• The Washington Supreme Court ruled that a church’s board of elders was powerless to amend the church’s articles of incorporation without the pastor’s approval. In 1967, a pastor organized a church. The church bylaws provided that the pastor was “recognized as the spiritual overseer of the church, ordained and appointed by God for the ministry and to shepherd the flock.” The church’s articles of incorportion specified that (1) the church would not have voting members; (2) the affairs of the church would be managed by a board of elders; (3) the church board consisted of three elders, plus the pastor who was designated the permanent chairman (he could not be removed from office while living); and, (4) neither the articles nor the bylaws could be amended without the pastor’s approval. The bylaws specified that the pastor would serve for life unless he decided to leave, and that pastor could “veto” any action of the board. For 20 years, there were no problems with this arrangement. However, in 1987, allegations of sexual misconduct on the part of the pastor surfaced. One elder testified that the pastor admitted to 27 acts of adultery over a period of 16 months. These alleged incidents resulted in lawsuits being filed against the church. In the midst of this turmoil, the pastor signed a statement agreeing to “step aside” as pastor while the board conducted hearings into the allegations. The board (without the pastor) conducted a series of hearings which lasted for 5 hours a day for several weeks. At the conclusion of these hearings, the board adopted a resolution placing the pastor on “special status.” This meant that he could resume his duties as pastor of the church, but he would not be permitted to be alone with any females. The board explained its action by stating that it was attempting to protect the church, and themselves, against additional lawsuits. This decision was announced to the church congregation in a special meeting. The pastor refused to accept this special status or to honor the board’s decision. Instead, he announced to the congregation that he was not under the authority of the elders and that he would resume his role of pastor without restriction. He also denied that any of the alleged acts occurred as a result of his “spiritual condition.” The board convened a meeting with the pastor in an attempt to reach a compromise. When it was clear that no agreement was possible, the three board members met without the pastor at another location and voted to amend the articles by removing the provision requiring the pastor to approve all amendments to the articles. They also voted to remove the pastor from office because of his breach of his “fiduciary duties” to the corporation. The pastor immediately filed a lawsuit asking a civil court to determine whether or not the elders had the authority to amend the articles without his approval. A trial court ruled in favor of the elders, and the pastor appealed. The state supreme court ruled in favor of the pastor. It reasoned that the articles clearly specified that they could not be amended without the pastor’s approval, and that as a result the elders’ attempt to amend the articles without the pastor’s approval was null and void. The court observed: “Neither of the parties has called to our attention any case holding that any corporation law in the country, profit or nonprofit, prohibits a provision in the articles of incorporation requiring the concurrence of a special individual to amend the articles.” The court agreed that the church’s articles “might well, in retrospect, be viewed by some as an improvident provision,” but it concluded that “it is not the function of this court … to protect those who freely chose to enter into this kind of relationship.” The court did acknowledge that while it rejected the elders’ attempt to amend the articles without the pastor’s approval, “we point out that this does not necessarily defeat the effort by the board to oust the [pastor]” since “the issue of breach of fiduciary duty still remains to be considered by the trial court.” Two justices dissented from the court’s ruling. They lamented that the court’s ruling “eliminates the board’s authority to protect the interests of the church and makes the board inoperative. The pastor’s veto power over the actions of the board impermissibly allows one director to grind the wheels of the corporation to a halt.” The dissenters also claimed that the pastor’s written agreement to let the board conduct hearings into his alleged sexual misconduct amounted to a “waiver” of his veto power over the board’s decision. For now, the case will proceed to trial on the issue of the board’s authority to remove the pastor because of his alleged breach of his fiduciary duties to the corporation. Any developments will be reported in future editions of Church Law & Tax Report. Barnett v. Hicks, 792 P.2d 150 (Wash. 1990).

© Copyright 1991, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m34 m56 m28 c0191