Court Involvement in Church Finance Dispute

Some legal arguments in churches may be settled in court.

Church Law and Tax 1996-09-01

Church property

Key point. The civil courts have authority to resolve a dispute as to which of two factions within a church controls a certificate of deposit in the name of the church.

A Georgia court ruled that it could resolve a dispute within a church regarding ownership of a certificate of deposit. In 1993 a church elected a board of directors pursuant to the church’s bylaws. Later that year, the congregation voted to terminate the services of its pastor, and the board informed the pastor that he would not be permitted to conduct services at the church in the future. A few days later the pastor notified his archbishop of this action. The pastor was advised by the archbishop to inform the board members that they were being removed from their positions. The board members refused to honor this decision and continued to serve. Meanwhile, members loyal to the pastor elected a new board. As a result, there were two boards purporting to act as the official board of the church! A question arose as to the control of a sizable certificate of deposit in the name of the church. Both “boards” claimed to have authority to direct the disposition of this certificate. A lawsuit was filed to determine the lawful board of the church. The trial court ruled that the archbishop had no authority to disband the board, and that the election of the new board had no legal effect since it was not in compliance with the church’s bylaws. The case was appealed, and a state appeals court upheld the findings of the trial court. The court began its opinion by observing that the civil courts have the authority to resolve church property disputes so long as they do so on the basis of “neutral principles of law” requiring no examination of church doctrine. The court concluded that the trial court correctly applied neutral principles of law (nondoctrinal provisions in the church’s charter and bylaws, and state nonprofit corporation law) in reaching its decision that the archbishop had no authority to remove a local church’s official board. The court also noted that even if the archbishop had the legal authority to remove the church’s board of directors, he had no authority to appoint a new board. It referred to a provision in the church’s bylaws specifying that members of the board of directors “shall be elected by secret ballot.” Kidist Mariam Church v. Kidist Church, 465 S.E.2d 491 (Ga. App. 1995). [ State Court Rulings Regarding Church Property Disputes]

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