Constitution, Bylaws and Charters

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

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Charters, Constitutions, and Bylaws

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

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

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

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

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

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

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

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

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

Legal Developments

Recent Developments in Ohio Regarding Church Membership

An Ohio court ruled that the first amendment guaranty of religious freedom prevented it from resolving a dispute between a dismissed church member and his former church.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1999-07-01

Church Membership

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

• Key point. The first amendment guaranty of religious freedom prevents the civil courts from resolving lawsuits by dismissed church members challenging the validity of their dismissals.

An Ohio court ruled that the first amendment guaranty of religious freedom prevented it from resolving a dispute between a dismissed church member and his former church. A church convened a business meeting at which a disgruntled member was dismissed from membership in the church. The dismissed member previously had sued his church for refusing to comply with his request to inspect the church’s financial records. At the business meeting, the dismissed member claimed that several defamatory statements were made about him, including that he was a liar, that he was in league with Satan, that he had been “overtaken by a fall,” that he was a “defiler of the temple” and an enemy of the church, and that he had committed adultery. The dismissed member was not allowed to be present at this meeting. He later sued the church on three grounds-the church violated its bylaws in dismissing him; defamation; and a violation of state nonprofit corporation law. The court rejected all three grounds, and dismissed the case. Its reasoning is summarized below.

Noncompliance with Bylaws

The court concluded that it lacked the authority to resolve the dismissed member’s claim that the church violated its bylaws in dismissing him. It observed:

Even congregational (as opposed to hierarchical) churches are free from secular court scrutiny of their internal practices and discipline regarding the membership of the congregation. Courts do, however, retain jurisdiction in cases involving congregational churches to determine whether the proper authority made the decision about church discipline or policy …. So long as the appropriate church authority has made the decision, the issue of whether the church followed its internal procedures is a matter of church governance and discipline into which a secular court is prohibited from inquiring.

The court quoted with approval from a landmark Supreme Court decision: “All who unite themselves to [a church] do so with an implied consent to its government, and are bound to submit to it. But it would be a vain consent and would lead to the total subversion of such religious bodies, if one aggrieved by one of their decisions could appeal to the secular courts to have them reversed.” Watson v. Jones, 80 U.S. 679 (1871).

The Ohio court continued:

Church discipline, ecclesiastical government, or the conformity of the members of a church to the standard of morals required of them is beyond the scope of review by a secular tribunal. In other words, secular courts will not inquire into whether disfellowship or expulsion from church membership was in accordance with church bylaws or regulations. For the foregoing reasons, we reject [the dismissed member’s] argument that the trial court had jurisdiction to determine whether his expulsion from membership was undertaken in accordance with the church’s bylaws and procedures.

The court emphasized that “all matters of the propriety of internal church discipline (except, in the case of a congregational church, whether the proper authority determined that discipline), whether taken against a clergyman or a church member, are beyond the jurisdiction of secular courts.”

Defamation

The court noted that all of the allegedly defamatory statements made about the dismissed member had been made during the church business meeting that was convened to address his membership status. In other words, all of the statements were made “to or by those involved in initiating the disfellowship proceedings, and concerned the [dismissed member’s] morality” and fitness for membership. As such, the statements were “inextricably intertwined with ecclesiastical or religious issues over which secular courts have no jurisdiction.”

Nonprofit Corporation Law

The dismissed member argued that he had a legal right to sue to compel the church to follow its bylaws. Once again, the court disagreed: “[M]embership in the church is not the same as membership or trusteeship in the corporation, and [the dismissed member’s] rights in the corporation are no greater than the corporation’s bylaws provide.” The court noted that the dismissed member no longer had “standing” to enforce the church’s bylaws, since he was no longer a member. And, he could not bring a “derivative lawsuit” under state nonprofit corporation law since he “does not meet any of the requirements for a derivative cause of action.”

Application. This case illustrates the nearly universal rule that the civil courts will not determine whether or not a church acted in conformity with its bylaws in dismissing a member. This court did recognize a limited exception-the civil courts may determine whether the “proper authority” dismissed a church member. Few other courts have adopted this exception. The case also illustrates the difficulty that church members face in suing their church or other members or officers for allegedly defamatory statements made in the course of disciplinary proceedings. Finally, the court rejected state nonprofit corporation law as a “backdoor” way for disgruntled members to sue their church. Howard v. Covenant Apostolic Church, Inc., 705 N.E.2d 305 (Ohio App. 1998). [Corporations, Church Members]

© Copyright 1999 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: m19 m47 m16 c0499

Legal Developments

Recent Developments by a Federal Appeals Court Regarding Employment Practices

A federal appeals court ruled that a church-affiliated university did not commit unlawful discrimination when it dismissed a professor in its divinity school.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1999-05-01

Employment Practices

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

• Key point. Title VII of the Civil Rights Act of 1964 prohibits employers with 15 or more employees, and that are engaged in interstate commerce, from discriminating in employment decisions on the basis of religion. Religious educational institutions are exempt from this prohibition.

A federal appeals court ruled that a church-affiliated university did not commit unlawful discrimination when it dismissed a professor in its divinity school. The professor had been employed to teach at a divinity school associated with Samford University-a Baptist university in Birmingham, Alabama. The professor claimed that he was dismissed by the divinity school’s dean because he “did not adhere to and sometimes questioned the fundamentalist theology advanced by the leadership” of the divinity school. The professor sued the university, claiming that it had discriminated against him on account of his religious views in violation of Title VII of the Civil Rights Act of 1964. A federal district court dismissed the case, and the professor appealed. A federal appeals court upheld the district court’s decision. It based its ruling on two exceptions set forth in Title VII:

(1) The religious institution exemption. Section 702(a) of Title VII specifies that the ban on religious discrimination in employment “shall not apply to … a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.”

The court concluded that this exemption applied to the university based on the following considerations: (1) The university was established as a “theological” institution. (2) The university’s trustees are all Baptists. (3) Nearly 7 percent ($4 million) of the University’s budget comes from the Alabama Baptist Convention (the “Convention”)-representing the university’s largest single course of funding. (4) The university submits financial reports to the Convention, and its audited financial statements are made available to all Baptist churches in Alabama. (5) All university professors who teach religious courses must subscribe to the Baptist “statement of faith,” and this requirement is clearly set forth in the faculty handbook and in faculty contracts. (6) The university’s charter states that its chief purpose is “the promotion of the Christian religion.” (7) The university is exempt from federal income taxes as a “religious educational institution.”

The court rejected the professor’s argument that section 702 exempts religious educational institutions from claims of religious discrimination only when they are acting pursuant to a specific religious policy rather than the actions of individuals (such as a divinity school dean). The court could find no support for this position, and summarily rejected it. The court concluded:

This case comes down to this situation: [The professor] is not allowed to teach at the divinity school of a religious educational institution because his religious beliefs … differ from those of the school’s dean, the person selected by the religious educational institution to apply its policy and to lead the faculty at the divinity school. The section 702 exemption’s purpose and words easily encompass [the professor’s] case; the exemption allows religious institutions to employ only persons whose beliefs are consistent with the employer’s when the work is connected with carrying out the institution’s activities. To us, a teaching job in a divinity school of a religious educational institution is at the core of the section 702 exemption; the inherent purpose of such schools is the study of God and God’s attributes. We conclude that the exemption protects Samford in this case.

(2) The religious educational institution exemption. Section 703(e)(2) of Title VII specifies that it shall not be an unlawful employment practice for a school, college, university, or other educational institution … to hire and employ employees of a particular religion if such a school, college, university, or other educational institution … is, in whole or substantial part, owned, supported, controlled, or managed by a particular religion or religious corporation, association, or society ….

The court concluded that this exemption applied to the university, since it was “in substantial part supported by the Convention:

Continuing support annually totaling over $4 million … accounting for seven percent of a university’s budget, and constituting a university’s largest single source of funding is of real worth and importance. This kind of support is neither illusory nor nominal. So, the Convention’s support is substantial.

The court concluded: “We … must give disputes about what particulars should or should not be taught in theological schools a wide berth. Congress, as we understand it, has told us to do so for purposes of Title VII. Also, such a construction allows us to avoid the first amendment concerns which always tower over us when we face a case that is about religion.”

Application. This case illustrates an important legal principle-religious organizations (including churches, denominations, agencies, and religious educational institutions) are exempt from Title VII’s ban on religious discrimination in employment. This means that they can discriminate on the basis of religion in their employment decisions, including the hiring, firing, and discipline of employees. Killinger v. Samford University, 113 F.3d 196 (11th Cir. 1997). [The Civil Rights Act of 1964]

Legal Developments

Recent Developments in Ohio Regarding Clergy Removal

An Ohio court ruled that it was barred by the first amendment from resolving an internal church dispute regarding the tenure of the pastor.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1999-05-01

Clergy-Removal

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

• Key point. Most courts have concluded that they are barred by the first amendment guarantees of religious freedom and nonestablishment of religion from resolving challenges by dismissed clergy to the legal validity of their dismissals.

An Ohio court ruled that it was barred by the first amendment from resolving an internal church dispute regarding the tenure of the pastor. A church hired a new pastor, and an employment agreement was signed. The contract made no provision for the method of terminating the contract other than to require thirty-day notice for either party. A few years later, the church members held an election and 39 of the 40 members present voted to terminate the pastor’s employment. After the pastor refused to leave his position, the church asked a court to issue an injunction compelling him to do so, and ordering the church trustees to discontinue paying him. The pastor claimed that the court was without jurisdiction to resolve a purely ecclesiastical dispute such as this, and therefore it had to reject the church’s request for relief. The trial court ordered that a special election take place, at which time all members of the congregation as of a specified date would be eligible to vote on whether to retain the pastor. The order also contained arrangements to vote by absentee ballot for those unable to personally attend this election. Each party submitted several names of members whose membership status was disputed. Unfortunately, the church had two constitutions, and the parties disagreed as to which one was controlling. Both constitutions required that membership status be determined on the basis of the individuals’ presence at church services during the immediate ninety-day period or their donations to the church during that same time period. The two constitutions differed, however, in what constituted a majority. The earlier constitution called for a simple majority of the membership; the latter constitution called for the approval of two-thirds of the membership in order to enact any church business. The trial court determined that the earlier constitution, calling for a majority rule, was the valid constitution. It further determined that the votes of both parties’ disputed members qualified as members of the congregation and so would be included in calculating the results of the special election. Calculating both the absentee ballots with those in actual attendance, the court concluded that the final count was 41 in favor of retaining the pastor and 39 against. As a result, the church’s lawsuit was dismissed.

The church appealed this ruling. A state appeals court began its opinion by noting that the first amendment prohibits the civil courts from inquiring into religious doctrine, practice, or policy. Ecclesiastical matters, including the decision as to who should “preach from the pulpit,” are generally outside a state court’s jurisdiction. It quoted from an earlier decision by the United States Supreme Court:

The opinion [in Watson v. Jones, supra] radiates … a spirit of freedom for religious organizations, and independence from secular control or manipulations in short, power to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine. Freedom to select the clergy, where no improper methods of choice are proven, we think, must now be said to have federal constitutional protection as part of the free exercise of religion against state interference …. Purely secular matters, those not involving church doctrine or church policy, however, are not beyond the jurisdiction of a civil court. This is true of hierarchical churches, those churches with an outside governing body, as well as congregational churches that do not have any such outside governing body. The distinction between hierarchical and congregational churches becomes important, however, when reviewing a church’s decision as to “who shall preach from the pulpit.” In this regard, a civil court’s jurisdiction over an ecclesiastical decision made by a congregational church is limited to determining whether the decision was made by the proper church authority. This is so because a congregational church, unlike a hierarchical church, lacks a higher authority in determining whether such a decision was made by the appropriate church authority. Kedroff v. St. Nicholas Cathedral of Russian Orthodox Church, 344 U.S. 94 (1952).

The Tennessee court noted that the church in this case was congregational, and as such is governed by its constitution and bylaws. The church constitution provides that the church has the power to elect or dismiss a pastor and that at any official meeting, the majority rules. The court concluded that

the proper church authority, the church itself, decided to terminate the services of [the pastor]. At this point, the trial court’s inquiry should have gone no further. Despite the trial court’s good intentions in attempting to resolve the conflict between the parties, we find that it exceeded its jurisdictional authority when it ordered another election and unnecessarily interfered with the governing structure of the congregation. Because we find that … the proper church authority made the determination to terminate [the pastor’s] employment, the trial court erred in ordering another election and thereafter ordering that [the pastor] remain as pastor as a result of that election. We therefore reverse the decision of the trial court which retained [the pastor] as a result of the court-ordered election.

Application. This case illustrates a couple of important points. First, it demonstrates the confusion, and legal difficulties, that can arise when a church has multiple constitutions or bylaws. Unfortunately, in many churches there is considerable confusion as to the identification of the controlling constitution or bylaws. This is often due to the fact that the document has been amended several times over the years and there are multiple documents in circulation representing various versions. One way to reduce this confusion is for church leaders to identify the current document, with all amendments, and to place a date on the top of each page (for example, “Bylaws as of July 1, 1999”). This simple practice will greatly reduce the risk of confusion because of the existence of multiple versions of the same document. Second, the case illustrates the view of most courts that the first amendment prevents the civil courts from resolving disputes over pastoral tenure. Sacrificial Missionary Baptist Church v. Parks, 1997 WL 812168 (Ohio App. 1997). [Termination]

Legal Developments

Recent Developments in Ohio Regarding Libel and Slander

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1998-11-01

Libel and slander

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

• Key point. Statements communicated by church leaders to church members concerning matters of “common interest” are protected by a “qualified privilege”. This means that they cannot be defamatory unless they are uttered with “legal malice.” Statements are made with legal malice if they are made with a knowledge that they are false, or with a reckless disregard as to their truth or falsity. The qualified privilege does not apply if information is shared with nonmembers.

An Ohio court ruled that a letter addressed by a church official to “members and friends” of the church, in which he explained why the church board dismissed a church secretary, might have been defamatory. A woman was employed as an office secretary for her church for approximately eight years. In May of 1996, she was informed by church officials that her employment was being terminated. The woman claimed that church officials did not express any dissatisfaction with her work performance. She later received a letter confirming the termination of her employment. The letter did not state any reasons for the termination. A church official later circulated a letter in which he stated that the woman had been “fired” as church secretary. The letter was directed to the “Fellow Members and Friends” of the church. In the letter, the official stated that the church board of trustees had cited “insubordination, some incompetency, and inability to maintain confidentiality” as some of the reasons for the termination.

A few months later, the woman sued her church for defamation. A trial court threw out the case, on the basis of a “qualified privilege”. It concluded that church members “have an interest in actions taken by the board of trustees with regards to employees of the church” and that “the board of trustees are accountable to the church body.” The trial court also found that although the letter was mailed to a large number of church members, such members “are within an acceptable scope for the communication.”

A state appeals court defined the concept of qualified privilege as follows:

In order to qualify for this privilege, a defendant must establish that (1) he acted in good faith; (2) there was an interest to be upheld; (3) the statement was limited in its scope to the purpose of upholding that interest; (4) the occasion was proper; and (5) the publication was made in a proper manner and only to the proper parties. Once the defendant establishes the defense of qualified privilege, the plaintiff may not recover for defamation unless he can present clear and convincing evidence that the defamatory statement was made with actual malice.

Was the letter sent by the church official to “members and friends” of the church protected against defamation by this qualified privilege? The court began its opinion by observing that members of the church would “logically be interested in, and proper parties to, the subject letter. Obviously, the letter concerned a church interest; i.e., [the woman’s] ability to perform her duties as secretary for the church. It was written by a church [official], and was limited in scope to informing the members of the reasons for [the woman’s] termination.”

However, the court reversed the trial court’s dismissal of the case, and ordered it to proceed to trial, because it was not convinced that the letter had been distributed “only to the proper parties, i.e., the church membership.” While the church official insisted that the letter had been sent only to members of the church, the woman claimed that “of the approximately 150 persons or households to whom the letter was mailed, seventeen were not members of the church,” and that one of the recipients was another church. The court pointed out that the church failed to “indicate that the other church was in any way affiliated with it, and did not provide any evidence to show that the other church had a valid interest in the subject matter of the letter. Therefore, we conclude that a question of fact exists, with regard to the one church on the mailing list, as to whether the publication was limited to proper parties.”

Application. The relevance of this case could not be more clear – church leaders should never communicate potentially defamatory information about a member or employee to persons who are not church members. Many courts have held that churches are protected by a “qualified privilege” when sharing information with members, meaning that the information they share cannot be defamatory unless it is shared maliciously. The idea here is that members have a “common interest” in learning about internal administrative and employment decisions by church leaders, and so the law should not punish church leaders when they attempt to keep members informed. The problem in this case was that the church could not prove that the allegedly defamatory letter was sent only to members. The woman insisted that at least seventeen nonmembers, including another church, had received the letter. The church will not be forced to prove that any nonmembers (or other churches) who received the letter had a sufficient interest in the information for the qualified privilege to apply. This is not an impossible task, but it will be a very difficult one. The point is clear, church leaders should not disseminate potentially defamatory information with any nonmembers or with other congregations – without the advice of legal counsel. And, if church leaders decide to share information with members, they should do so in a way that will leave no doubt that only members received the information. The church in this case could not prove that only members received the letter, and this failure will force the church to go through the time and expense of a trial.

One more point. The “qualified privilege” is “qualified” in the sense that it will not apply to communications that are “malicious”. In this context, malice means a knowledge that the information was false, or a reckless disregard as to its truth or falsity. This is a very difficult standard to meet. As a result, it is very difficult for churches to be sued successfully for defamation when they restrict the dissemination of information to members. Baker v. Spinning Road Baptist Church, 1998 WL 598094 (unpublished decision, Ohio App. 1998). Defamation

© Copyright 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: m53 m86 m43 c0698

Legal Developments

Recent Developments in Ohio Regarding Church Business Meetings

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1998-07-01

Church business meetings

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

• Key point. The general nonprofit corporation laws of many states prohibit proxy voting unless specifically authorized by a nonprofit corporation’s charter or bylaws.

An Ohio court ruled that the members of a nonprofit corporation could not vote by proxy at a special business meeting since proxy voting was not authorized in the corporation’s articles of incorporation or bylaws. A nonprofit hospital corporation sent a notice to all members informing them that a special business meeting had been called to amend the definition of “members” in the articles of incorporation. The notice included a form allowing a member to vote by proxy. The overwhelming majority of members voted in favor of the amendment by proxy voting. Members opposed to the change challenged the legality of the vote in court. A state appeals court ruled that the proxy votes were invalid. It noted that Ohio’s Nonprofit Corporation Law specifies that “unless the articles of incorporation or the regulations otherwise provide, no member who is a natural person shall vote or act by proxy.” While the corporation’s bylaws allowed amendments by proxy voting, the articles of incorporation did not. Since the proposed amendment involved the definition of “members” in the articles of incorporation, proxy voting was not authorized and was invalid.

Application. There are two points to note about this case. First, proxy voting is not allowed under the nonprofit corporation laws of many states-unless specifically authorized by a corporation’s articles of incorporation or bylaws. Is your church incorporated? If so, you should review your state nonprofit corporation law to determine if proxy voting is allowed, and if so under what conditions. It may be that proxy voting is only allowed if specifically authorized by your articles of incorporation or bylaws. If this is the case, what do your governing documents have to say about this issue? It would be well to resolve these issues before someone insists on voting by proxy at a future business meeting. Second, if your articles of incorporation or bylaws authorize proxy voting, are there any conditions? In this case, only the bylaws authorized amendments by proxy voting. As a result, the court refused to allow an amendment to the articles of incorporation by proxy voting. Hecker v. White, 688 N.E.2d 289 (Ohio App. 1996).
[Corporations, Church Business Meetings]

Legal Developments

Recent Developments in Ohio Regarding Clergy Selection

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1998-05-01

Clergy Selection

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

• Key point. Most courts have concluded that they are prohibited by the first amendment from resolving lawsuits addressing a church’s selection of a minister.

• Key point. A minority of courts have been willing to resolve lawsuits addressing a church’s selection of a minister if the church failed to follow its bylaws, and the case can be resolved without any inquiry into religious doctrine.

An Ohio court ruled that it could invalidate a church’s election of a pastor if the election violated the church’s bylaws and if it could resolve the dispute without any inquiry into religious doctrine. A group of church members asked a court to invalidate the church’s election of a new pastor on the ground that the election failed to comply with the church bylaws. A trial court ruled that the church breached its bylaws in the election of its pastor and therefore the election was not a legal action of the church. The church appealed, claiming that the first amendment prevents the civil courts from interfering with a church’s selection of a pastor. A state appeals court upheld the trial court’s ruling. It began its opinion by noting:

the church] is a congregational, as opposed to hierarchical, church, meaning that it is self—governing and does not answer to any higher organizational authority …. It is governed by whatever constitution, rules, and processes it has put in place for itself. However, the fact that [it] is so organized certainly should not grant to them the unbridled right to disregard and to violate the provisions of their own written bylaws or constitutions.

In this case, the propriety of the election which earned [the pastor] his place in the pulpit was largely brought into question as a result of the manner in which the election meeting was called and conducted. It is true that, in general, the appointment of clergy in a religious organization, where no improper methods of choice are proven, is governed by ecclesiastical law and enjoys constitutional protection. However, a civil court does not offend the first amendment by inquiring into whether a meeting, at which such purported congregational action took place, was properly called and properly conducted. Such elections must be made in accordance with the society’s constitution and bylaws. Otherwise, civil courts have the right and the obligation to step in and settle disputes where called upon.

It is well—settled that American courts will steadfastly decline to interfere in church disputes over doctrinal or spiritual matters. However, in [this] case there were no ecclesiastical questions decided or even considered by the lower court. The court did not delve into areas of church dogma or consider the doctrinal beliefs of either faction or [the pastor]. Relying on no religious precepts and based strictly upon a neutral and secular reading of the church’s own constitution, the court found that the election … had not been conducted in conformity with that governing document. For this reason, the court declared the election a nullity ….

Application. This case represents a minority view. Most courts that have addressed the issue have concluded that they are barred by the first amendment from meddling with a church’s selection of a pastor-even if the selection process was in violation of church bylaws. Winston v. Second Baptist Missionary Church, 1997 WL 576374 (Ohio App. 1997). [Negligence as a Basis for Liability]

Legal Developments

Recent Developments in Ohio Regarding Church Membership

An Ohio court ruled that it had no authority to review a church’s decision to dismiss a member.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1998-05-01

Church Membership

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

• Key point. The civil courts are without authority to review internal church decisions to discipline or dismiss a member.

• Key point. Some courts are willing to engage in “marginal review” of church membership decisions for the limited purpose of deciding if the proper body made the decision.

• Key point. Statements made in the context of a church membership meeting addressing the discipline of a member ordinarily cannot be defamatory.

An Ohio court ruled that it had no authority to review a church’s decision to dismiss a member. The court also ruled that it could not review the dismissed member’s defamation claim, and that a state nonprofit corporation law did not provide the dismissed member with any basis for suing the church. Here are the facts of this case: A church member sought access to his church’s financial records. When church leaders denied this request, the member filed a lawsuit in which he asked a court to order the church to turn over the records. Following the filing of this lawsuit, church leaders attempted to dismiss the member from church membership. The member filed another lawsuit against his church, claiming that the attempt to dismiss him was in violation of the church’s bylaws; caused severe emotional distress; was defamatory. A trial court dismissed the lawsuit on the ground that it was an ecclesiastical dispute over which it had no jurisdiction. The ousted member appealed.

Civil court review of membership disputes

A state appeals court upheld the trial court’s dismissal of the lawsuit. It observed:

Even congregational (as opposed to hierarchical) churches are free from secular court scrutiny of their internal practices and discipline regarding the membership of the congregation. Courts do, however, retain jurisdiction in cases involving congregational churches to determine whether the proper authority made the decision about church discipline or policy.

The court insisted that the power to determine whether or not the “proper authority” made a decision regarding church discipline does not mean that the civil courts can “determine whether a church has followed its own bylaws or constitution. So long as the appropriate church authority has made the decision, the issue of whether the church followed its internal procedures is a matter of church governance and discipline into which a secular court is prohibited from inquiring.” The court quoted from a landmark Supreme Court decision:

All who unite themselves to such a body [the general church] do so with an implied consent to [its] government, and are bound to submit to it. But it would be a vain consent and would lead to the total subversion of such religious bodies, if one aggrieved by one of their decisions could appeal to the secular courts to have them reversed. Watson v. Jones, 80 U.S. 679 (1871).

The court continued:

Church discipline, ecclesiastical government, or the conformity of the members of the church to the standard of morals required of them is beyond the scope of review by a secular tribunal. In other words, secular courts will not inquire into whether disfellowship or expulsion from church membership was in accordance with church bylaws or regulations.

The ousted member acknowledged that the “special relationship” between a church and its pastor “militates against secular court intervention,” but insisted that no such problem exists when a church member brings a complaint to the courts. The court disagreed:

While we agree that matters regarding “who should preach from the pulpit” are fundamentally and unquestionably beyond the jurisdiction of secular courts, the cases demonstrate that all matters of the propriety of internal church discipline (except, in the case of a congregational church, whether the proper authority determined the discipline), whether taken against a clergyman or a church member, are beyond the jurisdiction of secular courts.

Defamation

The court also rejected the ousted member’s claim that the civil courts could resolve his defamation against the church and its trustees. The ousted member asserted that the church trustees had defamed him by stating that he had lied, that he was “in league with Satan,” that he had been “overtaken by a fall,” that he was a “defiler of the temple” and an enemy of the church, and that he was “sleeping around,” and that a court could resolve the defamation issue without any interpretation of religious doctrine or beliefs. The court disagreed:

In this case, all of the statements alleged by appellant to be defamatory arose out of the underlying dispute between him and the church regarding the propriety of his conduct in suing the church to obtain its records and the church’s subsequent decision to remove [him] from church membership. [His lawsuit] makes clear that the dispute between the parties regarding [his] lawsuit against the church was based on biblical interpretation. The move to disfellowship [him] therefore arose from a dispute regarding his “conformity … to the standard of morals required of” him by his church. The allegedly defamatory statements made by church members, trustees or agents in terminating [his] membership in the church are therefore inextricably intertwined with ecclesiastical or religious issues over which secular courts have no jurisdiction.

nonprofit corporation law

The ousted member pointed out that the church is a nonprofit corporation organized under Ohio law, and is therefore governed by the nonprofit corporation statute. Among other things, this includes a requirement to comply with the corporate bylaws. The ousted member insisted that as a member of the church he had a right to sue to require the church to follow its bylaws. Once again, the court disagreed, noting that “membership in the church is not the same as membership … in the corporation,” and that a member’s rights in the corporation are no greater than the corporation’s bylaws provide. It further noted that the church’s bylaws contained no provision giving members the right to sue the church for noncompliance with its bylaws.

Application. There are a number of aspects to this decision that will be instructive to church leaders, including the following: (1) The court emphasized that the civil courts have no authority to resolve internal church decisions regarding members. However, it noted that the courts can determine whether or not the “proper authority” made such a decision. In other words, if the church bylaws give the entire church membership the authority to dismiss a member, then the civil courts can review a dismissed member’s claim that he was improperly dismissed by the church board. Note, however, that not all courts have come to this same conclusion. In fact, a majority of courts have rejected even this limited basis for civil court review of church membership decisions. (2) The court concluded that it had no authority to decide whether or not the church followed its bylaws in dismissing the member. This conclusion is in accord with the vast majority of other courts. (3) The court refused to review the ousted member’s defamation claim, since the allegedly defamatory remarks all occurred in the context of a church meeting that was called to determine whether or not the members should be dismissed. (4) Remember that the member was dismissed because he sued his church. Many church leaders have wondered if they can dismiss a member who sues the church. This case suggests that this may be a permissible basis for dismissal. Of course, before dismissing a member on such a basis, church leaders should carefully review their bylaws and consult with legal counsel. (5) The ousted member pointed out that the church is a nonprofit corporation organized under Ohio law, and is therefore governed by the nonprofit corporation statute. Among other things, this includes a requirement to comply with the corporate bylaws. The ousted member insisted that as a member of the church he had a right to sue to require the church to follow its bylaws. Once again, the court disagreed, noting that “membership in the church is not the same as membership … in the corporation,” and that a member’s rights in the corporation are no greater than the corporation’s bylaws provide. It further noted that the church’s bylaws contained no provision giving members the right to sue the church for noncompliance with its bylaws. (6) The court rejected the idea that nonprofit corporation law gives church members any special right to sue their church for noncompliance with the church’s bylaws. Howard v. Covenant Apostolic Church, Inc., 1997 WL 602906 (Ohio App. 1997). [Defamati on, Church Members]

Legal Developments

Fraudulent Business Expense Reimbursements

Exploring the penalties that can result from this fraudulent act.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

State v. Brumback, 671 N.E.2d 1064 (Ohio App. 1996)

Background. Claiming reimbursements for business miles that were not actually driven can result in a number of adverse consequences—including criminal penalties. A recent case provides helpful guidance for church treasurers.

Facts. The treasurer of a public school district was convicted of theft for reimbursing herself for mileage she had not driven. The court rejected the treasurer's defense that she had driven all of the reimbursed miles. The treasurer was sentenced to a 6-month jail term and was ordered to pay back all of the excess reimbursements.

The treasurer appealed her conviction, claiming that the state had failed to prove that she intentionally received excess reimbursements. She noted that she used her car "extensively" for school purposes—which justified her mileage claims.

The court's ruling. An appeals court rejected the treasurer's appeal and upheld her conviction. It observed:

The evidence showed that for years [the treasurer] had submitted unitemized mileage reimbursement vouchers in excess of the quarterly maximum amount payable for in-city mileage. Board policy required that mileage reimbursements claims be itemized. As treasurer [she] was responsible for approving mileage payments upon proper documentation. By virtue of her office, she was able to reimburse herself despite the lack of proper documentation pursuant to the board's policy. There was also testimony that [the treasurer] was not out of the office enough to justify the mileage claimed by her ….

[The treasurer's] testimony that she did not intend to take anything to which she was not entitled does not necessitate a not guilty verdict. There was strong evidence from which the jury could find that [she] had the required intent. As treasurer [she] was responsible for attending all board meetings and for creating and maintaining the board's resolutions. Her knowledge of the law, board actions, policy and procedure provided ample evidence that she knew that what she was doing was contrary to law.

What this means for churches

There are a couple of important lessons that church treasurers can learn from this case. Consider the following:

1. Treasurers held to a higher standard. Perhaps most importantly, this case demonstrates that treasurers will be held to a high standard when reimbursing themselves for business expenses. It is absolutely essential that church treasurers scrupulously follow applicable church policies and procedures when reimbursing themselves for any business expense. As this case illustrates, failure to do so may result in criminal liability.

Example. Gail is a church treasurer. Her church has established an accountable business expense reimbursement arrangement, which requires adequate substantiation of all reimbursed expenses. The church permits reimbursements of the business use of a car at the IRS-allowed rate of 32.5 cents per mile for 1998. Gail reimburses herself for 5,000 business miles for the first half of 1998 ($1,625). In fact, she failed to maintain any records to substantiate any of her business miles. Note the following consequences: (1) The reimbursements are all nonaccountable. (2) The reimbursements represents taxable income that must be reported on a W-2 or 1099. (3) Gail faces possible criminal liability. While the likelihood of criminal prosecution is remote, it is a possibility.

2. Handling reimbursements for other staff members. According to our research, most churches reimburse at least some of the business expenses of ministers and other church staff members. Is this true of your church? If so, the responsibility of reimbursing these expenses probably falls upon your shoulders—the church treasurer. You need to be alert to staff members who seek excessive business expense reimbursements on the basis of inaccurate or incomplete documentation. If your church has adopted an accountable arrangement, then be sure that you only reimburse those expenses supported by adequate documentation. This will reduce the exposure of staff members to the problems mentioned in the previous paragraph.

Legal Developments

Recent Developments in Ohio Regarding Personal Injuries on Church Property or During Church Activities

An Ohio court ruled that a church was not responsible for injuries sustained by a minor who was injured while trespassing on church property.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1998-01-01

Personal Injuries-on Church Property or During Church Activities

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

• Key point. Churches are not necessarily responsible for injuries sustained by minors while trespassing on church property.

An Ohio court ruled that a church was not responsible for injuries sustained by a minor who was injured while trespassing on church property. A church owned a “water drenching machine” that was used at various church activities. The machine was designed to be connected to a hose, and anyone who hit a lever on the machine with a ball caused an individual in the machine to be drenched with water. When not in use, the church stored the machine against a wall in the back of the church. A “no trespassing” sign was posted by the church. In addition, neighborhood children were not permitted to play on church premises during the week. The pastor and his wife frequently chased uninvited children off the property. One day a 6—year—old boy entered the church’s premises, walked around to the back of the church, and crawled onto the machine. He was injured when it fell on him. The boy’s parents sued the church. They claimed that they were not aware that neighbor children were not allowed to play on church property, although they did acknowledge that they were aware of the “no trespassing” sign. A trial court dismissed the lawsuit, and the parents appealed. A state appeals court upheld the trial court’s ruling in favor of the church. It noted that the boy was a trespasser, and that a property owner’s only duty with respect to a trespasser is to “refrain from wantonly or willfully injuring him.” The parents admitted that the church had not acted wantonly or willfully, but they insisted that the church was liable for their son’s injuries on the basis of the “dangerous instrumentality” rule. Under this rule, a property owner has a higher duty of care to a child trespasser when it operates hazardous equipment “the dangerousness of which is not readily apparent to children, on or immediately adjacent to a public place.” The court concluded that this exception did not apply in this case, since the machine was not “on or immediately adjacent to a public place.” To the contrary, the machine was “private property, behind the church building and up against a wall. It was not within easy reach of a child in a public area.”

Application. It is common for neighbor children to play on church premises during the week. This may include use of playground equipment, or riding bikes or roller—blading in the parking lot. Church leaders often are alarmed at the potential liability that may result from injuries to children under these circumstances, but they are at a loss as to what to do about it. This case suggests that “no trespassing” signs may be helpful, especially if church staff regularly attempt to enforce such a policy by advising trespassing children to leave the property. Of course, different courts may reach different results. And, this court acknowledged that some property owners may be liable for injuries to trespassing children on the basis of the “dangerous instrumentality” rule. Richards v. Cincinnati West Baptist Church, 680 N.E.2d 191 (Ohio App. 1996). [Premises Liability]

Legal Developments

Insurance Coverage of Acts of Molestation

An offender’s homeowner’s insurance policy will not cover such acts.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Insurance

Church Law and Tax 1997-11-01

Insurance

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

• Key point. The homeowner’s insurance policy of a child molester cannot be tapped to pay for victims’ injuries or the molester’s legal fees.

! The Supreme Court of Ohio ruled that a convicted child molester’s homeowner’s insurance policy did not cover acts of child molestation. Three minor girls were molested by a former neighbor and friend they called “grandpa.” The incidents occurred on several occasions over a period of three years. The victims sued the molester, who referred the lawsuit to his homeowner’s insurance company. The insurer claimed that the molester’s actions were not covered under the homeowner’s policy because of an exclusion for “intentional injuries.” The molester admitted that he abused the girls, and that his actions were considered morally wrong by his church. He insisted, however, that at the time of his actions he did not know that his acts would cause emotional injuries to the girls, and that he never intended to harm them. The state supreme court rejected the molester’s argument, concluding that “intent to harm is properly inferred as a matter of law from deliberate acts of sexual molestation of a minor.” The court added that “a person who sexually manipulates a minor cannot expect his insurer to cover his misconduct and cannot obtain such coverage simply by saying that he did not mean any harm.”

Application. This case illustrates an important point-church workers who molest minors should not assume that their homeowner’s insurance policy will cover their wrongs. This means that their homeowner’s insurer will not provide them with a legal defense if they are sued, and will not pay any portion of a judgment rendered against them. Church workers who molest children sometimes look to their homeowner’s policy after learning that the church’s insurance policy does not cover them. Gearing v. Nationwide Insurance Company, 665 N.E.2d 1115 (Ohio 1996). [ Negligence as a Basis for Liability—Defenses]

Retirement plans

• Key point. The civil courts are prohibited by the first amendment guaranty of religious freedom from resolving lawsuits brought by dismissed clergy challenging a loss of their retirement benefits based on their dismissed status, especially if the resolution of such a dispute would require consideration of ecclesiastical matters.

! The South Carolina Supreme Court ruled that the civil courts could resolve a dispute over a dismissed minister’s right to pension benefits. A minister served from 1952 until he retired in 1986 in churches of the Church of God (the Church). During his 33—year active ministry, he made the required monthly contribution to the Aged Ministers Pension Plan Fund of 4 percent of his gross income from the ministry. Following his retirement, he began receiving payments from the Fund. Payments from the Fund are governed by the Minutes of the Church of God, which provide that “any aged minister receiving benefit from the Aged Ministers’ Fund whose ministry has been revoked shall cease to draw compensation from the fund.” The Minutes further provide that “the license of a minister must be revoked when found guilty of adultery or fornication.” In 1989 the Church revoked the minister’s license after he confessed to adultery, and he stopped receiving pension payments. The minister sued the Church claiming that although the Church revoked his pastoral “license,” the Church did not thereby effectively revoke his “ministry.” He also argued that the Church could not have revoked his ministry by revoking his license because once he retired he had no “ministry” to revoke. A trial court agreed with the minister that his pension benefits had been wrongfully terminated by the Church, and awarded him $71,000 in damages. The state supreme court disagreed. It began its opinion by identifying the following three principles that emerge from a reading of decisions by the United States Supreme Court:

(1) courts may not engage in resolving disputes as to religious law, principle, doctrine, discipline, custom, or administration; (2) courts cannot avoid resolving rights growing out of civil law; and (3) in resolving such civil law disputes, courts must accept as final and binding the decisions of the highest religious judicatories as to religious law, principle, doctrine, discipline, custom, and administration.

The court concluded that the first amendment did not prevent it from resolving this case, since it was not being asked to adjudicate a matter of religious law, principle, doctrine, discipline, custom, or administration.” Rather, it was being asked to resolve a contractual dispute: “The issue here is the effect of the revocation of [the pastor’s] ministry on the pension agreement he had with the Church. This case simply requires the application of neutral principles of contract law and very little inquiry into religious law.” The court noted that the Church’s Minutes were “very clear” that if the pastor’s ministry was revoked he was not entitled to draw compensation from the Aged Ministers’ Fund. The court refused to address the former pastor’s claims that as a retired minister he had no ministry to “revoke,” and that revocation of a license to preach is not the same as revocation of ministry. These claims were “foreclosed by the fact that a court must accept the doctrinal and administrative determinations of the highest ecclesiastical body of the Church.” The court concluded that “because the [Minutes] unambiguously allowed the Church to discontinue [the former pastor’s] pension payments as a result of the revocation of his ministry, the trial court should have directed a verdict in favor of the Church.” Pearson v. Church of God, 478 S.E.2d 849 (S.C. App. 1995). [ Termination, Judicial Resolution of Church Disputes]

Sexual harassment

• Key point. Churches may be liable for sexual harassment if they do not respond promptly and effectively to employee allegations of sexual harassment.

! A federal appeals court ruled that a church—operated school was guilty of sexual harassment as a result of its failure to address its principal’s offensive behavior with several female employees. A denominational agency operated a residential school for emotionally and physically impaired children. Over the course of several years, the principal of the school was accused on many occasions of sexual harassment by female employees. There was substantial evidence that school officials were aware of many of these complaints. In 1993, school officials launched an investigation into the sexual harassment charges. They found that there was a significant basis to the harassment complaints. The school suspended the principal for five days without pay, ordered him to submit to a psychological assessment and placed him on three months’ probation. It also invited an outside consultant to conduct several days of seminars on sexual harassment. Even after this corrective action, there were several instances of inappropriate behavior involving the principal. During this same year, the principal was given a satisfactory performance evaluation and a raise. Several female employees who had been harassed by the principal sued the denominational agency on the ground that it was legally responsible for the principal’s acts because of its failure to respond adequately to the accusations against him. The women claimed that school officials “moved slowly” in dealing with the principal because he was African—American, and they were concerned about being sued for racial discrimination. In fact, the principal threatened on numerous occasions to file a discrimination complaint with the Equal Employment Opportunity Commission. A trial court ruled in favor of the women, and awarded them $300,000 in damages.

A federal appeals court upheld this ruling. It referred to the “long—term, ostrich—like failure” by denominational and school officials to “deal forthrightly with [the principal’s] treatment of female employees.” The court observed that “the jury was entitled to conclude that [the agency] not only looked the other way for many years but that its corrective action was woefully inadequate, as demonstrated by [the principal’s] later conduct.”

Application. This case illustrates the importance dealing promptly with complaints of sexual harassment. Letting years pass without addressing complaints of harassment will only increase significantly a church’s risk of liability. The agency finally acted in 1993-by suspending the principal for five days, ordering a psychological assessment, imposing a three—month probationary period, and inviting consultants to conduct sexual harassment training. These acts may seem thorough and adequate, but the court concluded that they were not sufficient to avoid liability for sexual harassment, because (1) the complaints against the principal had occurred over so many years; (2) the principal’s acts of harassment were so pervasive; (3) the agency waited years before acting; (4) the agency’s response was insufficient, since the principal continued to engage in harassment even after he was disciplined; and (5) the principal received a satisfactory employee evaluation and a raise during the same year that he was disciplined for harassment. These are “warning signals” that church leaders should heed. Also, note that the court acknowledged that the agency had “moved slowly” in responding to the complaints against the principal out of a fear of being sued for racial discrimination. However, the court not only rejected the relevance of such a concern, but suggested that it helped prove the victims’ claims of harassment. The lesson is clear-employers should not delay responding to allegations of sexual harassment on the ground that the alleged offender is a member of a protected group. Jonasson v. Lutheran Child and Family Services, 115 F.3d 436 (7th Cir. 1997). [Title VII of the Civil Rights Act of 1964, Application of Federal Labor and Discrimination Laws to Private Schools]

© Copyright 1997, 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: m50 m10 c0697

Legal Developments

Lawsuit Challenges Church’s Selection of Pastor

Court rules that it cannot intervene.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax 1997-09-01

Clergy-Selection

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

• Key point. The civil courts are prohibited by the first amendment guaranty of religious freedom from resolving internal church disputes involving ecclesiastical issues such as the selection of clergy.

• Key point. The civil courts will not resolve lawsuits brought by church members who fail to pursue or “exhaust” their remedies under their own church’s constitution or bylaws.

An Ohio court ruled that it had no legal authority to resolve a lawsuit challenging a church’s selection of a new pastor. Certain members of a church were dissatisfied with the method in which their pastor was chosen. They sued their church and its deacons and pastor, asking a court to declare the selection of the pastor “null and void” and to enter an order forbidding the church from installing him or paying him any compensation. The members insisted that the case involved “secular” matters which a civil court could address. A state appeals court disagreed. It began by noting that the church’s constitution provided a remedy for internal disputes regarding the pastor-the disgruntled members could take their claim before the entire church membership. This step had not been followed. The court concluded:

It is well—settled that civil courts lack jurisdiction to determine purely ecclesiastical or spiritual disputes of a church or religious organization. Where the members have consented to a plan of church government which provides the means for appeal for such disputes, as in this case, the matter is an ecclesiastical one. [This lawsuit] is thus ecclesiastical in nature [and must be dismissed].

Application. This case is important for two reasons. First, it illustrates the general rule that the civil courts will not resolve internal church disputes regarding the status of a minister. Second, it illustrates that the civil courts will not resolve a legal claim by church members who have failed to pursue (or “exhaust”) their remedies under their church’s constitution. Buchanan v. Second Tabernacle Missionary Baptist Church, 1996 WL 417135 (Ohio App. 1996). [Initiating the Pastor-Church Relationship, Judicial Resolution of Church Disputes, The Free Exercise Clause]

Legal Developments

Members’ Inspection of Church Records

Who has a right to inspect records?

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Church Records

Key point. Nonprofit corporation laws generally give members a right to inspect corporate records at a reasonable time for a proper purpose. Members of churches incorporated under such a statute therefore have a limited inspection right. However, this right does not apply unless the member can demonstrate a proper purpose.

An Ohio court ruled that a member of a nonprofit corporation did not have a legal right to inspect corporate records.

A nonprofit organization was incorporated under an Ohio statute that gives members a legal right to inspect "all corporate records … for any reasonable and proper purpose and at any reasonable time." A member of a nonprofit corporation asked to inspect (1) minutes of the board; (2) financial records; and (3) membership records. His stated purpose was to determine whether or not he had been secretly "excommunicated" from the organization. The member sued the corporation when it refused to respond to his request. A court ruled that the member was not entitled to inspect any of the records in question. It noted that Ohio nonprofit corporation law "requires that two elements be met before the books and records of a nonprofit corporation can be examined: (1) the person requesting the records must be a member of the organization; and (2) the member must have a reasonable and proper purpose for wanting to see the corporate books."

The court concluded that the member had no legal right to inspect the corporation's records. On the one hand, if he in fact were not a member, then he would fail the first requirement (only members have a legal right to inspect corporate records). On the other hand, if he in fact was still a member, then he failed the second requirement since there would be "reasonable and proper purpose" in inspecting corporate records to ascertain this fact.

What this means for churches

Many churches are incorporated under state nonprofit laws that provide members with a limited right to inspect corporate records. These laws generally require that the person requesting the records be a member, and that he or she be motivated by a proper purpose. This case illustrates the difficulty that may be encountered by members in establishing a proper purpose for a request to inspect records.

Nozik v. Mentor Lagoons Yacht Club, 678 N.E.2d 948 (Ohio App. 1996).

Legal Developments

Prayer in School Board Meetings

Court rules that this practice does not violate the First Amendment.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Schools

Church Law and Tax 1997-07-01

Freedom of Religion

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

• Key Point. The first amendments nonestablishment of religion clause does not prevent all accommodations of religious practice. Prayers before meetings of governmental or public bodies are an example of a practice that has been upheld by many courts.

A federal court in Ohio ruled that a school boards practice of opening each meeting with prayer did not violate the first amendment. The administration of Cleveland’s public schools has been characterized by divisiveness and rancor among board members and superintendents for most of the past two decades. Often, meetings of the school board would be filled with so much hostility among both members and the attending public that little business was accomplished. The citizens elected several new members in 1991, and the new board president immediately announced that board meetings would “henceforth begin with prayer.” At the very next meeting, a minister recited the following prayer:

Eternal Creator of us all, we come before you this night, grateful for the new year, and a new day of hope for the education of Cleveland’s children. While we give you special thanks for the new majority, we pray for a unanimous spirit to endeavor on behalf of children who too often have small voices, and little chance without champions in this important moment. Oh God of history, remind us here, this night, that human experience proves, that if there is no reaffirmation, then there will be revolution. Enable those entrusted with the leadership of this place, to be goaded into reaffirmation. Help them to amend the rules that protect the status quo, amend the rules that enforce-while not allowing for what should be; amend the rules which draw the cameras to this place, to refocus the lens and the light on the daily human triumphs taking place in the classrooms across the City. Oh God, who offers reaffirmation in each of the voters, be in the hearts and minds of the decision makers in this place, that their choices will be acceptable in your sight, and which in all things will enable teachers to teach, and students to learn in excellent, loving, productive and positive city schools. Amen.

Since the school board began opening the public meetings with prayer, a more businesslike and professional decorum has occurred. Both members of the school board and attendees have taken on a greater respect for the process. The board has been able to undertake more business than was true in the past. Prayers have been offered by representatives of the Protestant, Roman Catholic, Jewish and Muslim faiths. In January of 1996, a minister became president of the board. Since that time, rather than recruiting someone else to offer a prayer, the president has personally offered a prayer or requested a moment of silence.

Two persons objected to the offering of prayers at the beginning of board meetings. One was a public school math teacher who stated that he avoided rising for the prayer or saying “Amen” or “in some other fashion I go out of my way to avoid full participation in the prayer.” Nevertheless, he still felt “humiliated, demeaned and physically coerced into attending and participating in these prayers.” The teacher sued the school board, seeking a court order outlawing prayer at board meetings. A federal court refused to do so, and ruled that such prayers do not violate the constitution. It began its opinion by noting that

The very week the first congress approved the bill of rights, including the establishment clause, it also enacted legislation providing for paid chaplains for the House and the Senate. That Congress included seventeen draftsmen of the Constitution. As the Supreme Court [has observed]: “Clearly the men who wrote the first amendment religion clauses did not view paid legislative chaplains and opening prayers as a violation of that amendment, for the practice of opening sessions with prayer has continued without interruption ever since that early session of Congress.” Within a few days of voting to accept the Bill of Rights, the House of Representatives passed a resolution asking President George Washington to issue a Thanksgiving Day proclamation. The resolution asked the President to “recommend to the people of the United States a day of public thanksgiving and prayer, to be observed by acknowledging with grateful hearts the many and signal favors of Almighty God, especially by affording them an opportunity peaceably to establish a form of government for their safety and happiness.” President Washington complied, and his proclamation recommended that November 26, 1789, be devoted “to the service of that great and glorious Being who is the beneficent author of all the good that was, that is, or that will be; that we may then all unite in rendering unto Him our sincere and humble thanks for His kind care and protection of the people of this country previous to their becoming a nation … the civil and religious liberty with which we are blessed.” The tradition of an annual presidential Thanksgiving Day proclamation has carried forward to the present day. There are countless examples of government deference to religion in our history. In addition to paid chaplains for the House and Senate, the government provides chaplains for the military forces, and state legislatures have employed chaplains as well. Thanksgiving and Christmas Day are national holidays based upon religious observations. Our national motto is “In God We Trust,” and that motto appears on our currency. Meetings of public bodies often commence with the Pledge of Allegiance to the American flag, a pledge which includes the language “one nation under God.” Congress has directed the President to proclaim an annual National Day of Prayer. The Supreme Court and other federal courts have opened with the invocation “God save the United States and this Honorable Court” since the days of Chief Justice Marshall. Thus the nation has a tradition of “accommodation of all faiths and all forms of religious expression, and hostility toward none.”

The court then observed that in 1983 the Supreme Court ruled that it is permissible for state legislatures to hire paid chaplains to offer prayer at the beginning of legislative sessions. Marsh v. Chambers, 463 U.S. 783 (1983). It conceded that “a board of education is more administrative than legislative in nature,” and so the Marsh case is not directly relevant. However, it pointed out that the Supreme Court in the Marsh case did not restrict itself solely to the context of legislatures. Rather, the Court noted, “the opening of sessions of legislative and other deliberative public bodies with prayer is deeply embedded in the history and tradition of this country.”

The court concluded: “Because the prayer at issue is the prayer of a public deliberative body and occurs in a fundamentally adult atmosphere, rather than in a student or school oriented atmosphere, the case fits most closely into the Supreme Court’s Marsh analysis. As such, the practice of opening prayer does not violate the establishment clause of the Constitution ….” Coles v. Cleveland Board of Education, 950 F. Supp. 1337 (N. D. Ohio 1996). [The Establishment Clause, Prayer on Public Property]

Legal Developments

Church Members Sue to Remove Minister

Courts are not permitted to interfere in “ecclesiastical matters”.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax 1997-07-01

Clergy-removal

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

• Key point. It is the prevailing view that the civil courts are prohibited by the first amendment guaranty of religious freedom from resolving lawsuits addressing the question of “who will preach from the pulpit” of a church.

An Ohio court refused to resolve an internal church dispute concerning alleged financial improprieties by the pastor. Several church members asked the church board to investigate the allegedly wrongful conduct of their pastor, and to terminate his employment. Specifically, they alleged that the pastor had failed to pay a promissory note to the church when the note became due; that he improperly charged the church for expenses for his personal business; that he improperly concealed an order of garnishment against him that allegedly resulted in a judgment against the church; that he improperly removed funds from the church’s investment account; and that he misappropriated funds from another organization while holding himself out as an employee of the church, exposing the church to liability. The members claimed that the board took no action against the pastor, and that each board member thereby breached his fiduciary duty to the congregation. The members asked a trial court to order an accounting of the church’s finances and a new election to determine whether the pastor should remain in office. The church asked an appeals court to dismiss the members’ lawsuit on the ground that it was an internal church matter over which the civil courts have no jurisdiction. A state appeals court agreed with the church. It began its opinion by observing that the first amendment guaranty of religious freedom “prohibits state courts from making any inquiry into religious doctrine, practice or policy,” and that “ecclesiastical matters, including the decision as to who should preach from the pulpit, are outside of the state courts’ jurisdiction.” The court noted that it could resolve controversies that are “purely secular and require no inquiry into ecclesiastical matters.” However, this was not such a case:

The trial court further ordered that an audit be conducted of the church finances, apparently to determine whether or to what extent the pastor engaged in financial wrongdoing. Such an inquiry goes to the question of whether the pastor engaged in wrongdoing, rendering him unqualified as a pastor, and whether he should be removed for misconduct. Delving into the need or reason for disciplinary action against a pastor and the issue of whether the church membership should remove him as pastor necessarily requires the court to review ecclesiastical matters. Procedures for recalling the pastor of the church and for settling disputes with the pastor are encompassed in the church’s constitution; the court would be directly interfering with the internal government of the church by forcing the congregation to take action that it has apparently already determined not to take. It is precisely this type of interference with church ecclesiastical matters that is prohibited by the U.S. Constitution.

The court also pointed out that the church’s own constitution makes provision for the removal of a pastor, but that the dissident members ignored this provision and instead took their case to a civil court. The court concluded that “[t]he failure to follow internal procedures is fatal to the individual members’ claims and to the jurisdiction of the trial court.”

The court also refused to allow the members to sue the board members personally for breaching their fiduciary duties by failing to oust their pastor. It observed:

[I]nquiry into the relationship between the trustees and the congregation in matters concerning the pastorship would require the courts to consider each party’s view of “who should preach from the pulpit.” Review of such matters would further require the court to determine the issue of whether the trustees’ performance of their duties met the standards of the congregation and would therefore involve an inquiry into ecclesiastical concerns. Therefore … civil courts lack subject matter jurisdiction to entertain such matters …. [We] hold that the lower court has no jurisdiction over the claims brought by the individual members of the congregation seeking to oust the pastor or hold the board liable for breach of fiduciary duty to the congregation.

Application. This case illustrates the fundamental rule that the civil courts will not interfere with internal church disputes regarding the tenure or termination of a minister. As the court noted, “ecclesiastical matters, including the decision as to who should `preach from the pulpit,’ are outside of the state courts’ jurisdiction.” Further, it demonstrates that board members may not be personally liable, on the basis of a breach of fiduciary duties, for failing to investigate or oust a pastor who allegedly has committed financial improprieties. State v. Meagher, 1997 WL 180266 (Ohio App. 1997). [ Termination, Personal Liability of Church Officers, Directors, and Trustees, Judicial Resolution of Church Disputes]

Legal Developments

School Custodian Dismissed for Prior Conviction

It’s a good idea to perform background checks on anyone with access to minors.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Schools

Church Law and Tax 1997-05-01

Sexual Misconduct by Clergy and Church Workers

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

• Key point. Custodians often may have unsupervised access to minors, and so churches should not overlook them when screening youth and children’s workers.

An Ohio court ruled that a school could dismiss a custodian on account of a prior conviction for public indecency, since he was a person having responsibility for the “care, custody, or control” of children. An individual applied for work as a part-time custodian at a public elementary school. He failed to reveal on his employment application that he had been convicted of public indecency some twenty years earlier. The school hired the custodian, subject to a criminal records check mandated by state law. The records check disclosed the prior conviction, and the school terminated the custodian on the basis of a state law specifying that no public school “shall employ a person responsible for the care, custody, or control of a child if the person previously has been convicted of or pleaded guilty to” a designated crime (including public indecency). The custodian appealed his dismissal, and a court ordered the custodian reinstated since he “clearly was not in a position as a person responsible for the care, custody, or control of a child.” School officials appealed this ruling, and a state appeals court upheld the school’s dismissal of the custodian. The court noted that the custodian worked five-hour shifts, beginning at 2:30 in the afternoon, and that he reported to work as students were being dismissed. While his duties consisted of cleaning and maintaining school property, he had contact with students as they were leaving the school and with students who were in the school after regular school hours retrieving books and participating in after-school activities. A school official further noted that custodians were expected to intervene if they observed a student engaging in conduct that is dangerous or in violation of school rules. And, in an emergency, custodians could be entrusted with the care of children. These facts persuaded the court that the custodian was a person responsible for the care, custody, or control of a child, and accordingly the school was required by state law to dismiss him when it learned of his previous criminal conviction.

Application. This case illustrates an important point-custodians often have unsupervised access to minors. This makes them a potential risk to the safety of children. Churches that screen youth workers often overlook some positions in their screening process, including custodians. This may represent a dangerous “gap” in a church’s screening program. The case also illustrates the value of a criminal records check. The custodian in this case did not mention his prior conviction on his employment application. The conviction was discovered only when the criminal records check was performed. Finally, note that the custodian was terminated though his previous crime occurred some twenty years ago. The fact that a crime occurred many years ago does not necessarily make the applicant a lesser risk. Prete v. Akron City School District, 667 N.E.2d 73 (Ohio App. 1995). [Negligence as a Basis for Liability]

Legal Developments

Ohio Court Upholds Dismissal of Sexual Abuse Case

Statute of limitations had expired, court ruled.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Doe v. First United Methodist Church, 629 N.E.2d 402 (Ohio 1994)

Key point. Minors who are sexually molested by church workers may not sue their church after the statute of limitations has expired. Generally, the statute of limitations begins to run on a minor's 18th birthday. In some states the statute of limitations does not begin to run until an adult survivor of child sexual molestation "discovers" that he or she has experienced physical or emotional suffering as a result of the molestation. Other states do not recognize this so—called "discovery rule."

The Ohio Supreme Court dismissed a lawsuit brought by a 25—year—old man who had been repeatedly molested as a minor by a church choir director.

The victim had been molested by his church choir director on nearly 300 occasions over a period of 3 years (from 1981 through 1984) when he was between 15 and 18 years of age. He turned 18 in July of 1984. In July of 1991, shortly after his 25th birthday, the victim filed a lawsuit against the choir director and his church. He alleged that the director was guilty of assault and battery, and that the church had been negligent in the selection and supervision of the choir director. Ohio has a 1—year statute of limitations for assault and battery, meaning that a lawsuit alleging assault and battery must be brought within one year following the alleged wrongdoing. Ohio has a 2—year statute of limitations for bodily injury resulting from negligence.

Obviously, these statutes had expired long before the victim brought his lawsuit in 1991. However, the victim insisted that the statutes had not expired since he did not "discover" the nature and extent of his injuries until he sought psychological help in September of 1989. A trial court dismissed the lawsuit, concluding that the statutes of limitations began running on the victim's 18th birthday (in 1984), and not when he sought counseling in 1989. A state appeals court agreed, and the victim appealed to the state supreme court.

The Ohio Supreme Court affirmed the dismissal of the victim's lawsuit. With regard to the claim of assault and battery against the choir director, the court noted that the 1—year statute of limitations for assault and battery expired prior to the time the victim brought his lawsuit even if the statute did not begin to run until he sought counseling in 1989. Further, the court refused to allow the victim to utilize other theories of law to transform an assault and battery into another wrong with a longer limitations period. It observed: "[T]hrough clever pleading or by utilizing another theory of law, the assault and battery cannot be [transformed] into another type of action subject to a longer statute of limitations as it would circumvent the statute of limitations for assault and battery to allow that to be done."

With regard to the victim's claim that the church was responsible for his injuries on the basis of negligence, the court pointed out that the 2—year statute of limitations for negligence applied. The court concluded that the 2—year period of time for bringing a negligence lawsuit against the church began on the victim's 18th birthday and not when he claimed to have "discovered" that his emotional injuries were caused by the abuse. The court observed:

Given the facts of this case, even if this court were to adopt, now or in the future, a rule of discovery for cases of sexual abuse, the rule would not apply to toll the periods of limitations beyond [the victim's] eighteenth birthday. Here, the facts clearly establish that at the time [he] reached the age of majority, [he] knew that he had been sexually abused by [the choir director]. [The choir director] allegedly initiated homosexual conduct with [the victim] on two hundred to three hundred separate occasions without [his] consent. During the period of sexual abuse, [the victim] was fourteen to seventeen years of age. Apparently, the last act of sexual battery occurred just months prior to [the victim's] eighteenth birthday. After graduating from high school, [he] became preoccupied with his sexual identity and suffered from depression, guilt, anger and anxiety. [He] eventually sought psychological help in September 1989, and told his psychologist of the prior sexual encounters with [the choir director].

In July 1984, upon reaching the age of majority, [the victim] knew that he had been sexually abused, and he knew the identity of the perpetrator. Although [he] may not have discovered the full extent of his psychological injuries until September 1989, the fact that [he] was aware upon reaching the age of majority that he had been sexually abused by [the choir director] was sufficient to trigger the commencement of the statute of limitations for assault and battery. Nothing in law, or in fact, prevented [the victim] from asserting his claims against [the choir director] during the applicable statutory limitations period. We find that the one—year statute of limitations for [the victim's] claims against [the choir director] commenced on July 7, 1984, and, thus, [the victim's] action … (filed on July 12, 1991) was time—barred. We hold that a minor who is the victim of sexual abuse has one year from the date he or she reaches the age of majority to assert any claims against the perpetrator arising from the sexual abuse where the victim knows the identity of the perpetrator and is fully aware of the fact that a battery has occurred. (emphasis added)

The court concluded that the victim's claims against the church were also barred by the statute of limitations. It pointed out that the victim "has never claimed or argued that his knowledge of the sexual abuse was insufficient to apprise him of the possibility that the church … had been negligent in failing to protect him from [the choir director]. Under these circumstances, we are left to assume that the events that triggered the one—year statute of limitations for assault and battery were no different from the events that triggered the two—year statute of limitations that applies to [the victim's] negligence causes of action against the church …. Therefore, the two—year period of limitations commenced in July 1984, and [the victim's] negligence claims against the church … are barred …." The court emphasized that this case did

not involve any impediment which might have precluded [the victim] from asserting his claims in a timely fashion. Here, [he] knew of [the choir director's] tortious conduct at the time it occurred and this knowledge continued undiminished throughout the applicable statutory limitations period. This is not a case involving the sexual abuse of a child of tender years. This is not a case involving incest. This is not a case involving repressed memory or psychological disability. At some future date, on facts different from those presented in the case at bar, this court may very well consider whether to apply a rule of discovery to toll an applicable statute of limitations in a case involving childhood sexual abuse. However, the facts of this case do not require or permit us to reach that question.

This is an important development. Many adult survivors of child sexual molestation have brought lawsuits many years (and in some cases decades) after their 18th birthday, claiming that they had not "discovered" the nature and extent of their psychological harm until they sought professional counseling. A number of states (perhaps as many as 15) have adopted the so—called "discovery rule," under which the statute of limitations does not begin to run until an adult survivor of child sexual molestation discovers the nature and extent of his or her injuries, whenever that may occur. Of course, such a rule presents extraordinary difficulties for a church in attempting to defend itself. In some cases, church leaders cannot even remember the alleged molester, much less the precautions that were followed in selecting or supervising this person. Because of these difficulties, a majority of states have rejected the discovery rule.

This case illustrates the majority rule. But this case is important for another reason. The court rejected the victim's assertion that he was not aware of his injuries until he sought counseling when he was 25 years old. What was the court saying? Simply this—adult survivors of child sexual molestation should not be permitted to sue churches years or decades after an incident of molestation simply by asserting that they were not aware of their injuries until they sought counseling. Of course, in some cases such a claim will be legitimate, particularly in cases involving molestation of young children. But when a victim is a teenager, such a claim will be more difficult to prove.

Because of the almost impossible burden that is imposed on churches in such cases to disprove allegations of negligence for an alleged incident that occurred many years before, courts should view such claims of "delayed discovery" with skepticism. This reasoning will be useful to churches in those states that recognize the discovery rule.

Key point. The most significant aspect of this case was the Ohio Supreme Court's conclusion that the statute of limitations for adult survivors of child sexual abuse begins to run on the victim's 18th birthday if "the victim knows the identity of the perpetrator and is fully aware of the fact that a battery has occurred."

Legal Developments

Letter Calling for Pastor’s Resignation Not Defamatory, Court Rules

Letter meets with “qualified privilege” requirements.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Confidential and Privileged Communications, Defamation

Key point: Statements made to other church members concerning a matter of common interest are protected by a "qualified privilege," meaning that they cannot be defamatory unless made with malice.

An Ohio court ruled that church board members who wrote a letter asking their pastor to resign on account of his failing health were not guilty of defamation.

A pastor sued all 12 members of the board of deacons of his former church as a result of a letter the board had sent to him. The letter was written following a series of meetings and expressed the deacons' belief that the pastor's health problems prevented him from performing his duties effectively. The letter stated, in pertinent part:

[I]t is the opinion of the Deacon Board that [your resignation] is necessary to protect the health and vitality of [the church]. We are thoroughly convinced that your general health and physical condition prohibit you from effectively performing your pastoral responsibilities. Additionally, we are convinced that the spirituality within the church has reached a point that the only logical alternative is to change pastoral leadership. We simply need a pastor that is capable of providing creative leadership, new ideas, and visionary direction. Our church must be restored to its historical and enriched heritage.

The letter requested that the pastor either retire or resign and stated that if he did not elect one of these alternatives, the deacons would recommend to the church congregation that his services as pastor be terminated. The pastor responded to the deacons' request by informing them that he would neither retire nor resign. The deacons then called for a special meeting of the congregation and distributed to those members present copies of the letter they had sent the pastor. At this meeting, the congregation requested that the pastor retire and approved the terms and conditions of his retirement package. The pastor retired at this meeting. He later sued the board of deacons for defamation. The trial court "directed a verdict" in favor of the deacons before it heard all the evidence. This is an extraordinary action indicating that a lawsuit lacks any merit. The pastor appealed.

A state appeals court ruled that even if the letter signed by the deacons was defamatory, it was protected by a "qualified privilege." A qualified privilege protects "communications made in good faith on any subject matter in which the person communicating has an interest, or in reference to which he has a duty [if such communication is] made to a person having a corresponding interest or duty …." This privilege typically applies to statements made by church members to other church members regarding matters of common interest. For such statements to be defamatory, they must be made with "legal malice," meaning that the defamatory statements were made "with knowledge that the statements are false [or with a] reckless disregard as to their truth or falsity." The court concluded that the deacons' letter was protected by the qualified privilege. It observed:

Our review of the evidence in this case indicates that the deacons properly raised the defense of qualified privilege … and that the evidence adduced at trial during the presentation of [the pastor's] case clearly established the elements necessary for application of the qualified privilege, as a matter of law. The letter in question concerned various church interests, i.e., [the pastor's] perceived inability to perform his pastoral duties and to inspire the congregation in light of his health problems and the need to restore the spirituality of the church. It was written by members of the congregation of the church, i.e., the deacons, and published exclusively to other members of the church. No evidence was established at trial that any nonmembers were either given or otherwise received a copy of the letter. Furthermore, the letter was sent to [the pastor] prior to any publication and was limited in scope to informing him of the deacons' concern as to his leadership and the future of the church if he did not resign or retire. From this evidence, we conclude that the deacons were entitled to the defense of qualified privilege. Therefore, [the pastor] could only … recover for defamation if he could prove by clear and convincing evidence that the deacons acted with actual malice in publishing the letter ….

The court concluded that the pastor failed to prove that the deacons acted with legal malice, and accordingly the letter was not defamatory. It observed:

[T]he actual malice standard applied in defamation cases is defined as "acting with knowledge that the statements are false or acting with reckless disregard as to their truth or falsity." At trial, [the pastor] seemed to concede that the deacons did not act with knowledge that the statements were false. Rather, he attempted to prove actual malice by asserting that the deacons' failure to contact [the pastor's] doctors or consult the church records immediately prior to drafting the letter amounted to reckless disregard as to the truth or falsity of the statements contained therein. While it is true that the deacons consulted neither [the pastor's] doctors nor the church records immediately prior to drafting the letter, we see no reason why the deacons would be required to consult these specific sources to establish the truth of their statements. Numerous other sources of information were available to them for this purpose. For instance, several of the deacons testified that they came to the conclusion that [the pastor's] health was affecting the leadership of the church through their conversations with members of the congregation, their independent observations of his performance, and repeated discussions during official meetings regarding the deteriorating financial condition and membership of the church. Thus, the deacons did have a factual foundation for their opinion concerning the effect of [the pastor's] health on his performance as pastor and did not act in reckless disregard as to the truth or falsity of their statements in the letter.

What this means for churches

This case demonstrates the legal protection that is extended to communications made among church members. However, as the court pointed out, the qualified privilege does not apply to communications shared with nonmembers. The court stressed that the deacons' letter "was written by members of the congregation of the church, i.e., the deacons, and published exclusively to other members of the church. No evidence was established at trial that any nonmembers were either given or otherwise received a copy of the letter." This is a very important principle for church leaders to keep in mind when they are considering the dissemination of information. Mosley v. Evans, 630 N.E.2d 75 (Ohio App. 11 Dist. 1993).PCL4B2, PCL4B3e

Legal Developments

“Secret Archives” Cannot Prevent Some Records from Subpoena

Court ruling applies to documents that do not interfere with religious freedom.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Church Records

• Key point: Churches cannot protect certain records from the subpoena power by placing them in a "secret archive."

• Can a church avoid inspection of its records in a civil lawsuit by placing them in a location that it designates as a "secret archive"? No, concluded an Ohio appeals court. A Catholic priest, and his church and diocese, were sued on account of the alleged sexual molestation of a minor child by the priest. The lawsuit claimed that the church and diocese were legally responsible for the priest's behavior on the basis of negligent hiring and negligent supervision. In preparation for trial the victim's attorney sought to inspect documents in the possession of the diocese pertaining to the sexual misconduct of the priest, including any notes or summaries made by psychologists with whom the priest had consulted. The diocese acknowledged that 5 years before the priest molested the victim it learned of another incident of molestation by the same priest, and that the matter had been referred to a personnel office for investigation. As a result of this investigation, the priest was required to receive regular and ongoing counseling. The diocese refused to disclose any of these documents. It asserted that they were all contained in a secret archive file that was not subject to inspection. This position was based on Canon 489 of the law of the Roman Catholic Church which states: "There is to be a secret archive … or at least a safe or file in the ordinary archive, completely closed and locked and which cannot be removed from the place" for those documents that are to be "kept and protected most securely." Canon 490 states further that "only the bishop" of the diocese may possess the key to the secret archive and that "documents are not to be removed from the secret archive or safe." The diocese also claimed that the notes from psychologists were protected from disclosure by the "physician-patient" privilege.

A trial court ordered the diocese to produce the documents for a private review by the judge to determine whether any of them should be disclosed in court. The diocese immediately appealed this order, claiming that it violated the first amendment's guaranty of religious freedom. A state appeals court agreed with the trial court, and ordered the diocese to turn over the requested information. The court began its opinion by observing that a party to a lawsuit has the legal right to "discover" or inspect any document in the possession of another party, so long as the document is relevant to the lawsuit and not privileged. The court concluded that the requested information in this case was clearly relevant to the lawsuit, and ordered the diocese to produce them for the trial court's inspection. The court acknowledged that the United States Supreme Court has upheld "the command of the first amendment not to interfere in disputes concerning religious doctrine, discipline, faith, or internal organization." However, it found nothing in the order of the trial judge in this case for a private inspection of the records of the diocese that interfered with or entangled the state "in the rights to believe and practice the religion of one's choice, which are the freedoms protected by the first amendment." The court quoted with approval from an earlier Pennsylvania case:

Merely because Canon 489 is controlling in the internal operations of the affairs of the Church does not mean that it permits evidence pertaining to sexual molestation of children by priests to be secreted and shielded from discovery which is otherwise proper ….

Free exercise of religion, as it its encapsulated in the first amendment, embraces two concepts—freedom to believe and freedom to act. The first is absolute, but the second remains subject to regulations for the protection of society …. We are not concerned here with the former; [the Church] and other congregation members remain unimpeded in the cerebral sphere. The sole issue is whether the Church may refrain from producing documents under a narrowed court order. There is no doubt that this constitutes conduct. Decisions expressing judicial reluctance to become entangled in internal church affairs are also inapplicable. Those cases are premised on a perceived danger that in resolving intra-church disputes the state will become entangled in essentially religious controversies or intervene on behalf of groups espousing particular doctrinal beliefs. Such considerations are not applicable to purely secular disputes between third parties and a particular defendant, albeit a religiously affiliated organization …. Hutchison v. Luddy, 606 A.2d 905 (Pa.Super. 1992).

The court then made an interesting observation. It noted that the Ohio child abuse reporting law includes in the listing of persons who are required to report abuse "person(s) rendering spiritual treatment through prayer in accordance with the tenets of a well-recognized religion, who is acting in his official or professional capacity …." The court then observed that the child abuse reporting law contained no exception "for communications made as penitent to a clergy member as there are for communications made from patient to physician or client to attorney." The court "read from this statute a strong and clear legislative intent that the church is to yield to the state on issues such as these." In other words, the fact that clergy in some cases are mandatory reporters of child abuse under state law supports the view that church records should not be immune from disclosure in civil litigation.

The court did conclude that notes in the records of the diocese that were taken by psychologists and psychiatrists who interviewed the offending priest would be protected from disclosure by the physician-patient privilege if the priest "was in counseling with a psychiatrist or psychologist for the purposes of treatment." On the other hand, if the priest's counseling with a psychologist or psychiatrist was not for treatment, but rather for the diocese "to determine his future as a priest or how it intended to handle his problems," then the records would not be privileged. Niemann v. Cooley, 637 N.E.2d 943 (Ohio App. 1 Dist. 1994). 3G1, 8C2

© Copyright 1995, 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: m12 c0595

Legal Developments

Court Holds Boy Scout Organization Responsible for Injury at Local Troop Activity

Surprising ruling leaves national organization open to lawsuits.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio

Church Law and Tax1995-09-01Recent Developments

Personal Injuries – On Church Property or During Church Activities

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

• Key point: A national scouting organization may be legally responsible for injuries sustained by minors at local scouting events on the basis of agency.

• In a case that will be relevant to any denomination that operates scouting or other organized youth activities, an Ohio court ruled that a national scouting organization was responsible for injuries suffered by a minor while engaged in a local scouting activity. While attending a campout sponsored by his local Boy Scout troop, a 10-year-old minor (the victim) was injured when he was struck in the face by a tree that he and another scout were attempting to cut down. Despite four eye operations the victim lost all vision in his right eye as a result of his injuries. The victim and his parents sued the national Boy Scouts of America (BSA), alleging a negligent failure to properly instruct and supervise him during the campout. BSA asked the court to issue a “summary judgment” in its favor. It relied in part on an affidavit from one of its regional officials who claimed that (1) the BSA charters local councils as individual units to make the scouting program available on a wide basis; (2) local councils make the scouting program available to sponsoring organizations that actually implement the program within local communities; (3) BSA exercises no control or supervision over the sponsoring organization or its selection of volunteer leaders.

In response, the victim’s parents produced portions of the deposition of the regional scouting official in which he stated that while compliance with BSA policies by local councils is discretionary, BSA could revoke the charter of local councils for noncompliance with those policies. For example, BSA could revoke the charter of a local council that admitted girls, or that used a leader who was a homosexual, a convicted felon, or an atheists. The official also pointed out in his deposition that a majority of BSA funds come from registration fees collected at the local level. The parents also submitted portions of the deposition of one of the local volunteer scout leaders who was in charge of the campout at which the victim was injured. The scout leader stated in his deposition that: (1) BSA dictates the policies and procedures as well as the rules and regulations governing every level of the Boy Scouts of America; (2) local scout troops do not have separate rules apart from the national BSA; (3) BSA provides, for a fee, the handbooks, manuals, equipment, and uniforms used by the scouts and volunteer leaders. The victim’s mother submitted her own affidavit to the court in which she stated that she believed an “agency relationship” existed between the local council and volunteer leaders because of the boy scout uniforms, patches, booklets, and accessories provided to the scouts and leaders as well as the local leader’s representation that BSA required constant adult supervision for all children who attend camping trips. The mother claimed that she relied on this relationship when deciding to send her son on the campout.

The trial court after considering this evidence granted the BSA’s motion for summary judgment, meaning that it ruled in favor of BSA without submitting the case to a jury because reasonable minds could come to only one conclusion—that BSA was not responsible for the victim’s injuries. The parents appealed, and a state appeals court reversed the trial court’s summary judgement and ordered the case to proceed to trial. The court ruled that the parents had presented enough evidence to avoid a summary judgment:

[T]here is some evidence that BSA retained a degree of direction and control over [the local council and scout leader]. BSA’s policies, procedures, rules, and regulations governed [the local council] and its leaders. BSA provided [the local leader] with scouting booklets and manuals that included instructions on supervision and training. BSA’s liability insurance covered [the local leader] as an adult volunteer leader, and [he] was required to wear a particular BSA uniform at scouting functions. BSA also retained the authority to discharge [the local leader] if it was determined that [he] was an atheist, a convicted felon, a homosexual, or if he registered females into [the local organization]… . [W]e cannot say, as a matter of law, whether or not the control exhibited by BSA was sufficient to create a principal-agency relationship.

The court also concluded that the parents had presented sufficient evidence on their theory of “apparent agency” to have their day in court. Under the principle of apparent agency a person or organization can become the “agent” of another though no actual agency relationship exists, if the person or organization engages in conduct that leads others to assume that the “apparent agent” is in fact an agent. The court observed:

Here, [the parents] assert that BSA made representations and committed affirmative acts which led [them] to believe that [the local scout leaders] were BSA’s agents. [The parents] support this with [a local leader’s] testimony that … BSA required its volunteer leaders to purchase and wear identical uniforms, purchase official BSA accessories and supplies, and follow BSA’s particular policies, procedures, rules, and regulations. [The mother’s affidavit] demonstrates the requisite reliance … on the relationship between BSA and [the local leaders].

What is the significance of this case to religious organizations?

Unfortunately, the court in this case reached the wrong result, and its decision will be used to support litigation against regional and national religious scouting and youth organizations as a result of injuries to minors during local activities. While it is true that there was some level of connection between BSA and local councils and scout leaders, this connection did not even approach the amount of control required to establish an agency relationship. In fact, the level of control required for an agency relationship is, in the words of the Restatement (Second) of Agency (arespected legal treatise), the “continuous subjection to the will of the [principal].” Certainly, BSA did not exercise this level of control, and the trial court was correct in dismissing the case. More enlightened courts have recognized that the relationship between BSA and its local councils and scout leaders is not an agency relationship. Some of these decisions are reviewed in chapter 12 of Richard Hammar’s text, pastor, Church & Law (second edition), as well as in prior issues of this newsletter. Similarly, the court reached the wrong result with regard to the theory of “apparent agency.” This theory of liability is discussed fully in chapter 12 of Richard Hammar’s text, Pastor, Church & Law (second edition). Mayfield v. Boy Scouts of America, 643 N.E.2d 565 (Ohio App. 11 Dist. 1994).