Church Board’s Attempts to Amend Articles of Incorporation Ruled Invalid

A Florida court said procedural requirements were not followed.

Key point 6-02.2. 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 6-06.1. Churches select their officers and directors in various ways. For example, it is common for members of a church board to be elected by the church's membership, while officers are elected by the board. The civil courts generally refrain from resolving disputes involving the selection of church officers and directors on the ground that the first amendment guaranty of religious freedom prevents them from becoming involved in ecclesiastical disputes.

Key point 6-06.3. Church boards generally can act only in a meeting that is duly called pursuant to the church's governing documents. Many state nonprofit corporation laws permit church boards to act by written consent, or by conference telephone call.

Key point 6-12.4. 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.

Corporations Church Officers, Directors, and Trustees Church Business Meetings

* A Florida court ruled that a church board's attempts to amend the articles of incorporation were invalid because procedural requirements were not followed. A church hired a married couple (Mr. and Mrs. Miller) as ministers. Many years later a dispute arose when the ministers, at the time of their retirement, sought to dissolve the church and have the church's assets transferred to other religious corporations. The church's assets were substantial. In addition to highly appreciated church property, the church had investments in excess of $2 million. Former members of the church board sued to stop the dissolution of the church and the transfer of the church property and investments. The facts of this case are complex, but can be summarized as follows:

The church's articles of incorporation listed seven persons as members of the original board of directors and specified that board members "shall be members of the corporation." The articles of incorporation named no other members. While the church's bylaws specified that additional members could be elected "by a majority vote of the entire board of directors," no additional members were ever selected. The church bylaws stated that members of the corporation were to elect directors at annual meetings.

A membership meeting was called in 1978. Those present (amounting to less than a majority of the membership) elected Mr. and Mrs. Miller as directors, and then elected them as corporate officers and ministers. The bylaws of the church contain specific notice and quorum requirements for meetings of the members. Members must receive at least ten days' notice in writing of any membership meetings, and the notice must be mailed to each member's usual place of business or residence. The bylaws also require a majority of the members to be present in order to transact business at a membership meeting. These procedural requirements were not followed.

In 1979, the church called a meeting of the board at which an amendment to the church's articles of incorporation was approved. The amendment changed the name of the church corporation and revoked the original articles of incorporation and bylaws. It also created a "council of elders" and vested this council with complete control over the affairs of the church, including the ability to dissolve the corporation and distribute its assets. The amendment named Mr. and Mrs. Miller, along with one other person, elders and officers. However, the articles of incorporation specified that the articles could be amended only by a vote of two-thirds of the members of the church. At most, only one member in fact voted for the amendment.

In 1994, the council of elders attempted to make another amendment to the articles of incorporation to provide that the church would have no members. The council voted in 1996 to dissolve the corporation and distribute its assets.

In 1997, the church corporation filed a lawsuit against the council of elders contesting the dissolution of the corporation and seeking to recover and protect the corporation's assets. The lawsuit was brought by a majority of the church's directors who had served before the council of elders was established in 1979. The church claimed that the various amendments to the articles of incorporation were never approved by the corporate membership and were therefore void, and that the council of elders lacked authority to amend the articles of incorporation or to dissolve the church. The church asked the court to prevent the council of elders from disposing of the church's assets, and order the cancellation of any asset transfers already accomplished.

The court concluded that the action taken at the 1979 meeting was null and void since "those voting to amend the articles of incorporation lacked legal authority to make such an amendment." As a result, "the original members and directors of the corporation remain in control of the church, absent resignation or removal in accordance with the original articles of incorporation and bylaws, until and unless amended as provided therein." The court sent the case back to the trial court, with instructions to "set aside the acts complained of" and award damages.

The court concluded that the first amendment religion clauses did not prevent it from resolving this dispute since the case "implicates neutral legal principles only" and "precedent supports judicial resolution of the parties' dispute over corporate assets, the corporation's religious purposes notwithstanding." It further observed,

the doctrine of either side is … of no moment here. The courts are not concerned with the articles of faith of either, nor with the question as to whether or not the articles of faith or the religious doctrines of either are respected and observed. The only question which is sought to be presented here which may be addressed to the courts is in regard to the right to control the church property. The parties have asked neither us nor the trial court to become entangled in essentially religious controversies or intervene on behalf of groups espousing particular doctrinal beliefs.

Application. This case illustrates the importance of compliance with the procedural requirements spelled out in a church's governing documents. The church membership, board, and council of elders repeatedly violated the procedural and voting requirements of the articles of incorporation when purporting to hold meetings of the membership and board and amend the articles of incorporation. The result was that those actions were of no legal effect. The Word of Life Ministry, Inc. v. Miller, 778 So.2d 360 (Fla. App. 2001).

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