Members’ Right to Challenge Sale of Church Assets

Can members stop a board from selling church assets?

Do church members have the authority to challenge the sale of church assets by the church board?

That was the question before the District of Columbia Court of Appeals in an important decision. Mount Jezreel Baptist Church was incorporated in 1883. The original certificate of incorporation stated that it was formed "for the purpose of religious worship … at the corner of Fifth Street and E Street, Southeast, in the City of Washington."

In 1982, after the safety of the historic church building became an issue, the pastor and board of trustees decided to close the church and move to a new location. For at least ten years prior to the sale of the church property, relations between the board of trustees and a segment of the congregation became increasingly hostile.

After the sale of the church building, a group of the dissidents filed a lawsuit alleging that the trustees and pastor had violated their fiduciary duty as trustees to hold church properties for the purposes specified in the corporate charter (i.e., to conduct religious worship "at the church building on the southeast corner of Fifth Street and E Street"). The dissidents further alleged that the board of trustees and pastor had "improperly managed the church's assets and business affairs" and had exceeded their authority in selling the church building.

The dissidents claimed they were attempting to "salvage the historic old Mount Jezreel church building." A trial court dismissed the lawsuit on the ground that the dissidents were not members of the church and accordingly lacked "standing" to sue. The dissidents appealed this ruling. The appeals court noted that there were two questions—whether the dissidents had "standing" to filed the lawsuit against the board of trustees and pastor, and if so whether church members have the legal authority to challenge the decisions of a church board.

The court concluded that most of the dissidents did have standing, since they were lawful members of the church. It acknowledged that the congregation had voted in an annual business meeting to automatically dismiss any member who filed a lawsuit against the church. However, this action was taken after this lawsuit was filed. At the time the dissidents sued the board of trustees and pastor, they were members of the church, and this was all that was necessary to have "standing" to sue.

Next, the court addressed the question of whether church members have the legal authority to sue church trustees for the wrongful transfer of church property. The dissidents pointed out that title to the church's properties was in the name of the trustees who held church properties "in trust" for the members of the congregation, and that church members were "trust beneficiaries" who could sue the trustees for improper or unauthorized transactions with respect to those properties.

The court observed: "Although title to the church property is vested in the trustees or directors, the property itself is held in trust for the uses and purposes named and no other. Because the church was incorporated for the purpose of religious worship, and because the property was held in trust for that purpose, the members of the congregation are indeed the beneficiaries of the trust. As such, they have standing to sue the trustees in the event that the trust property is used or disposed of in a manner contrary to the stated purposes of the trust …. We therefore hold that, as a general principle, bona fide members of a church have standing to bring suit as trust beneficiaries when there is a dispute over the use or disposition of church property."

Mt. Jezreel Christians Without a Home v. Board of Trustees of Mount Jezreel Baptist Church, 582 A.2d 237 (D.C. App. 1990).

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