Church Property – Part 1

A Pennsylvania court ruled that a denomination owned the property of a dissident church as a result of a trust provision in the denomination’s governing documents.

Church Law and Tax2004-11-01

Church property – Part 1

Key point 7-04. Churches and denominational agencies can avoid church property disputes by adopting appropriate nondoctrinal language in deeds, trusts, local church bylaws, or denominational bylaws.
Internal Property Dispute Resolution Procedures

* A Pennsylvania court ruled that a denomination owned the property of a dissident church as a result of a trust provision in the denomination’s governing documents. A church consisting of 65 to 85 active adult members was incorporated in 1846 as part of the Episcopal Church in the United States (national church). Because of theological differences the church board (“vestrymen”) submitted a proposal to the membership to separate the church from the diocese and national church through a merger with a new foundation that they had created solely for this purpose. The diocese responded by declaring itself to be trustee of the church’s property and ordered removal of the church board. A trial court was asked to determine lawful ownership of the church property, and it concluded that the following trust provision in the national church’s canons vested title in the national church:

All real and personal property held by or for the benefit of any Parish, Mission or congregation is held in trust for this [National] Church and the Diocese thereof in which such Parish, Mission or Congregation is located. The existence of this trust, however, shall in no way limit the power and authority of the Parish, Mission, or Congregation otherwise existing over such property as long as the particular Parish, Mission or Congregation remains a part of, and subject to, this Church and its Constitution and Canons. Canon I.7.4.

The congregation appealed, claiming that it never formally accepted the national church’s canon pertaining to local church property. While it agreed to comply with the national church’s canons at the time of its affiliation, this “did not bind it to later-enacted canons of which it had no notice at the time of accession.” The appeals court disagreed, noting that the church “waited twenty years after the adoption of the [church property] canon to take action inconsistent with it.”

The court also found that the vestrymen had acted in bad faith and breached their fiduciary duties as directors by attempting to merge the church’s property with a foundation they had created solely for the purpose of separating from the national church. The court noted that the state nonprofit corporation law specifies that a director of a nonprofit corporation “stands in a fiduciary relation to the corporation and must perform his or her duties in good faith and in the best interests of the corporation, and the director shall be entitled to rely in good faith on the information, opinions, reports or statements prepared or presented by counsel.” The church claimed that the members of the vestry believed they had the right to disaffiliate, and they sought and followed the advice of counsel, who identified the merger as the best option and who advised that a merger would not involve amendment of articles of incorporation subject to diocesan approval. They rejected counsel’s suggestion, however, of bringing a quiet title action as such action against fellow Christians would not be consistent with scripture. The court concluded that the vestrymen acted to promote their own interest, but even had their purpose been proper, their method of acting was a violation of their fiduciary duty. In particular, their rejection of their own attorney’s advice to resolve the title questions by filing a “quiet title” action in civil court, and instead pursuing a merger with the foundation, was done in bad faith. In re Church of St. James the Less, 833 A.2d 319 (Pa. Common. 2003).

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold 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. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay