Buried Treasure on Church Property

Who has a right to the treasure?

Richard R. Hammar, Attorney, CPA

Bio

State: Iowa
Categories: Church Property

Church Law and Tax 1992-05-01 Recent Developments

Church Property

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

• Who owns buried treasure found on a church’s property—the church, or the heirs of former owners who put it there? That was the interesting question before the Supreme Court of Iowa. A family owned a parcel of ground (which included a home) for several generations. The property was purchased by a church in 1987. When the church later demolished the home, it discovered a substantial sum of paper money and coins buried in the ground in tin cans and glass jars. Several silver dollars and half-dollars were from the 19th century. Also included in the hoard were several ten and twenty dollar bills. The face amount of the coins and currency totaled nearly $25,000. Heirs of the previous owners of the property learned of the discovery, and claimed all of the money. They argued that, as heirs of the true owner of the money, their interest was superior to that of the church. The church asserted that it was the rightful owner of the money. A trial court rule in favor of the church, and the heirs appealed. The state supreme court began its opinion by noting:

The rights of finders of property vary according to the characterization of the property found …. The general rule is that the finder of lost property becomes the owner thereof against the whole world other than the true owner. Property is lost when the owner unintentionally and involuntarily parts with its possession and does not know where it is. Mislaid property is that which the owner has voluntarily placed somewhere and then forgets that it is there. The right of possession of mislaid property is in the owner of the premises upon which it is found, as against all persons other than the true owner …. Treasure trove is treated as lost and belongs to the finder as against all except the true owner. Treasure trove consists of coins or paper money which is concealed by the owner; it carries with it the thought of antiquity such that it has been hidden so long that the true owner is not discoverable. Abandoned property is that to which the owner has voluntarily relinquished all right, title, and interest with the intention of terminating his ownership. The finder who reduces abandoned property to possession acquires absolute title as against the former owner. The court concluded that money buried in the ground is treasure trove, and as such it is “the type of property to which the true owner retains ownership as against the finder or the owner of the property where it is found.” The court added that “if the original owner is deceased that person’s heirs … are entitled to lay claim to the property.” In conclusion, the supreme court ordered the church to pay the money over to the heirs. Ritz v. Selma United Methodist Church, 467 N.W.2d 266 (Iowa 1991).

© Copyright 1992, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m21 c0392

Legal Developments

“Use Taxes” and Churches

Use taxes are designed to prevent the avoidance of sales tax.

Richard R. Hammar, Attorney, CPA

Bio

State: Iowa

Church Law and Tax 1992-03-01 Recent Developments

Taxation – Sales

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

• The Iowa Supreme Court upheld the application of a state “use tax” to the purchase of religious products by a local church. A state tax agent audited a Lutheran church, and claimed that it owed “use taxes” on several items that were purchased from out-of-state church-affiliated suppliers. Most states have enacted “use taxes” as a means of taxing property that is purchased out-of-state. Use taxes are designed to prevent persons from avoiding state sales taxes by purchasing items out-of-state. The church purchased several items from out-of-state church-affiliated suppliers (including Augsburg Publishing House and Concordia Publishing House). Items purchased included church supplies, certificates, religious literature, envelopes, crosses, hymnals, and bulletins. The church objected to the tax, claiming that taxing a church’s purchase of religious supplies violated the first amendment guaranty of religious freedom. The state supreme court disagreed. It observed:

There is no evidence in this case that the payment of the consumer tax violates [the church’s] sincere religious beliefs. Iowa’s nondiscriminatory sales and use tax law requires only that the taxpayer remit to the state the use tax due on consumer items it purchases from its out-of-state, church-affiliated suppliers for its in-state use. The only burdens on [the church] in this case are a slight reduction of funds available to it for the purchase of consumer items and the costs associated with administering this generally-applicable tax. The [United States Supreme Court] has made it clear that to the extent that imposition of a generally-applicable tax merely decreases the amount of money a taxpayer has to spend on its religious activities, any such burden is not constitutionally significant. Though we do not doubt the economic cost to [the church] of complying with a generally-applicable sales and use tax, compliance with such a tax is no different from compliance with other generally-applicable laws and regulations, such as health and safety regulations, to which the taxpayer must adhere.

The court relied heavily on the United States Supreme Court’s 1990 ruling in the Jimmy Swaggart Ministries case upholding the application of the California state sales tax to sales by Swaggart in California (discussed in the March-April 1990 issue of Church Law & Tax Report). The Supreme Court noted in the Swaggart Ministries case that “the fact that [Swaggart Ministries] must bear the cost of collecting and remitting a generally applicable sales and use tax … does not enmesh government in religious affairs.” Hope Evangelical Lutheran Church v. Iowa Department of Revenue, 463 N.W.2d 76 (Iowa 1990).

Employee Relations

Church Law and Tax 1989-11-01 Recent Developments Employee Relations Richard R. Hammar, J.D., LL.M., CPA

Richard R. Hammar, Attorney, CPA

Bio

State: Iowa

Church Law and Tax 1989-11-01 Recent Developments

Employee Relations

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

• The Iowa Supreme Court ruled that a church-sponsored retirement center had not acted improperly in dismissing a female custodian. The custodian and her husband had been hired as a “team” and were required to live in an apartment on the premises. The husband was employed as building superintendent. A year after the couple was hired, the husband was dismissed because he allegedly had circulated notes threatening the administrator. The wife was also dismissed because “the termination of [her husband’s] employment necessarily destroyed the team concept,” and also out of a concern that her “effectiveness would be hampered by resentment” over her husband’s dismissal. She sued the center, claiming that her discharge constituted sex discrimination, breach of contract, and a violation of “public policy.” A trial court and a state appeals court ruled in favor of the center, and the wife appealed to the state supreme court. The supreme court also rejected the wife’s claim. In rejecting the allegation of sexual discrimination, the court observed that the center had established a legitimate nondiscriminatory reason for firing the wife: “[Her] husband could no longer remain at the center because of the threats he had made. Budgetary and economic concerns as testified to by the center’s witnesses would not have allowed the center to provide separate apartments for [the wife] and a new superintendent. Further, allowing [her] to live off of the premises would not have been a reasonable alternative because the team concept would have been destroyed. In these circumstances, the [trial court] could rationally conclude that the center’s decision to terminate [the wife’s] employment was reasonable and had not been motivated by a discriminatory [intent].” The court concluded that the wife had failed to prove that the center’s alleged reasons for terminating her were a “pretext for discrimination.” The court also rejected the wife’s “breach of contract” claim. Specifically, the wife acknowledged that either an employer or an employee has the authority to terminate an employment relationship “at will,” but she insisted that the center’s authority to terminate her had been limited by its stated “personnel policies.” The court agreed that an employer’s “personnel policies” (whether contained in an employee handbook or otherwise) can become part of an employee’s oral or written contract of employment if the parties so intend, and such policies may limit an employer’s authority to terminate an employee. The court concluded that even if the parties intended that the center’s personnel policies be a part of the wife’s employment contract, this would not have affected the center’s right to fire the wife since the personnel policies only limited the center’s authority to dismiss employees on the basis of misconduct (and the wife had not been dismissed as a result of any misconduct on her part). Finally, the court rejected the wife’s claim that her dismissal violated “public policy.” It observed that under Iowa law an employee termination violates public policy only if it is based upon an employee’s filing of a workers’ compensation claim. This case illustrates the importance of reviewing proposed employee dismissals to ensure that they are based on provable nondiscriminatory grounds. It also illustrates that personnel policies and employee handbooks may inadvertently limit a church’s authority to dismiss employees—if they are deemed to be a part of the employee’s oral or written employment contract. Finally, note that the dismissal of an employee for filing a workers’ compensation claim constitutes a violation of public policy in several states, and will subject the employer to potential legal liability. Hamilton v. First Baptist Elderly Housing Foundation, 436 N.W.2d 336 (Iowa 1989).

© Copyright 1989, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m42 m43 c0689

Legal Developments

Freedom of Religion – Part 1

Church Law and Tax 1989-09-01 Recent Developments Freedom of Religion Richard R. Hammar, J.D., LL.M.,

Richard R. Hammar, Attorney, CPA

Bio

State: Arkansas
Categories: Schools

Church Law and Tax 1989-09-01 Recent Developments

Freedom of Religion

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

• Two federal appeals courts addressed the issue of the right of Christian student groups to meet on public high school campuses for Bible study and prayer prior to the start of the school day. One court concluded that such groups have a legal right to meet on public school property, and the other court ruled that they do not. The United States Court of Appeals for the Eight Circuit (which includes the states of Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, South Dakota) concluded that Christian student groups have a legal right to meet on a public high school campus for Bible study and prayer prior to the start of the school day. The group in question (comprised of students at a Nebraska public high school) had argued that their school’s refusal to allow them to meet on school property violated the constitutional guaranty of religious freedom and the federal “Equal Access Act.” The Equal Access Act prohibits public high schools from denying any group access to school facilities during “noninstructional” hours on account of the religious content of the group’s speech if the school has established a “limited open forum” by making the same facilities available to “one or more noncurriculum related student groups.” The Christian group argued that the school had created a limited open forum by permitting several “noncurriculum related groups” to meet on school property (including the chess club, a junior Rotary Club, and a scuba diving club), and accordingly the school could not deny the Christian group access to the same facilities during noninstructional hours. School officials argued that they had not created a limited open forum, since all of the clubs that met on school property were curriculum related. They pointed out that the chess club was related to logic (though no logic courses were taught at the school), the junior Rotary Club was related to sociology, and the scuba diving club was related to physical education. The federal appeals court rejected the school’s claim that the Equal Access Act did not apply since all of the student clubs were curriculum related: “Allowing such a broad interpretation of ‘curriculum-related’ would make the Equal Access Act meaningless. A school’s administration could simply declare that it maintains a closed forum and choose which student clubs it wanted to allow by tying the purposes of those student clubs to some broadly defined educational goal. At the same time the administration could arbitrarily deny access to school facilities to any unfavored student club on the basis of its speech content. This is exactly the result that Congress sought to prohibit by enacting the Equal Access Act. A public secondary school cannot simply declare that it maintains a closed forum and then discriminate against a particular student group on the basis of the content of the speech of that group.” The court concluded that “many of the student clubs [at the high school in question], including the chess club, are non-curriculum-related” and therefore the school had established a limited open forum and “the Equal Access Act forbids discrimination against [the Christian student group] on the basis of its religious content.” The court also rejected the school’s claim that the Equal Access Act violated the constitution. The court noted that the United States Supreme Court had ruled in 1981 that a public university could not deny a Christian student group access to university facilities that were available to other student groups. This ruling, concluded the appeals court, demonstrated the validity of the Equal Access Act. The court rejected the school’s argument that the Supreme Court’s ruling should be limited to university students on account of the greater impressionability and immaturity of high school students. It noted that “Congress considered the difference in the maturity level of secondary students and university students before passing the Equal Access Act. We accept Congress’ fact-finding.” The ruling is controlling in the eighth federal judicial circuit (which includes the states of Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, South Dakota)—unless reversed or modified by the same court in a later decision, or by the United States Supreme Court. Mergens v. Board of Education of Westside Community Schools, 867 F.2d 1076 (8th Cir. 1989).

Legal Developments

Court Rejected Claim that Employment of Chaplain at a Public Hospital Violated the First Amendment

A federal court in Iowa rejected the claim that the employment of a full-time chaplain

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Freedom of Religion

A federal court in Iowa rejected the claim that the employment of a full-time chaplain at a public hospital violated the first amendment's nonestablishment of religion clause.

The court acknowledged that a public hospital's employment of a chaplain violated the nonestablishment of religion clause, but concluded that such a practice was validated by the first amendment's other religion clause (guaranteeing the free exercise of religion). The court referred to decisions upholding the constitutionality of military and prison chaplains. Like military personnel and prison inmates, hospital patients often are isolated and restricted in the exercise of their religion.

The provision of a chaplain in all of these cases , concluded the court, is necessary to ensure that the constitutional right to freely exercise one's religion is protected. However, the court cautioned that the hospital chaplain's activities could not be unrestricted. The court held that the chaplain could not actively proselytize; counsel with employees, outpatients, or families not in the hospital for emergencies or "death-bed watches"; or have access to patients' medical records without the express approval of the patient or a guardian. Carter v. Broadlawn Medical Center, 667 F. Supp. 1269 (S.D. Iowa 1987)

Legal Developments

Court Rejects Church Schools’ challenge to Iowa’s Compulsory Education Law

A federal appeals court rejected a challenge by two fundamentalist church schools to the constitutionality

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Schools

A federal appeals court rejected a challenge by two fundamentalist church schools to the constitutionality of Iowa's compulsory education law.

The state law required that church-related schools file annual reports with the local public school district listing pupils' names, ages and attendance record, texts used, and teachers employed. In addition, the law required that church schools provide "equivalent instruction" using state-certified teachers. The court concluded that the "burden on [parents'] religious beliefs—if one exists at all—is very minimal and is clearly outweighed by the state's interest in receiving reliable information about where children are being educated and by whom."

In rejecting the claim that standardized testing be used to evaluate the quality of education at the schools instead of requiring certified teachers, the court observed that "certification is the best means available today to satisfy [the state's] interest in the education of its children." The court also ordered that the state's attorneys' fees be paid since the lawsuit was "vexatious and unreasonable," and was based on arguments that had been rejected in the past by numerous courts. Fellowship Baptist Church v. Benton, 815 F.2d 485 (8th Cir. 1987).