Court Concluded that Denomination Controlled Church Property

A Pennsylvania state appeals court resolved a controversy between a local church and a Synod regarding ownership of church property and who would serve as pastor of the church.

For many years, Trinity Lutheran Evangelical Church was governed by its own constitution and bylaws as well as those of its regional Synod and the Lutheran Church of America (LCA). During the latter part of 1983, a division arose within the congregation because of participation by its pastor (Rev. Roth) in an organization formed to deal with the plight of unemployed workers in the area.

The Synod investigated the problems at the church and recommended certain actions in an effort to reunite the congregation. When the two factions within the church could not agree upon these recommendations, the Synod vacated the pulpit and appointed another pastor to serve. When the church refused to recognize the Synod's designated pastor, the Synod sought and received a court order forbidding the performance of any further pastoral functions at the church by Rev. Roth. Despite the court order, Rev. Roth continued to act as pastor, which resulted in his being jailed for contempt of court.

Nevertheless, Rev. Roth continued to dictate sermons which were read to the congregation. In addition, church board members transferred $9,500 out of a church bank account to their own personal accounts, and reduced the church's insurance coverage by 70%.

Because of these actions, the Synod declared the church "defunct," and, pursuant to the LCA constitution, ordered the board to transfer all church assets to the Synod. The board refused to comply with this request (some board members locked themselves in the church basement), and the Synod obtained another court order citing the board for contempt of court and ordering them to convey all church properties to the Synod.

The board members were "conditionally" jailed for between 30 and 60 days, with the understanding that they would be released immediately upon their willingness to comply with the court's orders.

A Pennsylvania state appeals court affirmed the lower court's orders. Specifically, it held that:

  1. The lower court did not exceed its authority in confining the pastor or board members for contempt of court.
  2. The incarceration of the pastor and board members was a "conditional commitment to achieve compliance with a court order" and as such was civil rather than criminal in nature. Accordingly, there was no requirement for a jury trial.
  3. The lower court's orders upholding the Synod's rulings (declaring the pulpit vacant and ordering all church properties transferred to the Synod) did not violate the church's constitutional guaranty of religious freedom, since "the members of Trinity are free to practice their religion as they see fit and to express themselves in any manner, so long as they do not interfere with the Synod's use of the church …."
  4. Civil courts must defer to the decision of ecclesiastical organizations involving questions of discipline, faith, or ecclesiastical rules, except in those cases where an ecclesiastical organization "fails to follow its own rules and procedures."
  5. The constitution of the LCA gave churches the right to appeal determinations of a Synod to the "annual convention of the Synod." Since there was evidence that the church had appealed the Synod's rulings to the "convention of the Synod," and that the appeal was never heard, the court ordered the trial court to determine whether or not an appeal had in fact been filed and if so whether or not it was properly heard.

    If the Synod failed to follow the LCA constitution, then the civil courts need not defer to its rulings. Regardless of whether one agrees with the result in this case, the fact remains that the Pennsylvania appeals court ignored the clear and binding pronouncement of the United Stated Supreme Court in Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976), that the civil courts are bound to defer to the determinations of ecclesiastical organizations involving questions of doctrine or polity even if those determinations are arbitrary in the sense that they fail to adhere to the organization's own internal rules.

    The Supreme Court's ruling has been criticized by many as encouraging irresponsible conduct by religious organizations. Nevertheless, it remains the law of the land and the Pennsylvania appeals court erred in ignoring it. Trinity Lutheran Evangelical Church v. May, 537 A.2d 537 (Pa. Common. 1988)

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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

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)

Court Affirmed an Arkansas Law That “The Bonding of a Church Construction Job is Mandatory”

The state of Arkansas has a unique law pertaining to the bonding of church construction

The state of Arkansas has a unique law pertaining to the bonding of church construction projects. It provides that "no contract in any sum exceeding $1,000 providing for the repair, alteration, or erection of any building … shall be entered into by any church or religious organization … unless the contractor shall furnish to the party letting the contract a bond in a sum equal to the amount of the contract."

A state appeals court ruled that "the bonding of a church construction job is mandatory" under Arkansas law. General Electric Supply Co. v. Downtown Church of Christ, 746 S.W.2d 386 (Ark. App. 1988)

Court Upheld the Property Tax Exemption of “Young Life” on the Ground That Its Property Is Owned and Used Solely for Religious Worship

A Colorado state appeals court upheld the property tax exemption of "Young Life" on the

A Colorado state appeals court upheld the property tax exemption of "Young Life" on the ground that its property is owned and used solely for religious worship and not for private or corporate profit.

The court also ruled that the state property tax administrator was without standing, under Colorado law, to challenge the decision of the state board of assessment appeals recognizing the exempt status of the property in question. Maurer v. Young Life, 751 P.2d 653 (Colo. App. 1988)

Court Ruled That a Vacant Property Owned by a Religious Organization Did Not Qualify for Exemption from Real Estate Taxes

Does property vacated but still owned by a religious organization continue to qualify for exemption

Does property vacated but still owned by a religious organization continue to qualify for exemption from real estate taxes under a Wisconsin law exempting "property owned and used exclusively by … a religious association"? No, concluded a state appeals court.

A Catholic order operated a convent on the property from 1953 through 1983, when it moved its members to new facilities in another state. The Wisconsin property was listed for sale, but did not sell for two years. A local tax assessor, finding the property to be vacant and listed for sale, determined that it was not exempt from real estate taxes for 1984 or 1985.

The Catholic order argued that the property continued to qualify for exemption even after it was vacated, since (1) it stored some maintenance tools and lawn implements there; (2) it retained a groundskeeper to maintain the property; (3) it had the property listed for sale; and (4) it maintained a mortgage on the property and used some of the proceeds to acquire its new quarters in another state.

The appeals court, in denying the order's claim of exemption, emphasized that the state law exempted only property owned and used exclusively by a religious association. "Exclusive use," observed the court, means the "physical use of the property" in connection with the "regular activities" of a religious organization. The mere maintenance and repair of the vacated property, and listing it for sale, did not amount to an "exclusive use" of the property by the order, since the property "was not being used for any of the order's regular activities or benevolent purposes." The Dominican Nuns v. City of LaCrosse, 419 N.W.2d 270 (Wisc. App. 1987)

Court Confirmed Civil Courts Are Prohibited from Resolving Church Property Disputes on the Basis of Religious Doctrine

A Florida court confirmed the general principle that the civil courts "are prohibited from resolving

A Florida court confirmed the general principle that the civil courts "are prohibited from resolving church property disputes on the basis of religious doctrine."

The civil courts are without jurisdiction to resolve such disputes when the "underlying controversy concerns religious doctrine and only incidentally affects other matters." Archdiocese of Miami v. Sama, 519 So.2d 28 (Fla. App. 1987)

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Court Ruled Church-Operated Nursing Home Was Exempt from Property Taxation

Can a church-operated nursing home be exempt from property taxation? Yes, concluded a Texas appeals

Can a church-operated nursing home be exempt from property taxation? Yes, concluded a Texas appeals court.

The nursing facility, which was operated by a Christian Science church as part of its religious and charitable purposes, admitted persons without regard to their religious faith. However, all patients had to agree to rely entirely upon the Christian Science method of healing (the sole method practiced at the facility), and all were expected and encouraged to study Christian Science literature.

The facility charged a fee for its services, but did not turn away patients unable to pay. Its total operating revenue generally was well below its operating expenses. Such facts, concluded the court, clearly established the facility's exemption under a state law exempting from property taxation any facility organized exclusively for religious or charitable purposes that was engaged exclusively in providing support or housing to elderly persons without regard to their ability to pay.

The court rejected the state's contention that the facility's discrimination against non-Christian Scientists prevented its property from being exempt from taxation: "As long as a nursing home provides care to persons who would otherwise become burdens upon the state, it meets the requirement that its services benefit the general public, regardless of the religious motivations of its operators." Dallas County Appraisal District v. The Leaves, Inc., 742 S.W.2d 424 (Tex. App. 1987)

Apartment Building Owned by Missions Organization Was Exempt from Property Taxation

Church Property

An Illinois state appeals court ruled that a three-story, 16-unit apartment building owned by a missions organization and rented to missionaries temporarily home on furlough was exempt from property taxation under a state law exempting "all property used exclusively for religious purposes including all property owned by churches or religious institutions or denominations and used in conjunction therewith as parsonages or other housing facilities provided for ministers …." Evangelical Alliance Mission v. Department of Revenue, 517 N.E.2d 1178 (Ill. App. 1987)

Court Applied the “Neutral Principles” Approach in the Resolution of a Nondoctrinal Internal Church Dispute

Internal church disputes present a difficult problem for the civil courts.

The regional diocese of the American-Bulgarian Eastern Orthodox Church dismissed certain church members from their position on a local church's board of trustees, selected other church members to govern the church, and ordered the discharged trustees to deliver the church's assets and records over to the newly appointed trustees.

When the discharged trustees refused to comply with the mandates, the newly appointed trustees filed suit. A state trial court issued an injunction ordering the former trustees to "turn over all documents and assets of (the church) currently in their possession," and declaring that the church was subject to "the dictates of the regional diocese."

The former trustees appealed, and a state appeals court reversed the lower court's order and ruled in favor of the former trustees. The appeals court began its opinion by observing that "the state has a cognizable interest in the peaceful resolution of internal church disputes which are concerned with control or ownership of church property, and the civil courts have general authority to resolve such controversies."

However, "when doctrinal or polity issues arise in the determination of a property dispute, the courts must defer to the resolution reached by the church's highest ecclesiastical authority." If doctrinal issues are not involved, "the first amendment does not require that the state adopt a rule of compulsory deference to religious authorities in resolving property disputes. Instead, the state courts may choose from a variety of approaches."

One of these, the neutral principles approach, allows a court to determine who owns or controls church property by applying objective legal principles to church documents and records. Another approach, the "compulsory deference rule," requires the civil courts to always defer to religious hierarchies in any disputes involving local churches.

The Illinois court chose to apply the "neutral principles" approach and accordingly concluded that it was not compelled to rule in favor of the diocese. Only when a church property dispute (or any other internal church dispute) involves doctrine or polity is a civil court compelled to defer to determinations of religious hierarchies.

This was not such a case, concluded the court. The appeals court remanded the case to the trial court with instructions to resolve the dispute on the basis of "neutral principles of law." Illinois is one of a number of states that have elected to apply the "neutral principles" approach in the resolution of nondoctrinal internal church disputes. Such an approach certainly has appeal in cases involving independent or "congregational" churches. But, the resolution of internal disputes involving "hierarchical" churches on the basis of "neutral principles"—contrary to the determinations of a denomination—is indeed troubling. Aglikin v. Kovacheff, 516 N.E.2d 704 (Ill. App. 1987)

Court Ruled Internal Church Dispute Does Not Justify a Breach of Contract

Church could have made appropriate revisions in the contract to protect itself against a claim of breach.

An internal church dispute does not justify a breach of contract with an outside vendor, ruled a Georgia state court.

A church entered into a contract to sell its property to a commercial business after its congregation voted to merge with another congregation. A dissatisfied minority filed lawsuits in state court seeking to stop the proposed merger and disputing the church's legal ownership to its property. The church was unable to resolve these disputes, and as a result, was unable to fulfill its obligations under the contract by the commercial buyer.

The church attempted to defend its breach of the contract on the basis of its internal problems and the lawsuits that had been filed against it by the dissident members. Such excuses were summarily rejected by the court, which noted that the church had been aware, at the time it executed the contract of sale, of the lawsuits against it by the dissident members, and it could have made appropriate revisions in the contract to protect itself against a claim of breach. Solid Rock Baptist Church v. Freight Terminals, Inc., 361 S.E.2d (Ga. App. 1987)

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Court Ruled City Violated the Guaranty of Religion Clause by Changing Zoning Laws Prohibiting Jehovah’s Witness Building a Church

A Jehovah's Witness congregation applied to city officials for approval to build a church in

A Jehovah's Witness congregation applied to city officials for approval to build a church in an area zoned for manufacturing use. The city then rezoned much of the community, changed the area where the church was to be built from a manufacturing to a residential district, and then prohibited the building of churches in all residential districts.

The congregation challenged the city's action as a violation of the constitutional guaranty of religious freedom. The court agreed: "Municipalities have the power to zone their districts, but to exclude churches and other places of worship from the very areas (residential communities) that they draw their members from and relocate them to a less desirable zone of the township … offends the very essence of … the New Jersey Constitution." Jehovah's Witnesses v. Woolrich Township, 532 A.2d 276 (N.J. Super. 1987)

Court Ruled building Owned by Franciscan Friars Used as Missionary Headquarters Qualified for Property Tax Exemption

Does a building owned by the Order of Franciscan Friars and used as a missionary

Does a building owned by the Order of Franciscan Friars and used as a missionary headquarters qualify for a property tax exemption under Pennsylvania law? Yes, concluded a Pennsylvania state court.

Noting that Pennsylvania law exempts from tax all properties used for purely charitable purposes, the court concluded that a building used as a missionary headquarters is charitable in nature. It defined "charity" to include an organization "designed to benefit an indefinite number of people from a religious standpoint" even though the organization performs no "non-religious charitable work."

This conclusion was not affected by the fact that eight priests used the property as a residence, since "the provision of living quarters is not inconsistent with a purely public charity." Order of Franciscan Fathers v. Board of Property Assessment, 534 A.2d 568 (Pa. Common. 1987)

Court Ruled Church’s Unimproved Lot Was Exempt from Real Estate Taxes

A Florida state court ruled that a church-owned unimproved lot was exempt from real estate

A Florida state court ruled that a church-owned unimproved lot was exempt from real estate taxes.

The court observed that "while the land was substantially vacant and unimproved and was not used by the church continuously, nevertheless, the land was being actually and presently used by the church for religious purposes sporadically and improvements and greater physical use were planned.

The church's present religious use of the property, while not evidenced by improvements and not continuous, was exclusive of any other use and was not incidental to any nonexempt use." Hausman v. First Baptist Church, 513 So.2d 767 (Fla. App. 1987)

Court Ruled Church-Owned Apartment Building Used as Subsidized Housing for Elderly and Handicapped Tenants Was Exempt from Property Tax

The Missouri Supreme Court ruled that a church-owned apartment building used as subsidized housing for

The Missouri Supreme Court ruled that a church-owned apartment building used as subsidized housing for elderly and handicapped tenants was exempt from property taxation under a state law exempting property "actually and regularly used exclusively for purposes purely charitable and not held for private or corporate profit." Pentecostal Church of God v. Hughlett, 737 S.W.2d 728 (Mo. 1987)

Church Loses Property after Withdrawing from Denomination

A deed to a church’s property may dictate who maintains ownership of the property in the event of a dispute.

To illustrate, the deed conveying title to a local church in Georgia read: "The aforesaid property is conveyed to the trustees above-named as trustees of First Evangelical Methodist Church, Lafayette, Georgia, affiliated with the Evangelical Methodist Church of Abiline, Texas, and other places, it is understood that this conveyance is made to the trustees hereinbefore named as trustees in connection with the affiliations aforesaid and that said connection is to be maintained in the use of the property herein conveyed."

The congregation voted to withdraw from the parent denomination, and a lawsuit resulted to determine whether the local church or the denomination had title to the church property. The Georgia Supreme Court concluded that the church is no longer "in connection with the affiliations aforesaid," and that said connection is not "maintained in the use of the property herein conveyed."

As a result, "title to the church parcel must be declared vested in the [parent denomination] and the local church, by virtue of the severance of its connection therewith, must be held to have forfeited its right of use and possession." First Evangelical Methodist Church v. Clinton, 360 S.E.2d 584 (Ga. 1987)

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Seventh Day Adventists Did Not Qualify for the Exemption of Parsonages under State Law

Church Property

An Indiana state tax court held that a duplex owned by the state conference of the Seventh Day Adventists did not qualify for the exemption of parsonages under state law.

The exemption was available only if the parsonage is actually used to house a minister, and the evidence was not clear that this was the exclusive use of the conference-owned duplex. The court did acknowledge that the duplex might qualify for exemption under another statutory provision exempting any property used for religious purposes, and accordingly remanded the case to the trial court for further consideration. Seventh-Day Adventists v. Board of Tax Commissioners, 512 N.E.2d 936 (Ind. Tax 1987)

State Property Tax Exemptions for Church-Owned Property Continues to Be a Hotly-Contested Issue

Church Property

A Seventh Day Adventist bookstore was ruled to be exempt under a Missouri law exempting property used for purely charitable purposes; a convent caretaker's residence was denied exemption under an Illinois statute exempting property used exclusively for religious purposes; and, a Buddhist temple was ruled to be exempt under a Tennessee statute exempting "religious institutions."

Cases from other jurisdictions are not necessarily relevant in a particular state, given the great variety in state property tax exemption statutes.

Missouri Conference Association of Seventh Day Adventists v. State Tax Commission, 727 S.W.2d 940 (Mo. App. 1987); Benedictine Sisters v. Department of Revenue, 508 N.E.2d 470 (Ill. App. 1987); Kopsombut-Myint Buddhist Center v. State Board of Equalization, 728 S.W.2d 327 (Tenn. App. 1987).

Church Property Taken Without Compensation in Violation of the Constitution

In 1957, a Lutheran church in California purchased a 21-acre parcel of land in a

In 1957, a Lutheran church in California purchased a 21-acre parcel of land in a canyon along the Mill Creek.

The church constructed several buildings on the property, including a dining hall, two bunkhouses, a lodge, and a chapel, and used the improved property as a campgrounds known a "Lutherglen."

In 1977, a fire destroyed the forest upstream of the campgrounds, creating a serious flood hazard. A severe storm in 1978 flooded Lutherglen and destroyed its buildings. In response to the dangerous conditions in the area, the County of Los Angeles adopted a temporary ordinance prohibiting anyone from building any structure within a flood zone that included Lutherglen.

The church thereafter sued the state of California, arguing that the state's prohibition of any further use of the campgrounds violated the fifth amendment to the United States Constitution, which specifies that "private property [shall not] be taken for public use, without just compensation." The fifth amendment, argued the church, does not require that the government seize private property by condemnation. It can also be violated by governmental regulations that effectively deny a landowner the use of his land, even on a temporary basis.

The California state courts rejected the church's contention, but the United States Supreme Court agreed that the county's ban on further development of the campgrounds amounted to a "regulatory taking" of the church's property without compensation in violation of the Constitution. First English Evangelical Lutheran Church v. Los Angeles County, 107 S. Ct. 2378 (1987).

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