Officers, Directors and Trustees – Part 2

Church Law and Tax 1989-11-01 Recent Developments Officers, Directors, and Trustees Richard R. Hammar, J.D.,

Church Law and Tax 1989-11-01 Recent Developments

Officers, Directors, and Trustees

The Virginia Supreme Court was called upon to determine whether the term of office of a church’s trustees was one year or life. For nearly 70 years, the trustees of an Episcopal church’s endowment fund served life terms. A dispute then arose, and the church’s vestry sought a court ruling on the trustees’ term of office. The court concluded that the trustees’ term of office was one year on the basis of a provision in the Virginia nonprofit corporation law specifying that “in the absence of a provision in the articles of incorporation fixing a term of office, the term of office for a director shall be one year.” Since the court found no provision in the articles of incorporation (i.e., the corporate charter) “fixing a term of office,” it concluded that state law mandated a one-year term. In support of its conclusion, the court observed that “had the organizers intended to take the unusual step of providing life terms for trustees, they surely would have done so in unmistakable fashion.” It further noted that the articles of incorporation required “not less than three” trustees to be “vestrymen of the church.” And, since the terms of the church’s vestrymen were limited to three years, there were at least three trustees (at any given time) who could not serve life terms. The court found this to be “unmistakable evidence of the organizers’ intention not to fix the trustees’ terms of office at life.” Since no provision in the articles of incorporation specified a life term (or any other term), the nonprofit corporation law fixed the trustees’ term at one year. This case illustrates the important principle that questions of church administration may be resolved by state nonprofit corporation law if the church is incorporated under the general nonprofit corporation law and the church’s articles of incorporation do not address a particular matter. St. John’s Protestant Episcopal Church Endowment Fund, Inc. v. Vestry of St. John’s Protestant Episcopal Church, 377 S.E.2d 375 (Va. 1989).

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