Zoning Law and Church Property

Does a Little League program violate zoning law?

Church Law and Tax 1992-03-01 Recent Developments


An Ohio appeals court ruled that a church could use its property to conduct a “Little League” baseball program, despite the claim of a neighbor that such use violated local zoning law. A Methodist church established a baseball diamond on vacant land that it owned in order to operate a Little League baseball program. The church maintained that it is a fundamental tenet of Methodism that worship involves not only religious services, but also reaching out to the community through sponsorship of activities such as scouting and Little League. The baseball program sponsored by the church is for children ages 6 to 12. The season extends from April to late June, during which time about 4 games are played each week from 6 to 8 p.m. on weekdays and on Saturday mornings. To reduce parking problems in front of the complaining neighbor’s house, “no parking” signs were installed on his property and orange pylons were placed in front of his property during games. Despite these precautions, the neighbor sued the church, demanding that the baseball program be discontinued. He claimed that the program violated local zoning law. The church property was located in a residential zone, which permitted churches and “church use.” A trial court agreed with the neighbor that the operation of a baseball program on church property was not a permitted use of church property in an area zoned for “church use.” The church appealed. A state appeals court agreed with the church and permitted the baseball program to continue. The court observed: “The trial court appears to suggest that a church is only a building and any use of the building or land adjacent must be necessary to the operation of that building as a church. We disagree.” The court noted that the Ohio Supreme Court had not addressed this issue specifically, but that courts in other states had done so and they generally ruled in favor of the church. For example, one court in a similar case concluded:

A church is more than merely an edifice affording people the opportunity to worship God. Strictly religious uses and activities are more than prayer and sacrifice and all churches recognize that the area of their responsibility is broader than leading the congregation in prayer. Churches have always developed social groups for adults and youth where the fellowship of the congregation is strengthened with the result that the parent church is strengthened. To limit a church to being merely a house of prayer and sacrifice would, in a large degree, be depriving the church of the opportunity of enlarging, perpetuating, and strengthening itself and the congregation.

Accordingly, the Ohio court concluded that “activities such as sponsoring a Little League baseball program on land owned by, and adjacent to, the [church] are incidental to, and form a part of, the public worship program of [the church] and are permitted under the city zoning ordinances as a church use.” The court emphasized that zoning ordinances must be construed “in favor of the property owner” (whose use of property is being questioned) and “in favor of the free use of property.”

The neighboring landowner, in his defense, pointed out that the church had been denied a tax exemption for the baseball field on the ground that it was not necessary for purposes of religious worship. The court rejected the relevance of this argument, pointing out that statutes allowing a tax exemption for houses of public worship are to be strictly construed against the property owner, whereas zoning ordinances are to be construed in favor of the property owner. This case represents a balanced interpretation of the term church use in the context of a municipal zoning ordinance, and it should be of use to several churches both in Ohio and in other states. Cash v. Brookshire United Methodist Church, 573 N.E.2d 692 (Ohio App. decided 1988, reported 1991).

See Also: Zoning Law

Church Property and Withdrawal from a Denomination

A local church may lose its property upon leaving its denomination.

A South Carolina appeals court ruled that a national church organization was entitled to the property of a local church that withdrew from the organization.

All of the members of a local church voted to withdraw from a parent religious denomination, and continued to use the church property. The national church sought a court order confirming that it was the lawful owner of the local church's property.

A trial court ruled in favor of the national church, finding that it was an hierarchical organization, and that its "decree book" (which was binding upon all local congregations) clearly specified that the national church owned all local church property.

The local church appealed, and a state appeals court ruled in favor of the national church. The court observed: "The governing body of a religious society may adopt a constitution and prescribe rules and regulations as to the government of the society and as to the discipline, worship and doctrine of the group.

Such constitution, rules, and regulations are obligatory among the members, congregations and officers of such societies and are given effect by the civil courts so long as they are reasonable and not inconsistent with or repugnant to the laws of the land, and so long as they are conformable and subordinate to the charter of the society where incorporated." The local church was bound by the provision in the national church's "decree book" specifying that all local church properties belonged to the national church. The court further explained:

The main issue of this case is whether when the congregation of an hierarchical church withdraws from the church, the congregation is entitled to the church property. The well-settled answer to this question is that the title and right of possession of the church property remains in the hierarchical church …. The South Carolina appellate courts have yet to face a situation in which the congregation as a whole withdrew and contended that the church property belonged to it.

The law on this question is settled. The South Carolina Supreme Court has held that when a church splits, the courts will not undertake to inquire into the ecclesiastical acts of the several parties, but will determine the property rights in favor of the party or division maintaining the church organization as it previously existed. We accordingly hold that when the entire congregation withdraws from the hierarchical church, the title to the church property remains in the church and does not follow the congregation …. Accordingly, we affirm the trial judge's holding that [the officers of the national church] are entitled to the beneficial use of the church property, including the right of possession and the right of control of the property. Dillard v. Jackson, 403 S.E.2d 136 (S.C. App. 1991).

Zoning Law and the Civil Rights Act

Church sues for damages due to a city’s unconstitutional actions.

Church Law and Tax 1992-03-01 Recent Developments


New Jersey state appeals court confirmed that a church is entitled to monetary damages resulting from a city’s denial of its constitutional right to religious freedom, but it refused to award any damages to a church whose rights were violated by a city’s actions. A city arbitrarily denied a church’s request for permission to construct a radio tower on its property, and the church sued the city for monetary damages under the federal Civil Rights Act which authorizes persons to collect money damages from those who violate their constitutional rights. The court concluded that the church was entitled “to recover such damages as it may prove.” The church produced evidence of damages amounting to nearly $800,000, comprised mostly of the projected revenues it lost by not being able to broadcast programs for some four years during the lawsuit. The state appeals court concluded that the proper measure of damages was the lost property value resulting from the city’s denial of the church’s constitutional rights. Since the value of the church’s property was in no way diminished by the city’s denial of the tower permit, the court refused to award the church any monetary damages. In summary, the court acknowledged that churches can sue for monetary damages resulting from a city’s denial of their constitutional rights. However, in the context of zoning law, the proper measure of a church’s damages for a city’s unconstitutional actions is loss in property value. Burlington Assembly of God Church v. Zoning Board, 588 A.2d 1297 (N.J. Super. 1990).

See Also: Zoning Law

Churches’ Interiors as Landmarks

Designation as a historical landmark may violate a church’s rights.

Church Law and Tax 1992-01-01 Recent Developments

Church Property

The Massachusetts Supreme Judicial Court ruled that the City of Boston could not declare a church’s interior as a “landmark.” Faced with an aging, oversized building, the leaders of a Catholic church adopted a plan to renovate the facility into office, counseling, and residential space. When work began, ten citizens promptly asked the city to designate the interior of the church as a landmark. The city approved the citizens’ request, and prohibited permanent alteration of “the nave, chancel, vestibule and organ loft on the main floor—the volume, window glazing, architectural detail, finishes, painting, the organ, and organ case.” Church leaders filed a lawsuit, claiming that their constitutional right to freely exercise their religion was violated by the city’ action. The court agreed. It relied entirely on a provision in the state constitution specifying that “no subject shall be hurt, molested, or restrained, in his person, liberty, or estate, for worshiping God in the manner and season most agreeable to the dictates of his own conscience; or for his religious profession or sentiments; provided he doth not disturb the public peace, or obstruct others in their religious worship.” This provision, noted the court, “plainly contemplates broad protection for religious worship” that was violated by the city declaring the interior of the church as a landmark. In rejecting the city’s claim that it was merely addressing a “secular question of interior design,” the court observed that “the configuration of the church interior is so freighted with religious meaning that it must be considered part and parcel of [Catholic] religious worship.” Accordingly, the court concluded that the state constitution “protects the right freely to design interior space for religious worship, thus barring the government from regulating changes in such places, provided that no public safety question is presented.” Society of Jesus v. Boston Landmarks Commission, 564 N.E.2d 571 (Mass. 1991).

See Also: Landmarking

Church Sues Architect over Fire

What are a church’s rights when construction goes wrong?

Church Law and Tax 1992-01-01 Recent Developments

Church Property

A New York state court ruled that a church could sue an architect for damages sustained in a fire allegedly caused by faulty installation of insulation around light fixtures. A church hired an architect in connection with the renovation of its facility. Among other things, the renovation involved installation of insulation above the church ceiling. The contract between the architect and the church was a standard agreement requiring the architect to prepare design and construction documents for the project. The contract also imposed certain obligations upon the architect. One provision specified that “the architect shall visit the site at intervals appropriate to the stage of construction … to become generally familiar with the progress and quality of the work and to determine in general if the work is proceeding in accordance with the contract documents.” The contract further provided that the architect was not responsible for construction techniques or defects. After the renovation project was complete, a fire caused extensive damage to the property. An engineer later determined that the fire had been caused by the use of combustible insulation too close to recessed light fixtures. The church sued the architect for breach of contract and negligence, and a trial court ruled in favor of the church. A state appeals court agreed. The court noted that the contract specifically required the architect to inspect the project to ensure that it was being performed according to the plans. This duty was violated by the architect in this case, the court concluded. The court refused to honor the contract provision attempting to relieve the architect of liability for construction defects. It noted that such attempts to limit liability are “disfavored.” Further, to relieve architects of liability “would leave owners without recourse against architects who fail to fulfill their contractual duties to make timely and proper inspections.” The court also rejected the architect’s claim that he could not be responsible for the church’s loss because he had no knowledge of the correct way to install insulation. Again, this claim was inconsistent with the architect’s duties under the contract, and any inconsistency should be interpreted against the architect. Diocese of Rochester v. R-Monde Contractors, Inc., 562 N.Y.S.2d 593 (Sup. Ct. 1990).

D.C. Statute Jeopardizes Churches’ Tax-Exempt Status

A court recently upheld this statute.

Church Law and Tax 1991-11-01 Recent Developments

Church Property

In a truly remarkable case, a District of Columbia court of appeals upheld the validity of a statute that jeopardizes the tax-exempt status of every church in the District of Columbia. Here are the facts. Several years ago, the United States Congress enacted a law (as part of the District of Columbia Code) that specifies: “Upon the dissolution of any society or congregation the estate and property of such society or congregation shall revert back to the persons, their heirs, and assigns who may have given or contributed to the purchase of or payment for the same, according to their respective rights.” D.C. Code § 29-911. A church’s members voted to dissolve the church. The church’s assets were sold for nearly $1 million. The church’s members adopted a plan for distributing the $1 million among themselves. In an attempt to stop this distribution, 2 of the church’s 6 trustees filed a lawsuit claiming that the statute (and planned distribution) were unlawful. The court rejected the trustees’ contention, and concluded that it was permissible for a statute to provide for the distribution of church assets to members following the church’s dissolution. It relied primarily on an 18th century legal treatise, and court rulings from the 19th century, as support for its conclusion that “any property which may have been given or contributed to a religious society reverts to the original donor or his heirs upon dissolution.” The court further noted that applying the statute “would not impermissibly entangle the court in matters of religious governance,” since “the court is being asked to do nothing other than apply a neutral property disposition rule involving no consideration of religious doctrine.” Incredibly, the court’s ruling completely ignores the plain language of the income tax regulations. Section 501(c)(3) of the Internal Revenue Code requires that churches be “organized exclusively” for exempt purposes in order to qualify for tax-exempt status. The income tax regulations (adopted by the United States Treasury Department), interpret this requirement as follows:

An organization is not organized exclusively for one or more exempt purposes unless its assets are dedicated to an exempt purpose. An organization’s assets will be considered dedicated to an exempt purpose, for example, if, upon dissolution, such assets would … be distributed for one or more exempt purposes …. However, an organization does not meet the organizational test if its articles [of incorporation] or the law of the state in which it was created provide that its assets would, upon dissolution, be distributed to its members …. Reg. § 1.501(c)(3)-1(b)(4) (emphasis added).

Clearly, the District of Columbia statute, quoted above, provides for the distribution of a church’s assets to its members upon the church’s dissolution. According to the plain meaning of the quoted regulation, this means that every church in the District of Columbia is disqualified for tax-exempt status under Code section 501(c)(3). What is indeed amazing is that Congress enacted both the District of Columbia statute, and section 501(c)(3) of the Internal Revenue Code. The court’s decision, in relying on 18th and 19th century precedent (predating the Internal Revenue Code) in support of its conclusion, did nothing to help resolve this fundamental dilemma. It will be interesting to see how the IRS, and Congress, respond. Obviously, the best approach would be for Congress to immediately repeal section 29-911 of the District of Columbia Code. Until it does so, the tax-exempt status of every church in the District will be needlessly threatened. Prince v. Firman, 584 A.2d 8 (D.C. App. 1990).

General Principles

Donors’ Restrictions in Church Property Deeds

The Arkansas Supreme Court ruled that such restrictions are legally enforceable.

The Arkansas Supreme Court ruled that a donor's restrictions in a deed of property to a church are legally enforceable.

In 1944, a donor executed a deed conveying property to a local church. The deed contained the following clause: "This transfer or deed is made with the full understanding that should the property fail to be used for the Church of God, it is to be null and void and property to revert to [the donor] or heirs." Several years later, the church wanted to sell its property and relocate. It asked a local court to cancel the clause in question and confirm that the church owned absolute title to the property.

The trial court granted the church the relief it requested, noting that the donor's reserved interest in the property was void on the ground that it violated the "rule against perpetuities." An heir of the donor appealed the case to the state supreme court, which reversed the trial court's decision and ruled that the property would revert to the donor's heirs if the church sold it.

The court acknowledged that the "rule against perpetuities" is recognized in virtually every state, including Arkansas, and that "this longstanding rule prohibits the creation of future interests or estates which by possibility may not become vested within a life or lives in being at the time of the effective date of the instrument and 21 years thereafter."

The court concluded that this rule did not apply in this case since the donor had retained a "possibility of reverter" that vested in the donor as soon as the deed was executed and accordingly was not subject to the rule against perpetuities. The court observed: "[T]he rule against perpetuities is alive, well, and fully applicable to terminate interests where those interests do not vest within 21 years after some life in being at the time of the creation of the instrument. However, the rule has no application to reversionary interests, which remain in the transferor and heirs. Such is the interest retained by the transferor in this instance …."

This case is of fundamental importance to those churches that have received property (by either gift or purchase) by means of a deed containing similar restrictions. Many persons have donated or sold property to churches "so long as" the property is used for church purposes, or so long as the property is used as a church of a specified denominational affiliation.

These kinds of restrictions often provide that the property shall revert to the original owner (or the original owner's heirs) in the event the condition is breached. Accordingly, any attempt by such a church to sell its property or to disaffiliate from its denominational affiliation can result in the automatic reversion of the property to the original owner (or the owner's heirs).

Obviously, this result can have disastrous and completely unforeseen consequences to the church. It is prudent, therefore, for any a church to address the following considerations prior to a sale of its property:

  1. Does the deed by which the church received title to the property contain any condition restricting sale?
  2. If the deed does contain a restriction on sale, is it in a legally recognizable form and is it legally enforceable under state law? Only an attorney can answer this question.
  3. If a legally enforceable restriction on sale does exist, is the previous owner (who imposed the restriction) willing to release it? If so, then an attorney should be enlisted to prepare an appropriate document releasing the restriction. If the previous owner is deceased, then only his or her legal heirs can release the restriction. Even if a church has no plans to sell its property, it would be prudent to discuss a release of such a restriction with the previous owner during his or her life, since a release of such a restriction becomes much more difficult after this person's death. Collins v. The Church of God of Prophecy, 800 S.W.2d 418 (Ark. 1990).
Related Topics:

Tax Exemption of Church Parking Lots

The court concluded that if a church rents its parking lot, and cannot prove that the lot is used primarily for religious purposes, then the exemption is lost.

Are church parking lots exempt from property taxes?

Not if they are leased to a commercial business during the week, said a Texas state appeals court. A Baptist church leased two of its parking lots to a neighboring real estate company. The lease provided that the company could use 407 of the 447 parking spaces on the two lots from 7:30 AM to 5:00 PM Monday through Friday. The church reserved 40 parking spaces for its own use during the week, and also reserved the right to use the lots after 5:00 PM each week day and all day on Saturday and Sunday.

The lease specified that the company, and not the church, was responsible for upkeep and maintenance of both lots. The company paid a rental fee of $275 per parking space per year, for a total annual rental fee on all 407 leased spaces of $111,925. The church applied for a property tax exemption on the two parking lots, but its application was denied by the county tax commission. The church appealed, and a trial court agreed with the church that the parking lots were exempt. The tax commission appealed, and a state appeals court denied the exemption.

The appeals court began its opinion by noting that Texas law exempts real property that satisfies three conditions: (1) it is owned by a religious organization, (2) it is used primarily as a place of regular religious worship, and (3) it is reasonably necessary for engaging in religious worship. The court acknowledged that a church-owned parking lot could be exempt from tax under this law, since a parking lot "may qualify as a place of religious worship" if it is owned by a church and is reasonably necessary to accommodate religious worship in the church sanctuary.

The church argued that the parking lots satisfied all three conditions. In support of its position, it noted that: (1) the lots were used on Sunday mornings and evenings, and Wednesday evenings, by church members attending religious services at the church; (2) it had exclusive use of the lots for a majority of the week (i.e., after 5:00 PM Monday through Friday, and all of Saturday and Sunday); and (3) it needed the lots as a "buffer against encroachment and as assurance of adequate room for growth." Generating rental income was a secondary or incidental purpose. The court rejected the church's arguments. It emphasized that the critical question "is the actual use of the property, not the church's primary reason for owning it or the amount of theoretical access the church enjoys." The court observed:

When the overall, day-to-day use of the property is considered, it is clear that the property is used almost entirely by [the real estate company]. The church does not contend that its right to access from 5:00 PM through the night until 7:30 AM constitutes evidence of primary religious use. The fact that [the company] leaves the lots empty for fourteen and one-half hours each night and gives the congregation the right to enter at night and on weekends does not mean that the lots are being used primarily for a religious purpose. Nor is primary religious use proved by evidence that from the church's viewpoint the lots are kept because it is necessary for a downtown church to have parking. Evidence that the church acquired the land and retains it for member parking and for future growth does not constitute evidence that it is used primarily for religious purposes.

The court emphasized that "the issue before us is not whether the church is entitled to own property for parking and future growth, or whether it can lease its property on these or any other terms …. No one questions that the church is entitled to own and lease property. The sole issue before this court is whether such property remains tax exempt when there is no proof that it is used primarily for religious purposes." To summarize, the court did not dispute that a church parking lot is exempt from tax. Rather, it concluded that if a church rents its parking lot, and cannot prove that the lot is used primarily for religious purposes, then the exemption is lost. Bexar County Appraisal Review Board v. First Baptist Church, 800 S.W.2d 892 (Tex. App. 1990).

Members’ Right to Challenge Sale of Church Assets

Can members stop a board from selling church assets?

Do church members have the authority to challenge the sale of church assets by the church board?

That was the question before the District of Columbia Court of Appeals in an important decision. Mount Jezreel Baptist Church was incorporated in 1883. The original certificate of incorporation stated that it was formed "for the purpose of religious worship … at the corner of Fifth Street and E Street, Southeast, in the City of Washington."

In 1982, after the safety of the historic church building became an issue, the pastor and board of trustees decided to close the church and move to a new location. For at least ten years prior to the sale of the church property, relations between the board of trustees and a segment of the congregation became increasingly hostile.

After the sale of the church building, a group of the dissidents filed a lawsuit alleging that the trustees and pastor had violated their fiduciary duty as trustees to hold church properties for the purposes specified in the corporate charter (i.e., to conduct religious worship "at the church building on the southeast corner of Fifth Street and E Street"). The dissidents further alleged that the board of trustees and pastor had "improperly managed the church's assets and business affairs" and had exceeded their authority in selling the church building.

The dissidents claimed they were attempting to "salvage the historic old Mount Jezreel church building." A trial court dismissed the lawsuit on the ground that the dissidents were not members of the church and accordingly lacked "standing" to sue. The dissidents appealed this ruling. The appeals court noted that there were two questions—whether the dissidents had "standing" to filed the lawsuit against the board of trustees and pastor, and if so whether church members have the legal authority to challenge the decisions of a church board.

The court concluded that most of the dissidents did have standing, since they were lawful members of the church. It acknowledged that the congregation had voted in an annual business meeting to automatically dismiss any member who filed a lawsuit against the church. However, this action was taken after this lawsuit was filed. At the time the dissidents sued the board of trustees and pastor, they were members of the church, and this was all that was necessary to have "standing" to sue.

Next, the court addressed the question of whether church members have the legal authority to sue church trustees for the wrongful transfer of church property. The dissidents pointed out that title to the church's properties was in the name of the trustees who held church properties "in trust" for the members of the congregation, and that church members were "trust beneficiaries" who could sue the trustees for improper or unauthorized transactions with respect to those properties.

The court observed: "Although title to the church property is vested in the trustees or directors, the property itself is held in trust for the uses and purposes named and no other. Because the church was incorporated for the purpose of religious worship, and because the property was held in trust for that purpose, the members of the congregation are indeed the beneficiaries of the trust. As such, they have standing to sue the trustees in the event that the trust property is used or disposed of in a manner contrary to the stated purposes of the trust …. We therefore hold that, as a general principle, bona fide members of a church have standing to bring suit as trust beneficiaries when there is a dispute over the use or disposition of church property."

Mt. Jezreel Christians Without a Home v. Board of Trustees of Mount Jezreel Baptist Church, 582 A.2d 237 (D.C. App. 1990).

Related Topics:

Disputes Over Congregational Churches’ Property

A South Carolina court recently ruled on this issue.

A South Carolina court ruled that a local Baptist church congregation had the authority to authorize its trustees to obtain financing to purchase a new building by mortgaging the existing facility.

In 1952, a minister deeded a church building and lot to 5 individuals as trustees of his church. The deed provided that the trustees would hold the property for the benefit of the congregation, and subject to the "laws" of the Baptist church.

In 1983, the church membership became divided over the issue of moving to a new building. The existing sanctuary had become dilapidated, and repairs were not feasible. The majority of the congregation voted to move to a new facility and to change the church's name. The minority resolved to remain in the old building and continue using the church's original name.

Two of the original trustees, representing the majority faction, deeded the old church property to themselves as trustees of the new church. Later, these same trustees mortgaged the old building to a local bank in order to secure financing to purchase a new church building. Two of the other original trustees filed a lawsuit seeking to have title to the old church building vested in themselves as trustees, and to invalidate the mortgage.

A state appeals court ruled that the congregation is the governing body in a Baptist church, and that "the actions of the [church] in changing its name, moving to a new location, transferring the property, and mortgaging it were valid and consistent with Baptist church policy." Further, "because such actions are ecclesiastical in nature, they are not reviewable by this court in the absence of fraud, collusion, or arbitrariness."

The court noted that the 2 trustees representing the minority faction did not have "standing" to sue because they were not members of the present congregation. Finally, the court felt that its decision was bolstered by the wording of the original deed, which was made subject to the "laws" of the Baptist church. It observed: "Surely by providing in their deed that the trustees would hold the property subject to the laws of the Baptist church, the [donors] knew that in the event of a schism in the church the majority would continue to control the property under Baptist church policy." Blair v. Blair, 396 S.E.2d 374 (S.C. App. 1990).

Related Topics:

Churches and “Landmark” Laws

Designation of a church as a historical landmark may violate the church’s rights.

Church Law and Tax 1991-07-01 Recent Developments

Church Property

A federal appeals court ruled that the constitutional rights of a church were not violated by a state “landmark” law that prevented the church from demolishing one of its buildings. St. Bartholomew’s Church is a Protestant Episcopal Church organized in 1835 under the laws of New York as a nonprofit religious corporation. Construction of the current sanctuary began in 1917. The church is a notable example of Byzantine style, built on a Latin cross plan. Significant features include its stone exterior, soaring octagonal dome, and large rose window. Perhaps most significantly, the church incorporates the Romanesque porch of the former church building. The porch is composed of a high arched central portal flanked by two lower arched doorways, all supported by columns. The doors themselves are richly decorated bronze, depicting Biblical themes. Next to the church sanctuary is a terraced, 7-story building known as the “community house.” The community house was built by the church in 1928, and complements the sanctuary in style and decoration. The community house is used for a variety of social and religious activities. It contains a preschool, theater, meeting rooms and offices, and facilities for providing food and shelter to the poor. In 1967, finding that “St. Bartholomew’s Church and community house have a special character, special historical and aesthetic interest and value as part of the development, heritage and cultural aspects of New York City,” the Landmarks Preservation Commission of the City of New York designated both buildings as “landmarks.” This designation prohibits the demolition or alteration of the buildings without approval of the Commission. The church did not object to the landmarking of its property. In 1983, the church applied to the commission for permission to replace the community house with a 59-story office tower. This request was denied as an inappropriate “alteration.” A year later, the church filed a second application, scaling down the proposed office building to 47-stories. This application also was denied, as was a third application. In 1986, the church asked a federal court to declare that the Commission’s actions violated the church’s constitutional right to religious freedom. It alleged that the landmarks law “excessively burdened” the church’s practice of religion, and “entangled” the government in religious affairs. Specifically, the church alleged that the Commission’s actions impaired its ability to carry on and expand the various activities that are central to its religious mission. It argued that the community house no longer is a sufficient facility for its activities, and that the church’s financial base has eroded. Construction of an office building would enable it to provide adequate space for its programs while at the same time generating needed income to support and expand those programs. The church also alleged that the Commission’s actions amounted to a “taking” of the church’s property without just compensation, in violation of the federal constitution. A federal district court rejected the church’s claims, and the church appealed. A federal appeals court also rejected the church’s claims. It quoted from a recent decision of the United States Supreme Court: “The right of free exercise [of religion] does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability on the ground that the law proscribes … conduct that his religions prescribes.” The court observed that the landmarks law was a “neutral regulation of general applicability,” and accordingly it was valid even though it happened to interfere with a church’s building plans. The court acknowledged that the landmarks law had “drastically restricted the church’s ability to raise revenues to carry out its various charitable and ministerial programs.” Nevertheless, “neutral regulations that diminish the income of a religious organization do not implicate” the constitutional guaranty of religious freedom. What government practices would violate this constitutional guaranty? The court observed: “The central question in identifying an unconstitutional burden is whether the claimant has been denied the ability to practice his religion or coerced in the nature of those practices.” It quoted again from a decision of the United States Supreme Court: “[I]ncidental effects of government programs, which have no tendency to coerce individuals into acting contrary to their religious beliefs, require government to bring forward a compelling justification for its otherwise lawful actions. The crucial word in the constitutional context is ‘prohibit.'” The appeals court concluded, on the basis of this language, that no constitutional violation occurs “absent a showing of discriminatory motive, coercion in religious practice, or the church’s inability to carry outs its religious mission in its existing facilities.” The Commission’s actions simply did not amount to a constitutional violation under this standard. The court concluded that the community house could be modified to accommodate the church’s programs, and that the church possessed sufficient resources to finance such structural modifications. It observed that the church had a total endowment of more than $14 million, much of which was unrestricted. And, the church could conduct a capital fund-raising campaign or even borrow money. The court suggested that if the structural modifications ever proved inadequate to accommodate the church’s programs, then an application by the church to construct an office building might well receive a different reception. But at this point, the court was unwilling to conclude that the church was incapable of carrying out its programs in its existing facilities (with appropriate modifications). Accordingly, the Commission’s denial of the church’s application for permission to construct the 47-story office building did not violate the church’s constitutional rights. St. Bartholomew’s Church v. City of New York, 914 F.2d 348 (2nd Cir. 1990).


Temporarily Vacant Church Buildings and Property Tax Exemption

When a congregation moves, must it pay property tax on its old building?

Church Law and Tax 1991-07-01 Recent Developments

Taxation – Church Property

In an important decision, an Illinois state appeals court ruled that a church building does not lose its property tax exemption when it is temporarily vacant following the congregation’s move to another location. A Lutheran church owned a piece of property on which was located a single building consisting of a church, an office, and a parsonage. The church and parsonage portions of the property were connected by the office. In 1985, following the minister’s retirement, the church merged with a campus ministry at a nearby state university. Thereafter, church activities were conducted at the campus location. The church attempted to sell its old building, but was not successful for nearly a year. During that year, the church and office portions of the property were used for storage of church property, including church records, pews, hymnals, an altar, a cross, the church pipe organ, and other furnishings. The church portion also was used for the storage of clothing and other materials prior to shipment to missionary sites. The parsonage portion of the building was not occupied during the year that the property was for sale. It too was used to store miscellaneous items of church property. The state department of revenue asserted that the building was not exempt from property taxes during the year in question because it was not being used for exempt purposes. The church appealed this determination, and an administrative judge within the department of revenue ruled that the church and office portions of the property were exempt but not the parsonage. The church appealed this ruling to a state court which concluded that the entire property was exempt. The state appealed this ruling, and a state appeals court upheld the trial court’s decision exempting the entire property from taxation. The court began its opinion by noting that Illinois law exempts from property taxation “all property used exclusively for religious purposes … including all such property owned by churches or religious institutions or denominations and used in conjunction therewith as parsonages or other housing facilities provided for ministers.” On appeal, the state conceded that the church and office portions of the property were exempt, but it insisted that the parsonage no longer was entitled to exemption since it was vacant and therefore could not be said to be used “exclusively for religious purposes.” Further, the state insisted that the building should be “divided” for tax purposes, with the church and office retaining their tax exemption and the parsonage being subject to tax. The court rejected both claims. It noted that the entire property had been used for exempt purposes for more than 40 years, and that no portion of the property currently was being used for a non-exempt purpose. The court concluded: “We do not think that mere temporary vacancy or lack of use of a portion of an otherwise exempt parcel of property renders that portion taxable. To hold that when a portion of a building otherwise used for an exempt purpose becomes temporarily vacant or unused it loses its exempt status is nonsensical and impractical of application. Nor do we think it is practical to divide this parcel of property, consisting of a single building, on the basis of temporary vacancy of a portion of it. We find that the parsonage … portion of the church property continued to be used exclusively for religious purposes ….” The court acknowledged that tax exemptions are to be “strictly construed in favor of taxation.” However, “they are not to be unreasonably construed. A decision based upon an erroneous, arbitrary or unreasonable construction of a statute cannot stand.” The court concluded by observing: “Under the facts of this case, where the property consists of a single building which has been used for an exempt purpose for 40 years, but of which a portion becomes temporarily vacant due to the retirement of the church’s pastor but is not used for a non-exempt purpose, we find denial of the tax exemption for that portion to be unreasonable and improper as a matter of law.” Our Savior Lutheran Church v. Department of Revenue, 562 N.E.2d 1198 (Ill. App. 5 Dist. 1990).

Property Taxes

Injuries During Church Activities

A New York court recently dismissed a woman’s lawsuit.

A New York court dismissed a lawsuit brought against a church by a woman who was injured during a church-sponsored activity. The woman and her husband attended a "country fair and barbecue" sponsored by her church. Following dinner, the couple took a raft ride on a nearby lake. After the ride, they were directed to walk on a back lawn area to return to the front of the church building. Closing time for the fair was 7:30PM, and since that time was approaching, workers were closing the various booths and exhibits. As the woman walked up a sloping lawn around the outside of a large tree, she slipped and fell, injuring her leg. She claimed that she slipped on ice cubes that were on the ground. Her husband testified that he saw ice cubes and crushed ice on the ground just before his wife fell.

The church asked the trial court to dismiss the lawsuit, but this request was denied. The church appealed, and a state appeals court dismissed the case. The court concluded that "plaintiff was required to demonstrate … that the condition was caused by [the church's] agents or existed for a sufficient period of time to require [the church] to have corrected it." Since the woman offered no evidence that an agent of the church caused the ice to be discarded on the lawn, or that the ice had been on the lawn for an unreasonable amount of time without being corrected, the lawsuit had to be dismissed. Torani v. First United Methodist Church, 558 N.Y.S.2d 272 (A.D. 3 Dept. 1990).

Premises Liability

Churches’ Liabilities for Minors’ Drowning Deaths

A court found a seminary legally responsible for a boy’s death.

Church Law and Tax 1991-05-01 Recent Developments

Personal Injuries – On Church Property or During Church Activities

A Pennsylvania state appeals court ruled that a seminary was responsible for the drowning death of a 12-year-old boy. The victim was swimming with a group of altar boys from a Catholic church at a seminary-owned pool. The victim’s mother sued the seminary, alleging that it had been negligent in allowing the boys to use the pool without a qualified lifeguard on duty. At the time of the drowning, the pool was under the supervision of a priest. The jury concluded that both the seminary and church were negligent, and it awarded more than $1 million in damages. The seminary appealed, and a state appeals court upheld the jury’s award. The court observed that “it is clear that [the evidence] was sufficient to support the jury’s finding that the seminary had breached a duty owed to the minor decedent. The seminary, as owner of the pool, had a duty to exercise those precautions which a reasonably prudent owner would have taken to prevent injury to those persons whom it knew or should have known were using the pool …. A jury could have found, in view of the evidence, that the seminary knew or should have known that its pool was being used by children and that it failed to exercise reasonable care to prevent injury to them.” The court further observed that “it was for the jury to determine whether the seminary had been negligent in failing to take reasonable precautions to prevent access to its pool when a competent lifeguard was not present and whether the seminary could reasonably rely upon [the priest] to supervise the activities of the boys while they were using the pool.” This case illustrates the important principle that churches and religious organizations may be liable for negligent supervision if they do not have an adequate number of trained adults supervising a youth activity. The mere presence of adult supervision will not be enough in some cases. Those adults must in fact be qualified to supervise the activity in question and to respond to emergencies that may occur. Rivera v. Philadelphia Theological Seminary, 580 A.2d 1341 (Pa. Super. 1990).

Negligent Supervision

Court Refused to Order a Church to Honor the Real Estate Contract

Church treasurer was without legal authority to sign a real estate sales contract for the sale of church property.

A Massachusetts appeals court ruled that a church treasurer was without legal authority to sign a real estate sales contract for the sale of church property.

The treasurer (who also was a member of the church board) was the only person to sign the contract on behalf of the church. She signed her name without any reference to her official or representative capacity. The church constitution specified that sales of church property had to be authorized by the church board. However, the board never authorized the sale in question. The church refused to honor the contract, and the buyer filed a lawsuit seeking a court order compelling the church to comply.

A trial court ruled in favor of the church, and the buyer appealed. The appeals court affirmed the trial court's decision on the basis of two considerations. First, the buyer had been negligent in not making a sufficient inquiry into the authority of the treasurer to unilaterally sign contracts. The court observed: "[T]he purchaser made inquiry only of the [real estate] broker and accepted his assurance of authority. Customary evidence of authority to act on behalf of a corporation, such as a clerk's certificate of vote, was never sought, and had the [purchaser] done so, he would have found, as the [trial] judge found, that no other officer or director of the corporation was ever aware of the transaction. The [trial] judge was correct in concluding that [the treasurer] had not been granted authority to sign the agreement."

Second, the court concluded that a treasurer has no legal authority to sign contracts unilaterally on behalf of a church corporation. The court noted that the treasurer "was not authorized to sign the agreement by virtue of her office as treasurer. The power of an officer of a charitable corporation to bind the corporation is narrowly construed in Massachusetts, and it most certainly does not extend to agreements to dispose of real estate owned by the corporation …." The court also rejected the buyer's argument that the treasurer had "apparent authority" to sign the contract on behalf of the church.

Apparent authority exists whenever a corporation leads others to believe that a particular individual is authorized to execute contracts on behalf of the corporation when in fact no such authority exists. The court, in rejecting the application of the apparent authority doctrine in this case, noted that "where the sale of corporate real estate is outside the scope of the corporation's usual activity, the doctrine of apparent authority does not apply.

The constitution of this corporation recites the 'nature and end of the congregation' to be 'the perfection of the love of God and man,' and that the congregation is to minister 'to the needs of contemporary society in domestic and foreign missions through Christian education, health care services, spiritual and corporal works of mercy.' These purposes and activities are obviously unrelated to the sale of real estate."

As a result, the court refused to order the church to honor the real estate contract. Of course, a church treasurer who signs a legal document without authorization may be personally liable for the debt or obligation if the church does not agree to honor the transaction.

What this means for churches

Church officers and directors should never sign contracts or other legal documents on behalf of a church unless (1) they clearly are authorized to do so by the church charter, bylaws, or a resolution of the church board or membership, and (2) they sign in a "representative" capacity (i.e., indicating that they are signing on behalf of the church). Biscegelia v. Bernadine Sisters, 560 N.E.2d 567 (Mass. App. 1990). [PCL8G3]

Church Fire Caused by Improperly Installed Organ

Court rules that church may sue manufacturer.

Church Law and Tax 1991-03-01 Recent Developments

Church Property

A Missouri court ruled that a church could sue an organ manufacturer as a result of a fire that destroyed the church and that allegedly was caused by improper installation of the church organ. A Baptist church constructed a new sanctuary in 1985. Less than two years later, the new facility was completely destroyed in a fire, resulting in a loss of nearly $5 million. The church sued the organ manufacturer, the general contractor, the electrical subcontractor, and the architect. It alleged that all of these parties had been negligent in the design and installation of the organ. Specifically, the church alleged that a large “organ room” containing speakers and amplifiers had been constructed in close proximity to an electrical system including electric wires and outlet boxes, and that this condition caused the fire. All of the defendants asked the trial court to dismiss the lawsuit, and the court agreed in part. A state appeals court however ruled in favor of the church, and ordered the case to proceed to trial. The court acknowledged that the church might have difficulty proving its claims in court: “The peculiar problem for [the church] in the present case is the presence of multiple defendants whose relationship with the construction of the church varies according to each defendant’s performance of different duties. This will present difficult problems at trial, in the absence of proof that the parties acted together or were responsible for the acts of one another. However, sufficiency of pleadings is not determined by problems of proof at trial.” First Baptist Church v. Bybee Church Organs, 789 S.W.2d 829 (Mo. App.1990).

Snow and Ice on Church Property

Failure to clear church property can result in unexpected liabilities.

Church Law and Tax 1991-03-01 Recent Developments

Personal Injuries – On Church Property or During Church Activities

Failure to remove snow and ice from church property can result in unexpected liabilities. The Montana Supreme Court upheld a jury’s award of more than $400,000 to a young woman who was injured when she slipped and fell on an icy church sidewalk. The woman had arrived at the church at 6AM to perform volunteer work. Several inches of snow had fallen during the night, but she entered the church without difficulty. While she was in the church, the church janitor shoveled the sidewalks. Usually, he applied salt shoveled sidewalks to prevent ice accumulation, but on this occasion he did not. By 9AM, the woman had completed her activities, and exited the building. As she left, she noticed that the sidewalk had been shoveled, and she started to walk towards her car. The sidewalk was level for several feet, and she had no difficulty negotiating it. However, the last several feet of the sidewalk sloped sharply downward where 2 steps had been replaced by a “slope” to enable handicapped and elderly individuals to enter the church more easily. There were no railings at any point along the sidewalk. As the woman was descending this slope, she slipped and fell, landing on her head and neck. As a result of her injuries, she had to undergo 5 operations to her cervical spine. She sued the church, alleging that it had been negligent in the construction and maintenance of the sidewalk, and that it had failed to warn her of the dangerous condition. A trial court ruled in the woman’s favor, and the church appealed to the state supreme court. The church argued that it was not responsible for “natural accumulations” of snow and ice, that it had no duty to warn of a danger that was clearly apparent to a reasonable person, and that the sidewalk was not negligently constructed or maintained. The court concluded that “a property owner may be held liable for falls on accumulations of ice and snow where the hazard created by the natural accumulation is increased or a new hazard is created by an affirmative act of the property owner. Even where such a condition is actually known or obvious, a property owner may be held liable if he should have anticipated that injuries would result from the dangerous condition.” The court concluded that the church janitor’s act of shoveling the sidewalk without applying any salt left the sidewalk covered with a “sheen of ice” that constituted a new hazard different from the natural accumulation of snow and ice that existed previously. It was this hazard, along with the dangerous slope of the sidewalk (without a railing), that constituted negligence on the part of the church. This case demonstrates the risks that churches face in not adequately responding to snow and ice accumulations on their property, and in maintaining steeply “sloped” sidewalks. There is little doubt that this tragic injury could have been avoided had salt been applied to the shoveled sidewalk, and had the church constructed a railing along the steep portion of the sidewalk (or constructed it in such a way that the slope was more gradual). These are important considerations for churches to keep in mind. Davis v. Church of Jesus Christ of Latter Day Saints, 796 P.2d 181 (Mont. 1990).

Related Topics:

Zoning Ordianance Ruled Unconstitutional

A court recently made an important ruling.

Church Law and Tax 1991-03-01 Recent Developments


Does a county’s practice of prohibiting churches from building new facilities if neighboring residents object violate the churches’ constitutional right of religious freedom? Yes, concluded a federal district court in Alabama in an important ruling. A county adopted a new zoning ordinance that limited churches to “institutional districts.” The ordinance purposely failed to recognize any land as an institutional district, so that churches would be forced to seek a zoning variance before purchasing property for church use. This procedure was designed to give the county “better site development controls over institutional construction.” A Mormon congregation that had outgrown its existing facility attempted to purchase land on which it proposed to construct a new sanctuary. It filed an application to have the property rezoned as an “institutional district,” but its application was denied by the county following a hearing in which several neighboring residents expressed “vociferous opposition.” The residents lived in an affluent residential district adjacent to the church’s proposed building site, and they were horrified by the impact the church would have on the “aesthetics” of the community and the value of existing homes. The county commission based its denial of the church’s application on the basis of the “will of the people.” One commissioner stated that churches should not locate anywhere that they are not wanted. The court noted that the church had outgrown its present facility, and that the church had “as a central tenet of its faith the need to assemble together and strengthen the faith of each other and to partake of communion.” The court concluded that the church’s constitutional right to exercise its religion was violated by the county’s procedure: “It is undisputed that the primary, if not the sole, policy reason for establishing the [county’s institutional district] system was to give it ‘site control’ …. The court recognizes that the [county is] allowed to consider … neighborhood aesthetics. On the other hand, it is too great a burden on religious interests to allow this to be determined [in each case] based upon neighborhood opposition …. Allowing churches to go only where they are welcome smacks of an unreasonable burden, even if the opposition is not related to the denomination of the church …. The court’s primary conclusion is that the burden here on religion is that the ability of a church to locate or not is dependent on the acceptability of that church, or any church, to the surrounding community, without there having been any predetermination that churches are allowed to go in any area.” This case will lend support to the right of churches to acquire land for church use if (1) no land is zoned for church use, and churches are required to apply for a zoning variance for any land that they purchase for church use, and (2) the decision whether or not to grant the zoning variance depends on opposition or support by neighboring residents. Church of Jesus Christ of Latter-Day Saints v. Jefferson County, 741 F. Supp. 1522 (N.D. Ala. 1990).

Failure to Pay Property Taxes

Churches that fail to pay taxes may lose property in a tax sale.

Church Law and Tax 1991-03-01 Recent Developments

Church Property

Can a church lose a portion of its property in a tax sale because of its failure to pay property taxes? Yes, said a Maryland state appeals court. A church received a parcel of vacant land as a gift. Church officials did not believe that the church was required to pay property taxes on the land. They assumed that the land had tax-exempt status, and they had no knowledge of taxes assessed against the property by the county. Tax bills were sent to the title insurance company that provided the church with an insurance policy on the donated land, since its address was the only address listed on the deed to the property. The tax collector assumed that this was the church’s address. The legal name of the church that appeared on the deed and in the recorder’s office was different from the name the church used in the telephone directory and on its church sign, and so the collector had no way of knowing that the address on the deed was not the church’s address. Eventually, the tax collector sold the property at a tax sale. The church was unaware that the tax sale was occurring, since it never received notice of the sale. The only notice of the sale appeared in a newspaper. The church challenged the sale of its property on the grounds that it had innocently assumed that the property was tax-exempt, that it never received a tax bill, and that it never received actual notice of the tax sale. All of these grounds were rejected by the state appeals court, which upheld the sale of the church’s property. In rejecting the church’s claims that it was unaware of the property’s tax status, or of the tax sale, the court observed that vacant land is not tax-exempt under Maryland law and therefore the church’s assumptions regarding the donated property’s tax status were unreasonable. Further, the church had been “less than diligent in failing to ascertain that taxes were in default [and] that the sale had been made ….” The court emphasized that the notice in the newspaper was sufficient since there were no other reasonable means of contacting the church under the circumstances. In short, “the church enjoys no special status in relation to the property at issue because of the religious nature of its organization.” What is the significance of this case to local churches? Simply this—when acquiring real estate (whether by purchase or gift), be certain of two things. First, that the address of the church listed on the deed is correct. And second, if the legal name of the church as it appears on the deed is different from the name commonly used by the church (in the telephone directory, on the church sign, etc.), be sure to list both names. For example, if the legal name of a church is First Baptist Church and the commonly used name is “Baptist Temple,” then the deed should recite the church’s name as “First Baptist Church, also known as Baptist Temple.” Be sure to make the attorneys handling any acquisition of church property aware of both points. St. George Antiochian Orthodox Christian Church v. Aggarwal, 576 A.2d 224 (Md. App. 1990).

Injuries Sustained on Church Property

A court ruled that a member of an unincorporated church could not sue.

Church Law and Tax 1991-03-01 Recent Developments

Unincorporated Churches

A Pennsylvania court ruled that a member of an unincorporated church cannot sue the church for injuries sustained on church property. A church member was injured when she slipped and fell while leaving Christmas services. She sued her church, alleging that the church board had been negligent in failing to provide adequate lighting, handrails, and stripes on the stairs where the accident occurred. In dismissing the lawsuit, the court observed: “The law in Pennsylvania is clear: the members of an unincorporated association are engaged in a joint enterprise, and the negligence of each member in the prosecution of that enterprise is imputable to each and every other member, so that the member who has suffered damages through the tortious conduct of another member of the association may not recover from the association for such damages.” The court concluded that the victim “was a member of the association and thus any negligence of her fellow members is imputed to her and she cannot recover in tort …. [The victim] was a member of the church, an unincorporated association, at all times material to this case. As a member of the association … the decision not to place a handrail, lights, and stripes on the stairway is attributed to her. She cannot recover in tort because any negligence of the board is attributable to her.” What is the significance of this case? It illustrates that members of unincorporated churches may not be able to sue their church for injuries they sustain on church property or during church activities. Zehner v. Wilkinson Memorial United Methodist Church, 581 A.2d 1388 (Pa. Super. 1990).

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