle this court in doctrinal and theological issues." The plaintiffs appealed.

A state appeals court ruled that the ecclesiastical abstention doctrine did not prevent it from resolving this case. It observed: "Plaintiffs are not categorically prohibited from ever seeking redress from the courts solely because a religious organization is somehow involved in the dispute. When a church-related dispute can be resolved by applying neutral principles of law without inquiry into religious doctrine and without resolving religious controversy, the civil courts may adjudicate the dispute …. Nothing in the record indicates that the plaintiffs have sought judicial intervention concerning any aspect of church governance. Instead, they allege that the defendants, acting without authority, attempted to remove specific board members from the organization in derogation of the requirements of [the Florida nonprofit corporation law]."

The court noted that the state nonprofit corporation law (under which the church was incorporated) specified the procedure to be followed in removing board members of nonprofit corporations, and stipulated that these procedures applied only to the extent that a corporation's articles of incorporation or bylaws did not address the issue. The court found nothing in the church's articles of incorporation or bylaws addressing the removal of board members, and so, by default the state nonprofit corporation law applied. The court concluded:

The church in the instant case did not decide this aspect of church governance for itself; the bylaws of the church do not address the composition of the board, the removal of board members, or any similar aspect of corporate management. Because the church in the instant case had no bylaws governing the removal of board members, [the nonprofit corporation law] dictates the required procedures.

Because the statute unambiguously establishes procedures of uniform law, the instant dispute can be resolved by applying neutral principles of law without inquiry into religious doctrine and without resolving a religious controversy. Thus, the allegations in the complaint may be evaluated without recourse to any policy, practice, or doctrine of the church. The court is not asked to interpret religious doctrine or to evaluate church policies. The allegations at the heart of the complaint—that the defendants improperly attempted to remove members of the board of trustees—are entirely controlled by neutral application of [the nonprofit corporation law] …. This is not an instance where the court's involvement would transgress upon the exclusive authority granted to churches under the First Amendment "to decide for themselves, free from state interference, matters of church government."

What this means for churches

There are a couple of points to note about this case. First, the court concluded that the civil courts do not necessarily have to refrain from resolving internal church disputes. The resolution of such disputes is barred by the First Amendment only if an inquiry into church doctrine would be required. Second, the court applied state nonprofit corporation law in determining the procedure for removing church board members since the church had not addressed this issue in its governing documents. This illustrates the basic principle that state nonprofit corporation law is a "gap filler." An incorporated church is generally free to address issues of administration and governance in its articles and bylaws in any manner it chooses, free from state interference. But, if it neglects to address an issue in its governing documents, then state nonprofit corporation law will provide the answer. Bendross v. Readon, 89 So.3d 258 (Fla. App. 2012).

Legal Developments

Court Intervention in Church Legal Disputes

If religious doctrine is involved, courts typically won’t intervene in governance disputes.

Richard R. Hammar, Attorney, CPA

Bio

State: Texas
Categories: Charters, Constitutions, and Bylaws, Church Members

Church Law & Tax Report

Court Intervention in Church Disputes

If religious doctrine is involved, courts typically won’t intervene in governance disputes.

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

Key point 6-12.4. Most courts refuse to intervene in church disputes concerning the validity of a membership meeting that was not conducted in accordance with the procedural requirements specified in the church’s governing documents. However, some courts are willing to intervene in such disputes if they can do so without inquiring into religious doctrine or polity.

A Texas appeals court ruled that it was barred by the “ecclesiastical abstention doctrine” from resolving a lawsuit brought by former church members alleging that the church failed to follow its bylaws in various respects. Former members of a church (the “plaintiffs”) sued the church and its trustees (the “defendants”) alleging that they breached their obligations to the plaintiffs, as members of the church, by failing to conduct elections for trustees; improperly conducting general meetings without a quorum; adopting amendments to the bylaws in violation of those bylaws; disenfranchising numerous members of the church who were critical of the trustees’ policies and procedures; refusing to allow these disenfranchised members to participate in meetings and refusing to provide them copies of church documents; establishing a mandatory monthly membership fee of $30; refusing to honor the members’ petitions to call special meetings or place matters on the agenda for other meetings; and altering the trustee-nomination procedure and committee-appointment process so that only persons appointed by them could be eligible for appointment.

The plaintiffs asked the court for a declaration that the amended bylaws were of no effect, all disenfranchised members would be restored to full rights as members, and the $30 membership fee invalidated.

The defendants claimed that the “ecclesiastical abstention doctrine” applied to divest the court of jurisdiction to hear the plaintiffs’ claims. The trial court agreed with the defendants and dismissed the lawsuit. The plaintiffs appealed on the ground that a resolution of their claims was not barred by the First Amendment or the ecclesiastical abstention doctrine since a civil court could resolve all of the claims using “neutral principles of law” requiring no inquiring into church doctrine.

A state appeals court affirmed the trial court’s ruling dismissing the case. It noted that the ecclesiastical abstention doctrine is based on the First Amendment’s free exercise of religion clause, which prohibits “governmental action that burdens the free exercise of religion by encroaching on a church’s ability to manage its internal affairs.” However, the court acknowledged that the civil courts have the authority to resolve “purely secular disputes that do not require an inquiry into religious doctrine.”

The court noted that the plaintiffs’ primary argument was that the church’s bylaws were changed inappropriately. It noted that “the church’s failure to follow its bylaws on a matter of internal governance is a matter of internal church governance and ecclesiastical concerns, and the courts may not interfere with that decision.” The court concluded:

The neutral principles of law approach does not apply here because the plaintiffs complain about matters of internal church governance. The disputes in this case do not involve contract, property, or civil rights. Instead, the plaintiffs contend that the trustees failed to comply with the bylaws when they allegedly called for elections, conducted meetings, and amended the bylaws; disenfranchised members; refused to allow those disenfranchised members to participate in meetings; refused to provide disenfranchised members copies of church documents; and established a mandatory monthly membership fee. Whether a church failed to “follow its bylaws on a matter of internal governance is also a matter of internal church governance and ecclesiastical concerns,” and we may not interfere with that decision.

Nor do courts have jurisdiction to decide who may or may not be members of the church. We conclude that the trial court lacked jurisdiction to hear the plaintiffs’ claims because they involve matters of internal church governance.

What This Means For Churches:

All courts would agree that they are prohibited by the First Amendment from resolving any internal church dispute requiring an interpretation of church doctrine or polity. However, the courts interpret doctrine and polity differently. Some courts, such as this one, interpret the concepts of doctrine and polity broadly to include a church’s adherence to its bylaws on matters of internal church governance. But other courts have taken a narrower view of doctrine and polity and have been willing to resolve some disputes involving church governance, so long as no inquiring into doctrine or polity is involved. 2011 WL 2685969 (Tex. App. 2011).

This Recent Development first appeared in Church Law & Tax Report, July/August 2012.

Legal Developments

Court Intervention in Church Legal Disputes

Courts will not resolve disputes that involve church doctrine.

Richard R. Hammar, Attorney, CPA

Bio

State: Florida
Categories: Charters, Constitutions, and Bylaws, Church Members

Church Law & Tax Report

Court Intervention in Church Legal Disputes

Courts will not resolve disputes that involve church doctrine.

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

Key point 6-06.1. Churches select their officers and directors in various ways. For example, it is common for members of a church board to be elected by the church’s membership, while officers are elected by the board. The civil courts generally refrain from resolving disputes involving the selection of church officers and directors on the ground that the First Amendment guaranty of religious freedom prevents them from becoming involved in ecclesiastical disputes.

Key point 6-10.1. 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 Florida court ruled that it was barred by the First Amendment guaranty of religious freedom from resolving an internal dispute involving an interpretation of a church’s articles of incorporation and bylaws, and applicable state nonprofit corporation law, because it could not do so without inquiring into religious doctrine. A church’s articles of incorporation provided for a seven-member board of directors to manage the “affairs of the corporation,” and director elections were to occur “annually at a meeting of the members of the corporation to be held without notice on the last Wednesday night of September each year.” The articles of incorporation further specified that “the bylaws of this corporation shall be made, altered, amended or rescinded by the board of directors of this corporation.”

The church’s bylaws addressed a number of governance issues, including the selection, authority, and discipline of members. With regard to discipline, the bylaws stated: “The church may, after due notice and consideration, terminate the membership of any member at the next scheduled business meeting or within 30 days by the vote of a simple majority.”

The bylaws also provided that regular business meetings were to be held monthly, and that “a majority vote of all active members present, unless otherwise stated herein, shall decide all matters.” The bylaws stated that they could be amended “by a majority vote of all active members present, at the regular business meeting or a special called meeting after one week’s notice.”

In 2007, a small group within the church comprised of its lead pastor, and associate pastor, and a lay leader, began discussions with members about the wisdom of, and biblical justification for, changing the church’s governance structure from congregation led to elder led. In 2008, after a regular business meeting adjourned, the pastor again raised with the members in attendance his proposal for an elder-led form of governance. The proposal met with strong opposition from several individuals.

The pastor met with several of the dissidents about what he considered to be grounds for removing them as members of the church. He called two special meetings of the membership to take action on “disciplinary matters” involving four of the dissidents. At the next regular business meeting a majority of the members attending voted to terminate those individuals’ memberships. After the vote, the pastor directed the four ousted members to leave the premises, which they eventually did, taking more than twenty sympathizers with them. Thereafter, the membership voted to amend the church’s articles of incorporation and bylaws as necessary to transition from a congregational church to an elder-led church, and to take a final vote at a special meeting the following month. Members also voted to reduce the number of church officers from five to three (the pastor, associate pastor and one layman), and make the membership of the board of directors and the board of elders identical.

Several of the dissidents (the “plaintiffs”) filed a lawsuit in which they asked the court to undo the membership terminations of the four members; the election of the pastor, associate pastor, and one layman to the reconstituted three-member board of directors; and the adoption of revised articles of incorporation and bylaws. The dissidents claimed that the meetings in which these actions were taken were conducted without proper notice, rendering the actions taken null and void. They further alleged that:

(1) The pastor and associate pastor were concerned that the church’s congregation-led government was inconsistent with biblical teachings, and accordingly they “decided on a plan to supplant congregation governance with elder-governance” under which “three male elders would make all decisions” for the church.

(2) The pastor took offense to statements by members who “voiced opposition to elder leadership” and shortly thereafter, he called special meetings to oust from their leadership positions and membership in the church those expressly opposed to the governance change.

(3) The individuals removed from leadership positions and excluded from church membership received no notice, “written or otherwise,” of “the charges against them or the nature of the action to be taken against them” at the meetings.

(4) The pastor and associate pastor “did not establish that those to be excluded [from membership] had become an offense to the church and to its good name by reason of immoral or unchristian conduct, or by persistent breach of his or her covenant vows, which [the] church’s constitution and bylaws require for exclusion.”

The plaintiffs claimed that the pastor and associate pastor had breached their fiduciary duties to the church by removing certain members, electing new directors, and changing its governing documents” in violation of the mandate under the state nonprofit corporation law (under which the church was incorporated) that corporate actions be taken in accordance with the church’s articles of incorporation and bylaws. This, the plaintiffs claim, the church did not do.

The pastor and associate pastor asserted that the dispute was not a doctrinally neutral dispute regarding church governance (whether the church should be congregation led or elder led). Rather, it was entirely an ecclesiastical matter, and so the civil courts had no power to intervene.

A state appeals court began its opinion by noting that the First Amendment “prevents secular courts from reviewing disputes requiring an analysis of theological controversy, church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required.” However, “the issue before us is whether the First Amendment prohibits judicial review of actions taken by a corporation allegedly in violation of its articles of incorporation and bylaws when the corporation is a church.” The court reasoned that “when a church-related dispute can be resolved by applying neutral principles of law without inquiry into religious doctrine and without resolving a religious controversy, the civil courts may adjudicate the dispute.” But if a church dispute cannot be resolved without delving into church doctrine, then the civil courts may not intervene. The court concluded that even though this case appeared to involve a dispute over the interpretation of a church’s governing documents, the dispute was sufficiently entangled with doctrinal issues to prohibit civil court review. The court concluded:

[Plaintiff] asks whether the church, a corporate entity, complied with its articles of incorporation and bylaws in terminating corporate membership, electing directors, and amending corporate documents. Thus, it implicates … neutral legal tenets. However, even where neutral law applies, secular courts must not become entangled in essentially religious controversies or intervene on behalf of groups espousing particular doctrinal beliefs …. First, the essential dispute in this case is not over property …. Rather, the controversy is solely over how the church should govern itself—an essentially religious matter. Second … [the church bylaws] detailed the procedure and grounds for terminating membership in the congregation. Consequently, any inquiry into whether the church adhered to its bylaws in excluding members necessarily entangles the court in religious matters protected by the First Amendment …. Finally, it is evident … that exercising jurisdiction in this instance would be tantamount to intervening on behalf of [a group] espousing particular doctrinal beliefs. We can discern no way under the facts of this case to draw a clean line between essentially religious matters protected by the First Amendment and matters of corporate law.

What This Means for Churches:

This case illustrates the important principle that the First Amendment bars civil court intervention in internal church disputes involving bylaw interpretations and compliance with applicable nonprofit corporation law, if a court’s resolution of the dispute might implicate church doctrine. Rosenberger v. Jamison, 72 So.3d 199 (Fla. App. 2011).

This Recent Development first appeared in Church Law and Tax Report, May/June 2012.

Legal Developments

Expelled Church Members Sue Church, Directors and Officers

Court agrees to resolve former members’ complaint.

Richard R. Hammar, Attorney, CPA

Bio

State: Hawaii
Categories: Charters, Constitutions, and Bylaws, Church Members

Key point. According to the minority view, the civil courts may engage in "marginal review" of disputes involving the discipline of a church member, in a few limited circumstances if they can do so without inquiring into religious doctrine or polity. For example, a few courts have been willing to review membership dismissals in one or more of the following limited circumstances: (1) the church interfered with a member's civil, contract, or property rights; (2) the disciplining body lacked authority to act; (3) the church failed to comply with its governing documents; (4) the church's decision was based on fraud or collusion; or (5) interpretation of contested terminology in the church's governing documents.

A Hawaii court ruled that it was not barred by the First Amendment from resolving a complaint by several expelled church members challenging the legality of their expulsion.

A group of church members (the "plaintiffs") sued their church, and its directors and officers, alleging that the church was operated for profit, and that church funds and assets had been misused for the pastor's personal benefit. They also asked the court to recognize their legal right, under the state nonprofit corporation law, to inspect the church's financial records. The plaintiffs' lawsuit contained the following allegations:

The church was a nonprofit corporation that had been granted a charter of incorporation by the state on the condition that it was "not organized for profit, that no part of [the church's] assets, income, or earnings shall be withdrawn or distributed to any of its members, and that officers, employees, or members of [the church] would not be paid for services that were not rendered or to be rendered to [the church]."

The church paid for various properties being used by the pastor and his family members as personal residences.
During a two year period the pastor and his family had been paid nearly $500,000 in compensation and benefits by the church.
The church authorized the pastor and members of his family to lease expensive automobiles.
The church breached its fiduciary duties, obtained secret profits, wasted corporate assets, jeopardized its tax-exempt status, and conducted a faulty election of the church's directors in violation of the church bylaws.
There existed various other accounting discrepancies and financial irregularities pertaining to the governance of the church.

Following the filing of the lawsuit, the church expelled 156 of its members, including the plaintiffs. The church then asked the court to dismiss the lawsuit on the ground that the plaintiffs were no longer members and therefore lacked standing. The church also insisted that under the so-called "ecclesiastical abstention doctrine" the court had no jurisdiction to resolve what amounted to an internal church dispute.

The plaintiffs asserted that by incorporating under the state nonprofit corporation law the church voluntarily submitted itself to the jurisdiction of the civil courts; and, that because the church's act of expelling them from the congregation was not "fair and reasonable" as required by the nonprofit corporation law and violated the Church's own bylaws, they had standing to bring their lawsuit. Further, they claimed that since they were never lawfully expelled from the church, they were still members and had the right to under the state nonprofit corporation law to inspect the church's financial records.

The plaintiffs claimed that the ecclesiastical abstention doctrine did not prevent the court from resolving their claims since (1) they were alleging "secular causes of action and not non-reviewable matters of church polity or doctrine"; and (2) a determination that the church violated its bylaws, and state law, in expelling the 156 members would not require the court to make "any constitutionally prohibited inquiry into doctrinal matters or religious law."

The appeals court began its opinion by noting that it had to decide "whether the expelled church members can use the Hawaii Nonprofit Corporations Act as a vehicle for enforcement of the church's bylaws despite the constitutional doctrine of ecclesiastical abstention." The court concluded that the ecclesiastical abstention doctrine did not prevent it from resolving the plaintiffs' wrongful expulsion claim, or from recognizing their legal right to inspect church records.

The court made a distinction between hierarchical and congregational churches. Hierarchical churches have their own established rules for discipline and internal government, and tribunals "tied to and based on ecclesiastical law developed over long periods of time …. To delve into the decision-making processes of these bodies would entangle a court into the religious thicket."

But, in a congregational church there is no body of ecclesiastical law to invoke, no internal tribunal to appeal to. A member of a congregational church, seeking the aid of the court in protecting his civil and property rights, may appeal only to the simple and fundamental principles of democratic government which are universally accepted in our society. These principles include the right to reasonable notice, the right to attend and advocate one's views, and the right to an honest count of the votes.

Such rights are fundamental to our notions of due process. They are neutral principles of law, applicable not only to religious bodies, but to public and private lay organizations and to civil governments as well. Courts must apply them every day, and can do so without any danger of entering a religious thicket. Therefore, the authorities which preclude the courts from examining whether an hierarchical church correctly followed its own internal procedures, or correctly applied its canon law, are inapposite to the question before us.

Similarly, the ecclesiastical abstention doctrine did not prevent the court from enforcing the plaintiffs' right, under the state nonprofit corporation law, to inspect the church's financial records since such a decision "would not involve any religious or ecclesiastical matter." Baldonado v. Way of Salvation Church, 185 P.3d 913 (Hawaii App. 2008).

Legal Developments

Church Property and Denominational Ownership

A California court ruled that a provision in a church’s deed that required church property to revert to a denominational agency was legally enforceable by the civil courts.

Richard R. Hammar, Attorney, CPA

Bio

State: California
Categories: Charters, Constitutions, and Bylaws, Church Property

Key point 7-04. Churches and denominational agencies can avoid church property disputes by adopting appropriate nondoctrinal language in deeds, trusts, local church bylaws, or denominational bylaws .

A California court ruled that a provision in a church's deed that required church property to revert to a denominational agency in the event that the agency determined that the church no longer was in fellowship with it, was legally enforceable by the civil courts.

For many years, a church was affiliated with the Church of God denomination, and one of its regional associations ("regional church"). The church acquired property by a deed containing the following provision: "To have and to hold, so long as [the church] maintains fellowship and doctrinal unity with [the regional church] and the property remains in use by said church. If this property falls into disuse or, if in the opinion of said [regional church] the church is no longer in fellowship and doctrinal unity with the [denomination] this property shall go to, vest in and become the property, in fee simple, of the [regional church]."

In 2004, the regional church revoked the ordination of the church's senior pastor. The regional church's administrative board adopted a resolution stating that: (1) the pastor's credentials had been revoked; (2) the church's board of trustees had voted to retain him as pastor, despite his removal from the approved list of ministers; and (3) therefore, the church no longer was in fellowship and doctrinal unity with the denomination. As a result, the regional church filed a lawsuit in which it asked a court to rule that it was the lawful owner of the church's property by reason of the above-quoted clause in the church's deed.

The church claimed that the deed restriction was "no longer in accord with the policies or best interests" of the church since its board of directors have "ratified the use of the property for the general purposes of the corporation as an independent church rather than for the specific purpose for which it was [acquired]."

The regional church presented evidence that the church intended to include the reverter clause in the deed. It introduced an affidavit signed by the previous pastor, who was employed by the church for 27 years. The former pastor's affidavit established the church's lengthy affiliation with the regional church and the history of its governing documents.

He testified that the church's board of trustees intended to protect its property from unscrupulous church leaders and groups within the church by preventing them from taking control of the church's property. Indeed, he testified the purpose of the deed was to prevent the very situation that had occurred in this case.

A trial court ruled in favor of the regional church on the ground that it had established that the parties had intended to create a reversionary interest that was triggered by the church's acts. The church appealed.

A state appeals court affirmed the trial court's ruling in favor of the regional church. It began its opinion by noting that "the deed's language provided that the property was to go to the [regional church] upon the happening of a certain event subsequent to the deed's recordation." Specifically, if in the opinion of the regional church, the church was no longer in fellowship and doctrinal unity with the parent denomination, the property would revert to the regional church. The court concluded that this language created a "power of termination."

The church claimed that the language in the deed regarding "fellowship and doctrinal unity" is too ambiguous to be enforceable. The court agreed that it would be "both improper and impossible" for it to determine whether the church remained in "fellowship and doctrinal unity," but it concluded that the deed did not require such a determination.

Under the deed's plain language, this issue was clearly left in the hands of the regional church: "If in the opinion of said [regional church] the church is no longer in fellowship and doctrinal unity …." The court noted that "just as a contract that permits a buyer to unilaterally determine whether goods are of a sufficient quality is proper, so is the language of the deed. Its language places the issue squarely in the hands of the regional church, and as it offered evidence that it reached a determination on this matter, that opinion is sufficient to invoke the termination clause. We therefore find that the regional church established by sufficient evidence that under the deed, it was the legal owner of the property."

The court also addressed the church's argument that the trial court wrongfully interjected itself into ecclesiastical matters in violation of the First Amendment. Specifically, the church claimed that the trial court considered whether or not the church and regional church were in fellowship or doctrinal unity with each other. The court found this argument to be "an improper attempt to create a constitutional issue where none exists.

The trial court was not required to, and did not, make any factual finding as to whether it believed the church and regional church continued to be in fellowship or doctrinal unity. Under the plain language of the deed, all the trial court was required to find was whether the regional church believed that was no longer the case: "If in the opinion of said [regional church] the church is no longer in fellowship and doctrinal unity with the [denomination] this property shall go to, vest in and become the property, in fee simple, of the [regional church]."

As a result, the trial court "had no reason to determine whether the parties were in fellowship and doctrinal unity. It made no such finding, which would have been legally improper and irrelevant in any event. The terms of the deed did not call for the court to determine that issue; it was the regional church's opinion that mattered." New Hope Community Church of God v. Association of Church of God Southern California, 2007 WL 1493806 (Cal. App. 2007).

Legal Developments

Bylaws, Constitutions, and Charters

Most courts refuse to intervene in church disputes concerning the validity of a membership meeting that was not conducted in accordance with the procedural requirements.

Richard R. Hammar, Attorney, CPA

Bio

State: North Carolina
Categories: Charters, Constitutions, and Bylaws, Church Business Meetings

Key point 6-12.4 . Most courts refuse to intervene in church disputes concerning the validity of a membership meeting that was not conducted in accordance with the procedural requirements specified in the church's governing documents. However, some courts are willing to intervene in such disputes if they can do so without inquiring into religious doctrine or polity.
Church Business Meetings

A North Carolina court ruled that it was barred by the first amendment from resolving a lawsuit brought by church members claiming that the decision by a church congregation to incorporate as a nonprofit corporation was invalid because it was made at a meeting that failed to comply with the procedure specified in the church bylaws.

A church was founded in 1872 and operated for more than 130 years as an unincorporated association. All decision making authority was vested within the church's congregation. In 1991 the congregation adopted bylaws to govern church administration. During a membership meeting in 2003 the members voted to incorporate the church.

Some members who dissented from this action filed a lawsuit, seeking a court order declaring the church meeting invalid on the ground that it failed to comply with the "notice" requirements spelled out in the bylaws. A state appeals court concluded that the first amendment guaranty of religious freedom prevented it from resolving the dispute, and the case was dismissed. The dissident members insisted that the case could be resolved by the court without any inquiries into religious doctrine, and so the first amendment would not be violated. The court disagreed:

A court's exercise of jurisdiction is improper where "purely ecclesiastical questions and controversies" are involved. An ecclesiastical matter is one which concerns doctrine, creed, or form of worship of the church, or the adoption and enforcement within a religious association of needful laws and regulations for the government of membership, and the power of excluding from such associations those deemed unworthy of membership by the legally constituted authorities of the church; and all such matters are within the province of church courts and their decisions will be respected by civil tribunals.

The court pointed out that "numerous ambiguities exist in the bylaws, conflicts remain between both parties' interpretations of the bylaws, and long-established church customs exist that may alter the interpretation of the notice requirements listed in the bylaws," and that both sides disagreed about the type of meeting actually held. As a result, to resolve this lawsuit a court "would be required to delve into ecclesiastical matters regarding how the church interprets the bylaws' notice requirements and types of meetings," and therefore the case had to be dismissed.

The dissident members also argued that the civil courts may resolve "church property disputes" so long as they can do so without addressing church doctrine, and they insisted that the current dispute was a property dispute.

Specifically, they pointed out that if the church were allowed to incorporate then the bylaws could be amended by a simple majority vote rather than the two-thirds vote required under the existing bylaws. And, since a church member's right to vote is a valuable property right, the court in this case could resolve the dispute.

The court disagreed. It agreed that the first amendment does not prohibit the civil courts from resolving church property disputes not involving questions of doctrine. But, it disagreed that this case could properly be characterized as a property dispute. It concluded, "The claims of plaintiffs in this case only tangentially affect property rights. The courts of this state should not intervene in a question of whether [a church should be] organized as an unincorporated association or a nonprofit corporation. Plaintiffs have failed to assert a substantial property right which has been affected by the incorporation of the church." Emory v. Jackson Chapel First Missionary Baptist Church, 598 S.E.2d 667 (N.C. App. 2004).

Legal Developments

First Amendment Bars the Civil Courts from Intervening in Church Elections

A New Jersey court ruled that a trial court acted improperly in overseeing a church business meeting and the election of a pastor.

Richard R. Hammar, Attorney, CPA

Bio

State: New Jersey
Categories: Charters, Constitutions, and Bylaws, First Amendment, Officers, Directors, and Trustees

Key point 6-06.1 . Churches select their officers and directors in various ways. For example, it is common for members of a church board to be elected by the church's membership, while officers are elected by the board. The civil courts generally refrain from resolving disputes involving the selection of church officers and directors on the ground that the first amendment guaranty of religious freedom prevents them from becoming involved in ecclesiastical disputes.

Key point 6-09.2. Church members have such legal authority as is vested in them by their church's governing documents, and in some cases by state nonprofit corporation law.

A New Jersey court ruled that a trial court acted improperly in overseeing a church business meeting and the election of a pastor in a church that was beset with internal strife over doctrinal issues.

A Baptist church was organized in 1980. The church's bylaws describe church governance and administration. The bylaws establish three bodies to govern the affairs of the church—an executive board, a board of trustees, and a board of deacons. The executive board consists of the pastor, the board of trustees, and the board of deacons; it meets monthly and discusses all matters of the church, spiritual and financial. The trustee board consists of nine to eleven members elected annually and holds in trust all property belonging to the church, and designates the bank where the funds of the church shall be deposited. The deacon board assists the pastor in his spiritual work and consists of deacons appointed by a "free vote of the church, after recommendation by the pastor and deacons who possess the qualifications as recorded in 1 Timothy 3:8-13." In addition, there is an advisory council, consisting of the elected officers of the church and the chairs of all standing committees. The council is authorized to review and amend all agenda items before presentation to the church. Other officers include a treasurer, a financial secretary, and a clerk.

The bylaws specify that election of church officers is to be held during annual meetings of the church in the third week of November. The bylaws prescribe the process for nominating persons for church office. The advisory council appoints a nominating committee who prepares a list of members qualified to hold the various church offices, interviews the candidates to ascertain their willingness to serve, nominates one or more persons from the list for each office, and reports the nominees to the congregation. In addition, any member present at the annual meeting and qualified to vote has the privilege of nominating "any eligible person for any office not so nominated."

The church hired a senior pastor in 1989 and entered into a "pastoral agreement" obligating him to be cooperative, act in agreement with the deacons, remain in accord with the executive board, abide by the church constitution and bylaws, and espouse Baptist doctrines. In 1994, the pastor began efforts to implement a "full gospel" ministry at the church, a doctrinal teaching at odds with church theology before his arrival on the scene. Despite the executive board's disapproval, in 1997 and 1998 the pastor took several steps to advance the full gospel ministry at the church, including bringing a full gospel bishop to the church to instruct the executive board on full gospel theology, taking church members to a full gospel Baptist conference, and petitioning the deacon board for spiritual and financial support for the full gospel ministry. Based on the recommendation of the deacon board, the executive board voted to call on the pastor to honor all aspects of his pastor agreement and, if he could not, to inform him that steps would be taken to remove him from office. In addition, the executive board voted to forbid Carlton from introducing any full gospel teachings at the church's worship services. Carlton, apparently, agreed to abide by these recommendations. However, he later attacked the executive board and told the congregation that "I am going to do what I have to do." The executive board and the advisory council voted to terminate the pastor.

The decision to remove the pastor created such a tumult within the church that the executive board padlocked church doors and suspended church services. The pastor's supporters held an outdoor meeting at which time they retained the pastor, abolished the church's executive board and advisory council, abolished the church bylaws, and appointed a new 5-member committee to draft new bylaws. A civil lawsuit was filed to determine which group controlled the church. A trial court appointed an attorney as "moderator" to assist the court in resolving the underlying dispute between the parties. Specifically, the moderator was empowered to (1) establish the criteria for membership and the eligibility of members of the church to participate and vote at the annual meeting; (2) determine the issues to be presented at the meeting; (3) determine the voting procedures at the meeting; (4) determine the ballot questions to be presented at that meeting; (5) establish the form and manner of notice to be given; (6) resolve any other matters that would permit a fair and reasonable membership meeting to occur.

The moderator designated seven members of the church to serve as the nominating committee and directed that the committee propose a slate of candidates for the following positions: board of trustees, treasurer, financial secretary, clerk, and superintendent of Sunday school. After determining voter qualifications, the moderator supervised the annual meeting in which the pastor's supporters prevailed by a vote of 180 to 153. As a result, ecclesiastical control of the church passed from the church's executive board to a board comprised of the pastor's supporters. In a subsequent meeting, the congregation voted to retain the pastor by a vote of 152 to 125.

Several of the ousted church leaders appealed the court's ruling. The ousted leaders claimed that the church elections were void because they were contrary to the church's bylaws that vested ecclesiastical authority to determine the eligibility of nominees for church office exclusively in internal church governing bodies. By holding that nominations could be made by the membership without prequalification by the nominating committee the trial court impermissibly intruded into matters of church governance, practice, and polity. The pastor and his supporters argued that the trial court correctly interpreted church law to mean that the only rule is that the majority rules and that their faction represented the majority.

A state appeals court concluded that "in the absence of clear and unambiguous direction in church law, an intrachurch dispute over eligibility for nomination to church office, implicating as it does the more fundamental question of church governance and congregational structure, does not present a proper issue for judicial consideration." It concluded,

Irrespective of the approach used, courts are admonished to scrupulously avoid incursions into questions of ecclesiastical polity or doctrine that would be constitutionally impermissible. To be sure, the task of reconciling respect for the autonomy of religious organizations with the responsibility of courts to resolve conflicts involving civil matters is a difficult one. Admittedly, in some instances there is a gray zone between express secular terms and religious doctrine, and the distinction between the court's duty to abstain from religious questions and to decide legal disputes is blurred. Complicating the matter is the fact that the once simple dichotomy between hierarchical and congregational polities does not reflect the diversity of contemporary denominational structures ….

In the present case, the trial court adjudicated no simple property or contract dispute but rather an essential issue of church governance, polity, and administration—namely whether the church is a true democracy controlled by its membership or a more republican, representative structure governed by internal ecclesiastical bodies. Purporting to apply so-called "neutral principles" of law, the trial court opted for the former based on an interpretation of church bylaws that vested nominating authority in any church member without prior screening and recommendation by the nominating committee …. We conclude that the trial court's ruling in this regard was an inappropriate application of "neutral principles" jurisprudence. First and foremost, the method of neutral principles does not allow for construction of church documents if their interpretation is the focus of dispute and if such documents are not so clear, provable, and express that the civil courts could enforce them without engaging in a searching, and therefore impermissible, inquiry into church polity. Here, the issue of eligibility for office was a highly controverted question of faith within the congregation. Despite the obvious division of opinion, the basis for the trial court's resolution allowing for floor nominations is unclear, as are the rules of common law it relied upon to structure the church-member relationship implicated in this matter. In essence, the trial judge interpreted the term "eligible" to be without any religious significance despite plaintiff's contrary contention that the nominating committee pre-screens candidates for spirituality and religiosity. We emphasize that the application of neutral principles does not require courts to "neutralize" ecclesiastical words.

In the absence of clear direction in church law, judicial inquiry into church procedures is precluded. Although courts may intervene to determine whether established procedures of a religious organization, as proven, have been followed, courts should not intervene where such procedures are … less than clearly defined, or ambiguous. Because of such uncertainty, resolution of intrachurch disputes cannot be made without extensive, and therefore impermissible, inquiry into religious law and polity …. In this case, inquiring whether the nominating committee has exclusive ecclesiastical authority to determine eligibility necessitates interpretation of ambiguous religious law, the resolution of which would require a deeper probe into the congregational structure and allocation of power within the church. For instance, in the absence of an express procedure in the church bylaws, inquiry need be made as to where within the church the rules of polity, accepted by its members before the schism, had placed ultimate authority over the eligibility question …. Simply stated, neutral principles of civil law do not include standards for judging appropriate qualities for church leadership ….

Application of these principles compels judicial abstention in this case. The trial court's opposite conclusion … unwittingly entrenched itself in church affairs …. The court below became entangled in election procedures, appointing a monitor with broad powers to determine not only qualifications of voters, but in essence qualifications for office. Unfortunately, the court's involvement did not end there. After approving the results of the election for church officers, the court, through its appointed representative, continued to monitor and supervise the pastoral election after first designating those members responsible for recommending candidates to the church for consideration and vote, a task that the bylaws clearly and expressly assign elsewhere.

What this means for churches

This case presented the difficult question of the appropriate role the civil courts should play in overseeing church elections. The court concluded that the first amendment bars the civil courts from intervening in church elections involving questions of ecclesiastical polity or doctrine. Such was the case here, since the basic questions involved the selection of the church's pastor and lay leaders. The opposite conclusion would entangle the civil courts in church affairs. The court concluded that it could intervene in an internal church dispute to see if a church had followed its own procedures, but only if those procedures were clear and "proven" and a decision could be made without "extensive, and therefore impermissible, inquiry into religious law and polity." Solid Rock Baptist Church v. Carlton, 789 A.2d 149 (N.J. Super. 2002).

Legal Developments

Constitution, Bylaws and Charters

An Ohio court ruled that a church’s board of trustees had been properly ousted and replaced with a new board in a specially-called business meeting.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Charters, Constitutions, and Bylaws

Key point 6-02.02. Churches are subject to the provisions of their governing documents, which generally include a charter and a constitution or bylaws (in some cases both). A charter is the state-approved articles of incorporation of an incorporated church. Most rules of internal church administration are contained in a constitution or bylaws. Specific and temporary matters often are addressed in resolutions. If a conflict develops among these documents, the order of priority generally is as follows-charter, constitution, bylaws, and resolutions.

Key point 6-06.04. Church officers and directors can be removed from office in the manner authorized by the church's governing documents. It is common for church bylaws to give the membership the authority to remove officers and directors who engage in specified misconduct or change their doctrinal position.

Key point 6-12.01. Church membership meetings must be conducted in accordance with the procedural requirements ordinarily specified in the church's governing documents. The most common requirements pertain to notice, quorum, and voting.

Key point 6-12.04. Most courts refuse to intervene in church disputes concerning the validity of a membership meeting that was not conducted in accordance with the procedural requirements specified in the church's governing documents. However, some courts are willing to intervene in such disputes if they can do so without inquiring into religious doctrine or polity.

An Ohio court ruled that a church's board of trustees had been properly ousted and replaced with a new board in a specially-called business meeting that was called in accordance with state nonprofit corporation law. In 1988, a church hired a new pastor. Two years later, the church adopted bylaws to govern the church. Over the next several years, problems arose between the pastor and members of the church's board of trustees regarding how the pastor conducted church services. As a result of this conflict, the pastor resigned during a board meeting in which the trustees expressed their concerns. Following the pastor's resignation, certain members of the congregation expressed a desire to have the pastor reinstated. These members called a special meeting of the congregation at which 41 members were present. During this meeting the pastor was reinstated, and the board of trustees were ousted and replaced with a new board. The ousted board members filed a lawsuit in which they asked a court to declare them to be the lawful trustees of the church and to issue an order barring the "new" board from disbursing church funds and exercising authority and control over the church's property and functions.

A trial judge ruled that while the special meeting had not been properly called pursuant to the church's bylaws, it had been called in compliance with Ohio nonprofit corporation law and therefore the elections were valid. The previous board members appealed. They claimed that the provisions of state nonprofit corporation law apply to a church only to the extent that the church has not provided otherwise in its own bylaws. Since the church bylaws did address elections and meetings, these provisions "superseded" conflicting provisions in the state nonprofit corporation law. The state nonprofit corporation law specifies that "a nonprofit corporation may provide its own rules or regulations to govern the calling, noticing, and conducting of meetings of its members." The church bylaws state that "special meetings may be called at any time by the pastor, Board of Trustees Chairman, or by any one in authority so designated by the church." The "Notice of Special Meeting of Members" which was used to call the special meeting in this case stated that "the special meeting was called by the Pastor pursuant to the Bylaws, and also by the following members of the church corporation …." The notice was then signed by forty-two members of the church.

A state appeals court noted that at the time the special meeting was called, the pastor was no longer the pastor of the church. As a result, he was unable to call a special meeting pursuant to the church bylaws. Further, the special meeting was not called by the chairman of the board of trustees or any other person in authority so designated by the church, and so, pursuant to the church bylaws, the meeting was invalid.

The court noted that "the calling of meetings is also regulated by statute," and quoted from the state nonprofit corporation law: "Meetings of voting members may be called by any of the following … (3) The lesser of (a) ten percent of the voting members or (b) twenty-five of such members, unless the articles or the regulations specify for such purpose a smaller or larger proportion or number, but not in excess of fifty per cent of such members." The court noted that the "Notice of Special Meeting of Members" indicated that it had been called by the forty-two members who had signed the notice. The court concluded that since the church's bylaws did not modify the number of members required to call a special meeting pursuant to the nonprofit corporation law, the bylaws did not supersede the nonprofit corporation law, and therefore the special business meeting was properly called because the requirements of the statute were met when forty-two members had called the special meeting.

Application. This case illustrates a couple of important points. First, it is essential that membership meetings (annual or special) of incorporated churches be conducted in accordance with the notice and voting requirements of state nonprofit corporation law. Of course, a church is free to enact bylaws that alter the provisions of the nonprofit corporation law, and if it does so it is generally the bylaws that will control. Second, as this case demonstrates, the provisions of state nonprofit corporation law will be superseded only to the extent that there is a conflicting provision in a church's bylaws. In this case, the nonprofit corporation law allowed special business meetings to be called by 25 members. The church's bylaws, by not addressing the number of members required to call a special business meeting, did not supersede this provision. North Dayton First Church of God v. Berger, 2000 WL 1597963 (Ohio App. 2000).

Legal Developments

Court Was Able to Rule in a Church Issue Involving Church Funds and the Appointment of a New Minister

Removal

Richard R. Hammar, Attorney, CPA

Bio

State: Illinois
Categories: Charters, Constitutions, and Bylaws, Clergy - Removal

What legal recourse does a church have if a minister refuses to honor a congregational vote removing him from office? An Illinois appeals court addressed this difficult question.

Here are the facts. Rev. Smith started a church in 1937, and served as its pastor up until the time of her disability in 1985. In 1958, she appointed a Rev. Sims to serve as "financial secretary" and pulpit minister of the church. As pulpit minister, Rev. Sims sat on the pulpit during each service, and conducted services on the fourth Sunday of each month. Following Rev. Smith's disability in 1985, the church's board of trustees took action requiring two authorized signatures on church checks, and removed Rev. Sims' name from the list of authorized signers.

A few months later, the congregation elected Rev. Wing as pastor of the church. Rev. Sims refused to recognize Rev. Wing's appointment, or the authority of the church trustees, and began disrupting worship services. During one service the church was forced to contact the police, and Rev. Sims was physically evicted from the premises. The church later obtained a court order permanently prohibiting Rev. Sims from interfering with church services, publicly asserting her alleged authority to act as minister, or exercising any authority over the church's funds.

In direct violation of this order, Rev. Sims withdrew $25,000 from the church's bank account. The church sued to recover the money, and Rev. Sims responded by alleging that a civil court has no jurisdiction over "an ecclesiastical matter." The state appeals court agreed that "when matters of religious doctrine or practice are at issue in property disputes involving hierarchical church organizations, civil courts must defer to any resolution of those issues reached by the highest authority within the church organization." However, "as long as no consideration of doctrine is involved in the dispute," a civil court is free to intervene.

The issues involved in this case, observed the court, did not involve "matters of religious doctrine or practice," and so it was appropriate for a civil court to intervene. The only issues present were (1) whether the trustees had the authority to restrict access to church funds, and (2) whether the church followed its bylaws in the election of Rev. Wing. Such issues involved no impermissible inquiries into religious doctrine, the court concluded.

Finally, the court noted that Rev. Sims had a legal right to "lobby in a proper forum and speak to others regarding the church." Therefore, the lower court's injunction permanently forbidding her to speak out regarding her claimed authority to act as minister was overly broad. While such an order may have been appropriate if it limited Rev. Sims' activities only on the church's premises, it was not so limited. Accordingly, it had the effect of impermissibly restricting Rev. Sims' right of free speech in forums other than the church.

The appeals court sent the case back to the trial court with instructions to rewrite the injunction so as to recognize Rev. Sims' legal right "to lobby in a proper forum and speak to others regarding the church."

This case illustrates that (1) the power of the state is available to assist a church in dealing with disruptive behavior, even if such behavior is on the part of a former minister, and (2) church officers can be held accountable in the civil courts for misappropriation of church funds.

Lily of the Valley Spiritual Church v. Sims, 523 N.E.2d 999 (Ill. App. 1st Dist. 1988)

Legal Developments

Court Concluded That a Motion to Fire a Minister Was Invalid Because of Improper Notification

Can a minister be voted out of office at a congregational meeting if the notice

Richard R. Hammar, Attorney, CPA

Bio

State: Louisiana
Categories: Charters, Constitutions, and Bylaws, Clergy - Removal

Can a minister be voted out of office at a congregational meeting if the notice of the meeting did not indicate that there would be a vote on the minister's continued employment? That was the difficult question before a Louisiana state appeals court in a recent decision.

A Baptist church convened a special meeting of the congregation. Notice of the meeting consisted of announcements from the pulpit on the three consecutive Sundays prior to the meeting. These announcements did not indicate that a vote would be taken on the minister's continued employment. At the meeting, a motion was made from the floor to terminate the minister's services. The minister, acting as chairman of the meeting, ruled the motion out of order since there had been no prior notice that such a vote would be taken. A deacon then proceeded to conduct a vote over the minister's objection, and the members present voted to terminate the minister's services.

The ousted minister attempted to return to the pulpit on the following Sunday, but was prevented from doing so. The church later obtained a court order prohibiting the minister from attempting to occupy his former position.

The minister appealed this decision to a state appeals court, arguing that the church had improperly fired him since it had not given proper notice of the business to be transacted at the congregational meeting. The appeals court agreed. It began its opinion by observing that neither the church's charter nor bylaws specified the type of notice needed for special meetings.

Since the charter and bylaws were silent concerning the proper form and manner of notice, the state nonprofit corporation law under which the church was incorporated had to be consulted. A provision in the nonprofit corporation law specified that "unless otherwise provided in the [charter] or bylaws … the authorized person calling a members' meeting shall cause written notice of the time, place and purpose of the meeting to be given to all members entitled to vote at such meeting, at least ten days and not more than sixty days prior to the day fixed for the meeting."

Notice of the church's special congregational meeting was defective since it was not in writing (it had been announced from the pulpit), and it failed to specify the purposes of the meeting. "The notice of the meeting was clearly deficient," concluded the court, "and the meeting was therefore invalid."

This case is significant for two reasons:

First, it emphasizes the significance of giving proper notice of church business meetings. Procedural defects, such as defective notice, can render a meeting invalid. It is essential that clergy and church boards be familiar with the wording of their own church charters and bylaws regarding the matter of notice.

Second, the case illustrates the principle (which is followed in many states) that an incorporated church may be governed by state nonprofit corporation law in the event that it fails to address certain matters of administration and operation in its charter or bylaws. Of course, churches in such states are free to adopt provisions contrary to the nonprofit corporation law in their own charter or bylaws, and such provisions will be controlling. But in the event that they fail (for whatever reason) to address certain issues of church administration in their organizational documents, state law may step in to "fill the void." Bethlehem Missionary Baptist Church v. Henderson, 522 So.2d 1339 (La. App. 1988).

Legal Developments

Court Ruled Church’s Property Belonged to the Parent Denomination Because of Nondoctrinal, Controlling Language in Both the Local Church’s Deed and in the Denomination’s Bylaws

A Texas state appeals court resolved a church property dispute in which a denomination and

Richard R. Hammar, Attorney, CPA

Bio

State: Texas
Categories: Charters, Constitutions, and Bylaws, Church Property

A Texas state appeals court resolved a church property dispute in which a denomination and a local church both claimed title to the church's property.

The church was established in 1970, and in the same year was affiliated with the Evangelical Assemblies denomination. Pursuant to the Evangelical Assemblies' constitution, the church paid for its property but title was vested in the name of the denomination. In 1983, a majority of the church's members voted to disassociate the church from the denomination, whereupon a lawsuit was commenced to determine legal ownership of church property. The appeals court held that the result in such a case depends upon whether the church and denomination are "hierarchical" or "congregational" in polity.

The court noted that Texas decisions had established the following factors which indicate that a particular church is "hierarchical" in nature: (1) affiliation with a parent church; (2) an ascending order of ecclesiastical judicatories in which the government of the local church is subject to review and control by higher authorities; (3) subjugation of the local church to the jurisdiction of a parent church or to a constitution promulgated by a parent church; (4) a charter from the parent church governing the ownership of local church property and specifying ownership of local church property; (5) the repository of legal title; and (6) the licensing or ordination of local ministers by the parent church.

Application of these factors led to the conclusion that the Evangelical Assemblies was "in every respect" a hierarchical church organization, and accordingly, "as the parent church, Evangelical Assemblies owns and is entitled to possession of the property under the mutually binding constitution." The Texas court reached the correct result, but for the wrong reason.

A determination of whether a church or denomination is congregational or hierarchical in nature is not required unless the court chooses to apply the "compulsory deference" rule, under which the courts are compelled to defer to the rulings of denominational agencies within a hierarchical denomination. Texas, like most states, has rejected the compulsory deference rule in church property disputes in favor of the "neutral principles of law" approach under which the civil courts determine the ownership of contested church property through nondoctrinal language in controlling legal documents (e.g., the local church's deed, or the bylaws of either the local church or parent denomination).

Obviously, under a proper application of the neutral principles approach, title to the church's property belonged to the Evangelical Assemblies—because of nondoctrinal, controlling language in both the local church's deed and in the denomination's bylaws. Templo Ebenezer, Inc. v. Evangelical Assemblies, Inc., 752 S.W.2d 197 (Tex. App. 1988).

Legal Developments

Court Ruled Church’s Property Was Not Owned by the Denomination

Is a dissident church or a religious denomination entitled to the church's property following its

Richard R. Hammar, Attorney, CPA

Bio

State: Pennsylvania
Categories: Charters, Constitutions, and Bylaws, Church Property

Is a dissident church or a religious denomination entitled to the church's property following its disaffiliation from the denomination? This important question was addressed by a Pennsylvania state appeals court.

In 1982, a church voted to disassociate from the Orthodox Church in America and to affiliate with the Russian Orthodox Church Outside of Russia (the "Church Abroad") because of a proposed revision by the Orthodox Church in its calendar. The proposed revision altered the dates of several holy days (for example, Christmas was moved from January 7 to December 25). After the church's attempted disassociation, the Orthodox Church sought a court order requiring the church to turn over all of its assets to the parent denomination.

The state appeals court agreed with the the local congregation that such an order would be inappropriate. The court noted that the civil courts do have a role to play in some church disputes: "All disputes among members of a congregation … are not doctrinal disputes. Some are simply disputes as to meaning of agreements on wills, trusts, contracts, and property ownership." Such disputes, involving principles of civil law, may be resolved on the basis of "neutral principles of law" involving no intrustion "into the sacred precincts." However, "where the resolution of the issue involves questions of discipline, faith, ecclesiastical rule, custom or law, a civil court must defer to the highest church [tribunal] to which the question has been carried."

The court held that an award of a local church's assets to a parent denomination was possible only if the denomination could demonstrate "(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 court observed that the denomination could not satisfy the first test, since the local congregation "never relinquished its right to possession or legal title to the church property." On the contrary, the church's original affiliation with the Orthodox Church was accompanied by a letter expressing its intent to retain ownership and control of its property.

As to the second requirement, the court observed, after reviewing the church's charter, constitution, bylaws, and the bylaws of the Orthodox Church, that none of these documents contained any "clear and unambiguous" language creating a trust in favor of the Orthodox Church.

The court also rejected the denomination's claim that its "hierarchical structure" compelled an award in its favor, since "regardless of the form of government of the church in question, we must examine the relevant deeds, contracts, or other evidence to determine ownership of the disputed property." Orthodox Church of America v. Pavuk, 538 A.2d 632 (Pa. Common. 1988)

Legal Developments

Church Property Ownership Dispute Between a Church and the National Denomination

a West Virginia appeals court awarded the assets of a schismatic congregation to a national denomination.

Richard R. Hammar, Attorney, CPA

Bio

State: West Virginia
Categories: Charters, Constitutions, and Bylaws, Church Property

A local congregation that had been affiliated with the Original Glorious Church of God in Christ (the "national church") seceded from the national church, and established a new church. The church's trustees attempted to convey the church's assets to the new organization. This conveyance was challenged by the national church, which asserted that the church's assets belonged to it.

It cited a provision in the national church's constitution dictating that "no church group desiring to leave this body shall have any legal claim on church property if the property in question was purchased and paid for with general funds or if general funds were in any way used in the purchase thereof."

Since the national church produced a copy of a check in the amount of $300 that it had issued to the local church in 1964 to assist with church construction, the court concluded that the church's assets belonged to the national church and that the attempted conveyance by the local trustees was void.

This conclusion was reinforced by a state law specifying that "when an individual church has become extinct, or has dissolved, a suit may be instituted by the religious body that by the laws of the denomination to which such individual church belongs, has the charge or custody of the property, or in which it may be vested by the laws of the church."

The court further noted that with respect to hierarchical churches (such as the Original Glorious Church of God in Christ), the civil courts "should respect, and where appropriate enforce, the final adjudications of the highest church tribunals, provided that such adjudications are not procured by fraud or collusion. If a church has a hierarchical structure and its leaders have addressed a doctrinal or administrative dispute, the civil courts do not intervene, absent fraud or collusion."

Since the national church had addressed the issue of property disputes in its constitution (quoted above), the civil courts were bound to defer to that document and award the local congregation's assets to the national church. Finally, the court noted that title must be vested in the trustees of the national church, since under West Virginia law churches and religious denominations cannot incorporate or hold title to property in the name of the organization. The court's decision indicates that West Virginia has adopted the "compulsory deference" rule for resolving church property disputes.

This rule requires the civil courts to defer to the determinations of hierarchical church denominations in church property disputes. An alternative approach, approved by the United States Supreme Court, is the "neutral principles of law" approach, under which church property disputes are resolved on the basis of nondoctrinal language in deeds, state statutes, and the constitutions and bylaws of local congregations and national churches with which they are affiliated.

While most courts have adopted the neutral principles of law approach, the "compulsory deference" approach (adopted by the West Virginia court) has some appeal, since it avoids the prospect of a civil court resolving a church dispute on the basis of "neutral principles of law" despite a determination of a national church to the contrary. Original Glorious Church of God in Christ v. Myers, 367 S.E.2d 30 (W. Va. App. 1988).