The Mississippi Supreme Court ruled that a local congregation, rather than a parent denomination, was the legal owner of church property. A local church acquired property by deed in 1958, in the name of “Church of God Pentecostal, General Assembly.” It acquired adjacent property by deed in 1968, in the name of “Church of God Pentecostal of Moss Point, Mississippi.” The purchase price for the properties conveyed by both deeds was paid for entirely by the local congregation. In 1994, the church’s pastor was “defrocked” by the Church of God Pentecostal, a national religious denomination, for misconduct and a failure to comply with the national church’s bylaws. The local congregation rejected the action of the national church, and retained their pastor. It also attempted to convey its property to a newly formed church using a different name that did not refer to any association with the national church. A trial court ruled that the local congregation held title to its properties, and the national church appealed.

The state supreme court applied the “neutral principles of law” approach in resolving this dispute. It noted that for the national church to prevail under the neutral principles of law approach, it “must demonstrate either an actual transfer of property from the congregation to the denomination, an express trust, or clear and convincing evidence evincing an intent on the part of the local congregation to create a trust in favor of the denomination.” The court noted that the congregation had not transferred its property to the national church, and there were no documents creating an express trust in favor of the national church. Therefore, “the only manner by which title can be confirmed in [the national church] is by either a resulting or constructive trust.” The court defined these trusts as follows:

Resulting Ttrust

“If one buys land in the name of another and pays the consideration therefor, the land will be held by the grantee in trust for the benefit of him who advances the purchase money …. The foundation of trust in such cases is that the property really belongs to him whose funds have paid for it.”

Constructive Trust

“A constructive trust is one that arises by operation of law against one who, by fraud, actual or constructive, by duress or abuse of confidence, by commission of wrong, or by any form of unconscionable conduct, artifice, concealment, or questionable means, or who in any way against equity and good conscience, either has obtained or holds the legal right to property which he ought not, in equity and good conscience, hold and enjoy.”

In deciding whether a resulting or constructive trust existed in favor of the national church, the court looked to the bylaws of the national church and the deeds to the local church property.

National Church’s Bylaws

The court acknowledged that the national church’s bylaws clearly state that “[a]ll deeds and abstract of deeds of any local church shall remain the property of the parent church and shall be sent to the general office and kept there.” In addition, the bylaws declare that “no church that is the property of the parent church of the Church of God Pentecostal shall at any time secede from the parent church. All properties shall at any and all times remain the property of the parent church.” The court conceded that this language demonstrates “a clear intent … that any property of one of its local churches is the property of the national denomination.”

The court concluded, however, that the national church’s bylaws did not create a resulting or constructive trust in favor of the national church, for the following reasons: (1) There was no evidence that the congregation had “adopted” the national church’s bylaws, or that it complied with them. (2) The national church’s bylaws were not in existence until at least 1963-some five years after the date of the first deed of property to the local church. The court concluded that “on this basis, the bylaws clearly would not be applicable” to the 1958 deed. (3) The national church itself did not exist as a corporate entity until 1961, and therefore “it could not have had an ownership interest in any property purchased by the … congregation in 1959.” (4) The national church’s bylaws required that all deeds be sent to and held in its general offices, and that all affiliated churches submit a semi-annual report setting forth all property, mortgages, and loans. The congregation did not send its deeds to the general office, nor did it submit the semi-annual reports.

The court concluded that a review of the national church’s bylaw provisions, viewed under neutral principles, clearly demonstrated that the local congregation, if even aware of the bylaws, did not adopt or abide by them. Therefore, “the local congregation did not, on the basis of the bylaws, evince an intent to purchase or hold the contested realty in trust” for the national church.

Deeds

The court then applied the neutral principles of law approach to the deeds to the church’s property. The first deed transferred title to some of the church’s property to the “Church of God Pentecostal General Assembly.” The national church insisted that the title “general assembly” designated the national church. The local church insisted that it did not. The court conceded that the language in the deed was ambiguous, and then referred to “surrounding circumstances” to ascertain the intent of the parties. It concluded that the intent of the parties clearly was to vest title in the local congregation, based on the following facts: (1) the local church paid for the property without any assistance from the national church; and (2) the national church was not incorporated until 1961 and had no printed bylaws at the time of the purchase.

Application. The court placed great emphasis on the concept of resulting trust. Church leaders should have some familiarity with this concept, since it is recognized in most states. In essence, if one party pays the purchase price for property, but title vests in another party, then the law creates a resulting trust in favor of the first party. To illustrate, if a national or regional denominational agency pays all or a portion of the purchase price for a local church’s property, but title is vested in the name of the local church, then the local church holds title in trust for the benefit of the denominational agency. This means that the church cannot withdraw from the denomination and retain title to the property without the approval of the denomination. If the denominational agency paid only a portion of the purchase price, then it has a partial interest in the property. Church of God Pentecostal, Inc. v. Freewill Pentecostal Church of God, Inc., 716 So.2d 200 (Miss. 1998). [State Court Rulings Regarding Church Property Disputes]

© Copyright 1999 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m21 m39 c0399