• Key point. A home purchased on behalf of a pastor by his or her church may be subject to a trust in favor of the church even though title was vested in the pastor.
• Key point: Unincorporated churches may not have the legal capacity to sue in some states.
An Ohio court ruled that a home purchased by a church for its pastor was subject to a “purchase money resulting trust” in favor of the church and therefore the home could not be considered in a property settlement following the pastor’s divorce. A pastor and his wife filed for a divorce. While the couple was engaged in dividing their assets, the pastor’s church intervened in the divorce action and asserted a legal interest in the couple’s home. A trial court refused to permit the church to intervene in the lawsuit on the ground that it never proved that it was a corporation and unincorporated entities cannot sue or otherwise intervene in a lawsuit. While two witnesses testified that the church was incorporated, no documentary evidence (such as a corporate charter or certificate of incorporation) was introduced into evidence. The trial court decided to reject the witnesses’ testimony, and refused to permit the church to assert any claim to the couple’s home. The church appealed, and a state appeals court ruled in favor of the church. The court agreed that when property is purchased by one person, but title is vested in another, the person holding title does so subject to a “purchase money resulting trust” in favor of the person who paid for the property—at least if the parties intended that the purchaser have some equitable interest in the property. The court pointed out that the church purchased the home and adjoining property as a site for a new church building. As a result, the pastor and his wife held title to the home in trust for the church, and the home was not marital property that could be divided between the pastor and his wife.
The court then addressed the legal authority of an unincorporated church to sue or intervene in a lawsuit. The court noted that two witnesses testified in the divorce case that the church was incorporated, but that no documentary evidence was introduced by the church proving that it was incorporated. The court continued: “If [the church] had been required to prove its corporate existence in order to [intervene in the divorce case], the testimony presented at the hearing arguably demonstrated as much. Nevertheless, we acknowledge that without documentary evidence of incorporation, the issue was one of credibility and the judge was free to disbelieve such testimony.” However, the court pointed out that under Ohio law an objection to a party’s capacity to intervene in a lawsuit must be properly raised in an answer or amended answer to the original complaint. Since the pastor and his wife failed to object in this manner to the church’s intervention, they waived the right to do so.
This case illustrates three important points: (1) Property purchased with church funds may be subject to a trust in favor of the church even though title is vested in another person or organization. (2) Unincorporated churches may not have the legal authority to sue or otherwise intervene in lawsuits under the laws of some states. (3) Churches that are involved in civil litigation should establish their corporate status through documentary evidence (such as a corporate charter or certificate of incorporation) rather than by oral testimony alone. Cayten v. Cayten, 659 N.E.2d 805 (Ohio App. 1995). [ Unincorporated Associations, Clergy Authority in Property Matters, Internal Property Dispute Resolution Procedures—Resulting Trusts]
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