Church Property – Part 1

A denomination’s governing documents prevented a church from disaffiliating from the denomination and retaining control of church property.

Church Law and Tax 2006-09-01

Church property – Part 1

Key point 7-03.3. Most courts apply the ‘neutral principles of law’ rule in resolving disputes over the ownership and control of property in ‘hierarchical’ churches. Under this rule, the civil courts apply neutral principles of law, involving no inquiry into church doctrine, in resolving church property disputes. Generally, this means applying neutral legal principles to nondoctrinal language in any one or more of the following documents: (1) deeds to church property; (2) a church’s corporate charter; (3) a state law addressing the resolution of church property disputes; (4) church bylaws; or (5) a parent denomination’s bylaws.
State Court Rulings Regarding Church Property Disputes

* A California court ruled that a denomination’s governing documents prevented a church from disaffiliating from the denomination and retaining control of church property. A Protestant denomination known as the Open Bible Standard Churches was formed in 1935. Its governing documents, contained in a publication entitled ‘Policies and Principles,’ include the denomination’s constitution and bylaws. The church is administered through a system of national and regional officers and boards.

A local congregation affiliated with Open Bible is required to have articles of incorporation ‘in accordance with’ those of the national church. Each affiliated local church has the ‘privilege’ of adopting its own bylaws, so long as they ‘do not conflict with the spirit of the Policies and Principles’ of Open Bible. Under the Open Bible Bylaws, if any affiliated church has not filed its own bylaws with the national, regional and district offices of the denomination, ‘all of the provisions of Article IV of [the Open Bible] Bylaws shall apply.’ With regard to property ownership, the Open Bible Bylaws provide that ‘no property of the [affiliated] church shall be sold, leased, mortgaged, or the title otherwise endangered without first obtaining written consent of its regional and district superintendent.’ When an affiliated member church is dissolved or becomes ‘extinct,’ its assets are turned over to the applicable Open Bible region or to Open Bible’s national offices.

The Open Bible Bylaws require a church wanting to withdraw from affiliation to follow a mandatory procedure. The decision to withdraw must be made at a special membership meeting, by a two-thirds vote of all active church members eligible to vote, with notice of the special meeting and of its intent publicly announced from the pulpit, posted on the church bulletin board, and sent by first class mail to the church membership. Notice of the special meeting must also be sent by registered mail to the national secretary of Open Bible at least 90 days prior to the date of the special meeting, with an invitation also extended and opportunity given to an Open Bible representative to ‘present the cause of’ Open Bible at the meeting.

The Open Bible Bylaws specify that any affiliated church ‘needing or requesting help in the management of its pastoral, internal or legal affairs’ may be placed under ‘regional supervision’ for the purpose of providing ‘a service of counsel and supervision’ aimed at assisting it ‘back to stability and health.’ An affiliated church ‘automatically’ comes under regional supervision if it ‘has a pastor who is not a member in good standing of Open Bible.’ The Bylaws list several other ’emergency cases’ in which regional supervision is authorized, including where ‘the regional board has to change a pastor,’ ‘there is unresolved internal strife detrimental to the survival of the church,’ and ‘there are conflicts of interest, questionable legal and financial practices, or a pattern of numerical, financial or other decline.’

Under regional supervision, the regional board of directors becomes the governing board of the affiliated church, with power to manage the local church’s property and to remove the pastor. At the discretion of the regional board, an ‘advisory council’ may be selected from the membership of the local church to assist ‘the acting pastor’ in the routine day-to-day management of the church’s affairs. No meetings of the advisory council, church board, church membership or congregation may be called or conducted without the prior authorization of the regional office, or conducted without the presence of a regional official. Regional supervision continues until the regional board is satisfied that the local church has met all the requirements for ‘Release.’ These include regular submission of monthly attendance and financial reports to the district and regional superintendents; complete cooperation with and participation in the ‘programs and Policies and Principles of Open Bible’; a successful ‘confirmation visit’ by the district or regional superintendent ‘to review the items that were designated to be in order’; and successful functioning of the local congregation during a ‘mutually agreed period’ of governance by a provisional board appointed by the regional superintendent. Upon release of a local church from regional supervision, the local congregation is restored to control over its local ministry and church assets.

A California church affiliated with Open Bible in 1953. In 1977 the church voted unanimously to make its current pastor its pastor for life. In 1982 the church purchased a school facility and 10 acres for a purchase price of $1.75 million. Acquisition of the property was financed through sale of the previous church site and a five-year fundraising campaign to which over 500 people contributed. By the time all mortgage loans were paid off in 1986, the total contributions to the purchase had reached $2.3 million, including interest. None of the funds used to purchase the property came from the national church. The church used the property to operate a private school. The school has an enrollment of 500 students, annual revenues of $3 million, and an estimated value of $14 million.

As time passed, the leadership of the church’s ‘pastor for life’ became increasingly controversial. Between 1982 and 1994, the congregation declined from 216 to 91 members, and a schism developed as members took sides between the pastor and an associate pastor. When the associate pastor left the church in 1994, many members went with him. By that time, the senior pastor no longer had the support of the local church board. As a result of this dissension and attempts to remove him from office, the pastor asked Open Bible to impose regional supervision over the church in 1994. A regional superintendent immediately placed the church ‘under official regional supervision’ by letter stating that regional supervision would remain ‘in force until adequate steps are taken to be released.’ In accordance with Open Bible’s procedures for regional supervision, the regional board of directors became the official board of the church, and the pastor was retained for day-to-day management of the local church. Within a year, church membership had declined to 44.

Due to the continuing decline in its membership, regional supervision continued for five more years. By 2000, membership had dropped to 28. Despite serious concerns, the regional board released the church from regional supervision. Immediately following this action, the pastor reasserted his authority and consolidated control over the church’s remaining membership with the ultimate goal of withdrawing from Open Bible. He had already taken steps in this direction by summarily terminating the membership of individual members of the congregation without the knowledge or approval of Open Bible. As a result of these actions, the church’s membership dwindled to 18 individuals, all but five of whom were relatives of the pastor or his long-time secretary.

In 2001, the church board voted to recommend to the congregation that it withdraw from its affiliation with Open Bible. The membership held a meeting, attended by 13 members, in which a vote was taken to disaffiliate from Open Bible. Contrary to the specific requirements of Open Bible’s Bylaws the church gave no notice of this meeting to Open Bible’s national, regional, or district leadership. The national church immediately sent the pastor a letter, informing him that it did not recognize the church’s ‘attempted withdrawal.’ The regional board thereafter suspended the pastor’s ministerial credentials, and reimposed regional supervision.

The church filed a lawsuit in which it asked a court to affirm its right to terminate its affiliation with Open Bible and withdraw from the denomination, and barring Open Bible from exercising authority or control over the church. Open Bible sought a court ruling recognizing its control over the church, and holding the purported church disaffiliation to be ineffective. A trial court ruled in favor of Open Bible, and the local church appealed.

Congregational or hierarchical

A state appeals court began its opinion with the observation that ‘civil jurisdiction is more limited with respect to hierarchical religious organizations than it is in the case of congregational or independent ones.’ In concluding that Open Bible is a hierarchical denomination, the court observed:

Open Bible’s Constitution and Bylaws establish a large, interconnected structure of national, regional and district administration, containing a system of church tribunals and appeals for the enforcement of the Policies and Principles and the resolution of intrachurch disputes. In this structure, an individual affiliated church is treated as an ‘integral part’ of Open Bible ‘subject to the rules, regulations and discipline’ of the national church and its regional administrative bodies. A local congregation may adopt its own bylaws, but only if they are not in conflict with Open Bible’s national Policies and Principles.

The governing documents of both Open Bible and [the local church] show that from the time of the latter’s inception and affiliation with Open Bible in 1953 … [the church] has consistently and explicitly been identified as a subordinate member church in the Open Bible structure. Its own articles of incorporation and bylaws expressly state that it is an affiliated member church of Open Bible, governed by and organized in accordance with the Constitution and Bylaws of Open Bible. Its bylaws contain an express provision for the reversion of its property to Open Bible in the event of Concord Christian’s dissolution. Like all affiliated churches of Open Bible, in order to be valid, its bylaws were required to be consistent with those of the national church, and to be filed with the latter ….The actions of the parties [also] confirm the hierarchical nature of the Open Bible polity. Thus, the pastor’s own request that [the church be placed under] regional supervision in 1994 constituted an explicit recognition of the church’s subordinate position in Open Bible’s hierarchy. In addition, every Open Bible minister is required annually to verify his good standing and pledge continued support for the Polices and Principles of Open Bible to maintain his or her ministerial credentials.

The court concluded, based on this evidence, that ‘at no point in its history can the church be said to have been a strictly independent congregational church, free of outside ecclesiastical associations and owing no allegiance or obligation to any higher authority.’

Disputes concerning religious doctrine

The church insisted that even if Open Bible is a hierarchical religious organization, a civil court must defer to its decisions only as they relate to doctrine. And, since the present dispute did not involve doctrinal issues, the civil courts could intervene. The court noted that the United States Supreme Court ‘has adopted a two-pronged analysis in intra-church disputes involving property. Civil courts may employ neutral principles of law as the basis for resolving such disputes, unless this determination depends on the resolution of an ecclesiastical controversy over religious doctrine, practice or polity.’ As a result, ‘where the matter at issue in a church dispute involves questions of ownership of property and assets, civil courts applying neutral principles of law must defer to the authoritative decisions of hierarchical ecclesiastical bodies on any matters of internal church polity necessarily involved in resolving the issue.’ The court concluded that the issues in this case (the propriety of the denomination’s suspension of the pastor’s ministerial credentials, and its imposition of regional supervision) were ‘precisely the kinds of issues to which both the United States Supreme Court and the courts of this state have traditionally applied the ecclesiastical rule of judicial deference ….Thus, we conclude the trial court correctly determined that Open Bible was a hierarchical church as to which a civil court must defer with respect to its ecclesiastical decisions.’

The court concluded that Open Bible properly imposed regional supervision over the church: ‘Its imposition of regional supervision was based on a number of factors, including … ongoing controversy over the pastor’s leadership style and activities; chronic congregational disunity and schism; the precipitous decline in membership; and finally, the pastor’s actions in calling a meeting of hand-picked members for the purpose of withdrawing the church from Open Bible without any prior notice to the national church. Each of these circumstances justified imposition of regional supervision in accordance with the applicable provisions of Open Bible’s Policies and Principles. In addition, the fact the pastor himself voluntarily relinquished his ministerial credentials before Open Bible imposed regional supervision was by itself sufficient to justify automatic imposition of regional supervision under the Bylaws.’

In summary, the court upheld the imposition of regional supervision over the church, and refused to recognize the church’s vote to disaffiliate from the denomination. Concord Christian Center v. Open Bible Standard Churches, 34 Cal.Rptr.3d 412 (Cal. App. 2005).

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