Denominational Bylaws and Local Church Property

Are denominational bylaws regarding district supervision legally valid?

Bio

State: Missouri
Categories: Church Property

What is the legal effect of denominational bylaws giving a denomination the authority to assume control of a dissident congregation's property? That was the issue before a Missouri appeals court.

The board of deacons of a local Assemblies of God church voted to oust its pastor. The next day, the pastor contacted the Southern Missouri District of the Assemblies of God, and requested that the District intervene on the basis of "irreconcilable differences" between himself and the board.

The local church's bylaws contained a provision specifying that "[s]hould there arise irreconcilable differences between the pastor and members of the official church board, destroying unity and the successful ministry of the local assembly, the District executive presbytery … upon request from the pastor or a majority of the official board, shall investigate such differences and … may declare that the church be brought under District supervision until such strife ceases."

A week later, the church membership voted to dismiss the pastor. A District officer attended the membership meeting, and advised the congregation that its actions were in violation of the bylaws of both the church and District and accordingly were void. The District thereafter voted to place the church under District supervision "until strife ceases."

The District retained the pastor, and appointed a new board. A few months later the congregation voted overwhelmingly to disassociate the church from the Assemblies of God. When the District attempted to change the names of persons authorized to withdraw funds from the church's bank accounts, a lawsuit was filed to determine the legality of the District's actions.

A trial court ruled in favor of the church, concluding that the District had no authority to remove the board or change the signature cards at the bank. A state appeals court later reversed the trial court's action. The court provided the trial court with guidance regarding the question of "whether a local church, acting under Missouri's not-for-profit corporation act, can lawfully adopt a 'district supervision' bylaw which empowers the Southern Missouri District Council of the Assemblies of God to assume management of the secular affairs of the local church by temporarily replacing the duly elected directors of the local church when disputes arise among the local directors."

The appeals court noted the general rule that "the bylaws of a not-for-profit corporation may contain any provision for the regulation and management of the corporation which is not inconsistent with law or the corporation's articles of incorporation. A bylaw provision that is inconsistent with this state's law is void and must give way to the superior authority of the state. Likewise, any bylaw provision that conflicts with the articles of incorporation is void." However, the court concluded that the local church's bylaw provision authorizing District supervision "would not conflict with state law of the local church's articles of incorporation." The court observed:

In Missouri, the legislature has not prohibited temporary removal of directors of not-for-profit corporations during their term nor has the legislature established conditions or procedure for the removal of directors of not-for-profit corporations …. Here, it was left to the local church corporation, by enactment of bylaws, to establish the procedure for removal, reasons for removal, and criteria or events triggering temporary removal of directors. Removal od directors under the "District supervision" bylaw would not appear to violate [state law]. A bylaw provision which provides for two classes of directors, the first class being those elected for a given term, subject to temporary removal by the District Council when irreconcilable conflict arose, and a second class, those appointed by the District Council to serve temporarily during periods of irreconcilable conflict, would not conflict with [state not-for-profit corporation law].

The appeals court sent the case back to the trial court to determine the legal validity of the bylaw provision authorizing "District supervision." Any further developments will be reported in future issues of this newsletter. Boatmen's First National Bank v. Southern Missouri District Council of the Assemblies of God, 806 S.W.2d 706 (Mo. App. 1991).

Legal Developments

Man’s Attempt to Give Money to Minister Challenged in Court

A Missouri court ruled on the matter.

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri
Categories: Charitable Contributions, Wills, Trusts, and Estates

Church Law and Tax 1991-09-01 Recent Developments

Wills, Trusts, and Estates

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

• A husband’s attempt to give more than half of his estate to his minister was challenged in court. A Missouri couple was married in 1967, and they signed wills and a “postnuptial agreement” specifying that they would not “give away any of their property during their marriage.” Shortly before his death from kidney failure in 1987, the husband withdrew $26,000 from an investment account and gave it to the minister of his church. This transaction was never revealed to his wife. Following the husband’s death, his widow began investigating his affairs, and discovered the $26,000 gift to the minister. When she asked the minister about the gift, he replied “that is between him and God. If you knew about the money, it would only hurt you, and you don’t need to be hurt any more.” The widow continued to investigate her husband’s affairs, and later discovered that her husband had given the $26,000 to the minister, and that the minister used the money to buy 10 acres of land and a house. In exchange for the $26,000, the minister had agreed to pay the husband a monthly income “for life” of $266, and to “say some good words” about the husband at his funeral. When asked why the husband gave him the money, the minister later explained, “Because he wanted to, I feel. He wanted to help me out. He wanted me to go into full-time ministry, and he thought I had a message. And he said I need to be preaching it.” The widow filed a lawsuit seeking to recover the $26,000 on the ground that the transfer was a “fraudulent conveyance” in violation of her marital rights under state law. A jury agreed with her, and ordered the land and home sold and the proceeds returned to the widow. The minister appealed this verdict. A state appeals court agreed with the trial court’s decision. The court noted that a court can revoke a gift made by a husband to a third party with an intent to deprive his widow of her full legal rights in his estate. Factors indicating an intent to defraud a spouse include (1) a transfer of property for less than market value, (2) a reservation of some control by the husband over the property that is transferred, (3) the property transferred is a substantial portion of the estate, (4) a lack of open and frank disclosure by the husband to the surviving spouse about the transfer, and (5) the property is transferred by the spouse “in contemplation of death.” While not all of these factors are necessary for a fraudulent intent to be established, the court concluded that they all were present in this case. The property was conveyed to the minister for little if any value; the husband retained control over the property by requiring a monthly income of $266; the $26,000 transferred to the minister represented more than one-half of the estate; the husband purposely concealed the transfer from his wife; and, the husband made the gift at a time when he was dying of kidney failure. Accordingly, the appeals court agreed with the trial court, and ordered the home and 10 acres sold and the proceeds paid to the widow. In the Matter of the Estate of Froman, 803 S.W.2d 176 (Mo. App. 1991).

© Copyright 1991, 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: m80 c0591

Legal Developments

Death of Beneficiaries

What happens when a beneficiary in a will dies before the donor?

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri
Categories: Wills, Trusts, and Estates

Church Law and Tax 1991-09-01 Recent Developments

Wills, Trusts, and Estates

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

• A Missouri court ruled that a gift to a radio evangelist contained in the will of a donor “lapsed” when the evangelist died prior to the donor. The will contained an article specifying that the donor’s entire estate, after providing for the donor’s father for life, was to be distributed to a designated radio evangelist. The will provided that “I request that said [evangelist] shall use the money so received by him in the promotion and furtherance of his radio ministry and the spreading of the Gospel as he may see fit.” The donor’s father, and the radio evangelist, both died before the donor. At the donor’s death, his estate was claimed by the evangelist’s estate, what remained of the radio ministry, and the donor’s heirs. The evangelist’s radio ministry claimed that the donor intended to leave his estate to the evangelist in his “representative capacity to use for religious purposes and not in his individual capacity for his own personal use.” Accordingly, the gift was not affected by the evangelist’s death. The court rejected this argument, noting that the will merely requested that the funds be used to promote the radio ministry. It observed that the donor “did not manifest an intention to impose a legal obligation on the [evangelist] to use the property for religious purposes, but rather the language of the will allowed him to either apply the residue of [the donor’s] estate to the designated religious purposes or keep it for his own benefit.” The evangelist’s estate claimed that if the gift was to the evangelist in his individual capacity (and not as a representative of the radio ministry), then his estate was entitled to the property. In rejecting this claim, the court observed: “It is the rule at common law that a gift in trust lapses upon the death of the beneficiary prior to the death of the testator. In Missouri, if the named [beneficiary] in a will is not a relative by consanguinity [i.e., by blood], the common law rule that the gift lapses is still effective.” Accordingly, the court concluded that the donor’s heirs were the rightful owners of his estate. In the Matter of the Estate of McReynolds, 800 S.W.2d 798 (Mo. App. 1990).

Legal Developments

Church Fire Caused by Improperly Installed Organ

Court rules that church may sue manufacturer.

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri
Categories: Church Property

Church Law and Tax 1991-03-01 Recent Developments

Church Property

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

• 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).

Legal Developments

Former Hospital Chaplain Sues for Age and Sex Discrimination

Courts are prohibited from interfering in ecclesiastical considerations.

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri
Categories: Freedom of Religion

Church Law and Tax 1991-03-01 Recent Developments

Clergy – Removal

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

• A federal district court in Missouri ruled that a hospital chaplain could not sue the hospital for alleged age and sex discrimination following her dismissal. The former chaplain was an ordained Episcopal priest who had served as chaplain of a church affiliated hospital for 10 years. Following her dismissal, the former chaplain sued the hospital on the grounds that her dismissal (1) violated the federal Civil Rights Act of 1964, which prohibits certain employers from dismissing employees on the basis of their sex, and (2) violated the federal Age Discrimination in Employment Act, which bans discrimination in employment against persons 40 years of age and older—on account of age. The court granted the hospital’s request for a “summary judgment,” meaning that it dismissed the former chaplain’s lawsuit without allowing it to go to trial. In reaching its decision, the court relied on a 1979 ruling of the United States Supreme Court. In 1979, the Supreme Court ruled that in deciding whether of not a federal law applies to religious organizations, a civil court first must ask if applying the law to religious organizations “would give rise to serious constitutional questions.” If it would, then the law cannot be applied without an “affirmative expression of congressional intent” to apply the law to such organizations. The court concluded that application of both the federal Civil Rights Act of 1964 and the Age Discrimination in Employment Act to the relationship between a chaplain and a church-affiliated hospital would create “serious constitutional questions.” Accordingly, neither Act could be applied to the hospital without an “affirmative expression of congressional intent” to apply the law to such a relationship. The court found no congressional intent to apply the age discrimination law to the chaplain-hospital relationship, and so it concluded that the former chaplain’s claim of age discrimination had to be dismissed. But, the court did find an “affirmative expression of congressional intent” to apply the Civil Rights Act to the chaplain-hospital relationship. However, it concluded that the constitutional guaranty of religious freedom prohibited the Act from being applied in this context, and dismissed this claim as well. In reaching its decisions, the court emphasized that the hospital was “a church-affiliated institution with substantial religious character,” and that the former chaplain’s position was “inherently religious.” The court observed that the former chaplain had acted as a minister “by visiting hospital patients, reading the Bible to them, praying with them, performing baptisms, presiding at funerals, administering communion, performing chapel services, etc.” These activities, concluded the court, “are inherently religious and so confer on [the] chaplain position its inherently religious nature.” The court also rejected the former chaplain’s claim that since her lawsuit alleged only age and sex discrimination, any consideration of the ecclesiastical nature of her duties was inappropriate. It noted that the hospital had asserted that the dismissal was based in part on the former chaplain’s failure to follow “liturgical requirements,” and accordingly any review of her dismissal would inevitably involve the court in ecclesiastical considerations. The court quoted with approval from a 1928 decision of the Supreme Court: “Because the appointment is a canonical act, it is the function of the church authorities to determine what the essential qualifications of a chaplain are and whether the candidate possesses them. In the absence of fraud [or collusion] the decisions of the proper church tribunals on matters purely ecclesiastical, although affecting civil rights, are accepted in litigation before the secular courts as conclusive.” Scharon v. St. Luke’s Episcopal Presbyterian Hospitals, 736 F. Supp. 1018 (E.D. Mo. 1990).

Legal Developments

Personal Injuries – Part 2

On Church Property or During Church Activities

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri

Church Law and Tax 1990-01-01 Recent Developments

Personal Injuries – On Church Property or During Church Activities

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

• Can a nine-year-old boy’s own negligence prevent his family from recovering damages for fatal injuries suffered by the boy during a youth group activity? That was the issue before the Mississippi Supreme Court in a recent case. The boy was one of 19 children (between nine and twelve years of age) participating in a baseball game at a local park under the supervision of a 24-year-old “counselor.” After the game, the boys began playing on a large pole laying near the baseball field. The pole was over 18 feet long and weighed 1500 pounds, and was embedded in a shallow trough along the side of a gravel road. The ground on the side opposite the road sloped slightly downward. The adult supervisor promised a free ice cream cone to the child who could stay on the pole the longest. After several of the children had remained on the pole for ten minutes, the supervisor attempted to move the pole to make balancing more difficult. With the aid of several of the boys, he was able to move the log out of the trough in which it has been resting. The sudden movement of the log caused all the children still standing on the log to jump off. All of them except one jumped to the “high side” of the log, while the other boy jumped to the downhill side. The log rolled over and fatally crushed this boy. The main issue before the court was whether the victim’s own negligence prevented his family from recovering damages for his death. Ordinarily, an accident victim’s own “contributory negligence” will prevent him or her from recovering money damages (or will reduce the amount of damages available) from the person or organization primarily responsible for the accident. Should this principle apply to children? The court said no: “The law with respect to contributory negligence on the part of minors is clear. A minor between the ages of seven and fourteen years is presumed not to be possessed of sufficient discretion to make him guilty of contributory negligence ….” This ruling illustrates the additional risk that churches incur during youth activities, since they often will be unable to avoid legal liability by arguing that injured minors were themselves responsible for their own injuries. Glorioso v. YMCA of Jackson, 540 So.2d 638 (Miss. 1989).

© Copyright 1990, 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: m58 m86 c0190

Legal Developments

Zoning

Is a church-run child care center a permissible activity on church property zoned exclusively for church or residential purposes?

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri
Categories: Zoning

Is a church-run child care center a permissible activity on church property zoned exclusively for church or residential purposes?

Yes, concluded the Missouri Supreme Court. The court acknowledged that the zoning ordinance did not allow child care facilities in the neighborhood in which the church was located, but it concluded that such an activity was a permissible "accessory" use.

The court observed: "The day care program is subordinate to the principal use of the church. It was created by the governing body of the church and funded by the church. The governing body determined the curriculum for the program and hired a director.

The record shows that the church operates the day care to attract new members to the church and accomplish its mission of preaching the gospel and serving the community. Similarly, the day care is subordinate in area to the principal building and use of the church. The day care service contributes to the comfort and convenience of the church parishioners by providing child care for them.

The day care proper is located on the same lot as the church and it is located in the same zoning district." Accordingly, the child care center was an accessory use of the church under Missouri law and was a permissible use of church property. City of Richmond Heights v. Richmond Heights Presbyterian Church, 764 S.W.2d 647 (Mo. 1989).

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).

© 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: m47 c0589

Legal Developments

Church Property

The sale of a Georgia church’s property triggered an unfortunate legal dispute.

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri
Categories: Church Property

The sale of a Georgia church's property triggered an unfortunate legal dispute. In April of 1985, the church had signed an exclusive listing agreement with a realty company to sell certain church property. This listing expired in September of the same year, but the broker continued to assist the church with the sale of its property.

A few months later, the broker started his own agency, and presented the church with another exclusive listing contract. In December of 1985 the pastor signed the new contract without reading it. He assumed, based on discussions with the broker, that the contract called for a three-month exclusive listing.

In June of 1986, the broker called the pastor with an offer on the property, congratulated him, and reminded him that he expected 10% of the $200,000 sales price as his commission under the terms of the contract. The pastor, thinking that the new contract had only been for a three-month term, notified the broker that the listing agreement had expired in March, and accordingly that no commission was due. In fact, the new listing contract was not limited to three months.

The broker sued the church for his commission, and a trial court ruled in favor of the church. The broker appealed, and a state appeals court reversed the trial court's determination and ruled in favor of the broker. The court rejected the pastor's argument that he had been misled into assuming that the new contract contained a three-month term. "Where one signs a contract without reading it," observed the court, "he is bound by its terms unless he can show that an emergency existed at the time that he signed it that would excuse his failure to read it, or the other party misled him … or a confidential relationship existed upon which he relied in not reading the contract."

No emergency existed in the present case, noted the court, and the pastor could not argue that he had been misled "where he had the capacity and opportunity to read the contract …. He is not entitled to relief where, by exercising slight diligence, he could have prevented the fraud which he alleges to have been perpetrated upon him." This ruling illustrates the risks that a minister or church representative assumes in signing legal documents without a careful review. Never assume that you are familiar with the terms of any legal document that you have not read, no matter how logical or reasonable your assumptions or understandings may be. Stacey Realty Company v. Calvary Baptist Church, Inc., 374 S.E.2d 537 (Ga. App. 1988).

Legal Developments

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

Richard R. Hammar, Attorney, CPA

Bio

State: Missouri
Categories: Church Property, Tax Exemption

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)

Legal Developments

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

Church Property

Richard R. Hammar, Attorney, CPA

Bio

State: Illinois
Categories: 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).