Court Won’t Get Involved in Church Finance Dispute

Dispute is an ecclesiastical matter, court rules.

Church Law and Tax 1996-05-01

Church Funds

Key point. Internal church disputes involving financial improprieties are viewed by some courts as ecclesiastical matters over which they have no jurisdiction.

An Illinois court ruled that it lacked jurisdiction to resolve a lawsuit brought by church members who demanded an accounting of church funds. Six members of a church filed a lawsuit asking the court to order an accounting of church funds as a result of what they perceived to be financial irregularities involving their minister (who also was the church’s sole “trustee”). In 1919 the church transferred all of its assets to a trust for the sole purpose of advancing the church’s mission, and named the church’s minister as trustee. The trustee was given sole authority, by the terms of the trust, to “conduct all business, and execute all instruments in writing, and make all other contracts, which may seem in his judgment to be proper or necessary in the performance of this trust.” Church members became concerned with certain irregularities they alleged occurred after the current minister came to the church. These included the following: (1) Prior to the minister becoming associated with the church, it generated sufficient income to meet expenses and was without mortgages or significant debt; (2) the minister, as trustee, made a decision to increase the funds needed to initiate the building of a new church structure; (3) the minister made a $300,000 mortgage on church property without approval of the church board; (4) the minister provided financial reports to the six members, but the reports were not drafted according to the American Certified Public Accountant Standards nor any other accounting standards which accurately indicate the amount of funds raised by the church; (5) the minister refused to provide an accounting of the assets of the church trust although many requests have been made; (6) the six members alleged that the minister received substantial sums of money from the trust to fund his personal activities and expenses; and (7) the minister breached his fiduciary duty owed to the church membership as beneficiaries of the church trust. The members asked the court to remove the minister as trustee; order an accounting “of all dealings, bank accounts, mortgages and other real property or personal transactions involving the trust;” and appoint an independent board to oversee the financial affairs of the church. A trial court dismissed the lawsuit, and the six members appealed.

A state appeals court affirmed the trial court’s dismissal of the case. It began its opinion by observing that “[n]otwithstanding the … unambiguous language of the trust agreement giving the [minister—trustee] sole and plenary control over all property involved in the operation of the church in accordance with the trustee’s judgment, the [members] seek relief which is not judicially available to members of a hierarchical church and would plainly violate the trust agreement.” The court continued:

EXT It is eminently clear that the basis of this lawsuit is to have the courts examine the way the church is managing its financial affairs; to substitute the prudence of a court’s judgment for that of the trustee and [minister] who is entrusted by church doctrine to exercise such judgment; to impose court supervision over all financial matters of an entire religious faith; and to have a court interfere with the proper succession in the hierarchy of a religious faith. These matters, however, are beyond the realm of judicial jurisdiction.

EXT The issues raised by plaintiffs are matters of ecclesiastical polity and as such must be addressed and answered by the church itself rather than by the courts. The fact that property is incidentally involved does not change the nature of the issues raised by the plaintiffs. The mere assertion of a property right is not sufficient to invest courts with jurisdiction over what is essentially a religious dispute.

EXT The wisdom of the First Amendment of the United States Constitution is that when it comes to religious matters, religions and religious entities should receive neither help nor hindrance from any branch of government, including the judiciary. This wisdom must be assiduously applied by courts when confronted with the kinds of allegations made by plaintiffs in this case. The trial court’s order dismissing plaintiffs’ complaint was therefore proper. Rizzuto v. Rematt, 653 N.E.2d 34 (Ill. App. 1995). [ Termination, Church Records, Church Members, Judicial Resolution of Church Disputes]

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