Tennessee Church Loses Property Dispute Case

Church property will revert to denomination.

Church Law and Tax 1993-07-01 Recent Developments

Church Property

Key point: Churches that voluntarily join a religious denomination under which control over local church property is vested in the denomination ordinarily have no legal claim to their property if they vote to leave the denomination.

A Tennessee appeals court ruled that a denomination, and not a local church, was the legal owner of the church’s property following its disaffiliation from the denomination. The First Apostolic Church, an unincorporated church group, owned real property consisting of a church building and a parsonage in Springfield, Tennessee. In 1985, the pastor of the church began discussions with officials of the Assembly of the Emmanuel Churches of Christ (ECOC) about the possibility of affiliating with the ECOC. ECOC is a centralized church organization of approximately thirty-six churches. All congregations are subject to the governing authority of ECOC and all property is held for the benefit of the ECOC. In the fall of 1985, the sign in front of the church property was changed from “First Apostolic Church” to “Emmanuel Church of Christ.” In the early summer of 1986, the Springfield congregation was facing severe attendance problems along with financial difficulties. The pastor approached an ECOC bishop about the need to join ECOC and to have the congregation’s mortgage paid. Later that year the pastor led a congregational business meeting to discuss available options. According to the minutes of this meeting, the church trustees were authorized to deed the church and parsonage to ECOC. They did so shortly after the meeting. Prior to this conveyance, ECOC paid off the congregations’s mortgage indebtedness. Soon thereafter, the ECOC appointed a new pastor for the church. Within a year of joining ECOC, attendance greatly improved at the Springfield church. About one year later, ECOC sold the vacant parsonage for $28,000 and, after deducting expenses, ECOC invested the remainder of the money back into the Springfield church building. The new pastor began to disagree with the ECOC bylaws and shared his concern with the Springfield congregation. In 1988, the pastor formed a group called Christian Fellowship Ministries (CFM). Later that year a letter was sent to ECOC concerning the status of “the property.” An ECOC bishop sent a letter officially notifying the church that it had been “ex-communicated” from ECOC and that it was holding ECOC property illegally. After receiving this letter, the local church trustees filed a lawsuit asking the court to find the local church to be the legal owner of its property, and not the ECOC. They argued that the deed conveying the church property to the ECOC should be rescinded on the basis of fraud and “lack of consideration” since the ECOC had not adequately explained to the church members that they would lose their property if they voted to disaffiliate from the ECOC and the church received no benefit (“consideration”) for its conveyance of the property. A trial court agreed with the members, noting that “the idea that a religious body would transfer its religious property without recourse, is foreign to the religious principles of our state and nation …. There was never any intent nor was there a purpose to deliver the meeting hall of the religious body over to a fellow church group, without recourse.” The ECOC appealed this decision, and a state appeals court reversed the trial court’s judgment and ruled in favor of the ECOC. First, it found no evidence of fraud. Quite to the contrary, the court pointed out that the decision to transfer the church’s property to the ECOC was approved by the congregation during a business meeting. The church members voted on the transfer of the church property to the ECOC, and so it hardly could be said that they were not fully aware of the legal consequences of the affiliation with ECOC. Second, the court rejected the members’ claim that the deed conveying the church property to ECOC was not supported by adequate consideration. It is generally true that the party who transfers property to another (by deed) must receive something of value (“consideration”) in return. But the court insisted that the members did receive value for their conveyance. The deed itself recited that it was made “for and in consideration of the sum of ten dollars and other good and valuable consideration the receipt of which is hereby acknowledged.” Further, the ECOC paid off the church’s mortgage loan (that was past due), provided the church with a pastor under whose leadership the church grew from 8 to 60 members. And, when the congregation was meeting to decide whether or not to join the ECOC its pastor noted that one important benefit of such an affiliation would be the ability to “protect the church from the encroaches of false teachings and false doctrine of independent preachers.” The court concluded that “sufficient and adequate consideration existed for the transfer of the property.” Fry v. Emmanuel Churches of Christ, Inc., 839 S.W.2d 406 (Tenn. App. 1992).

See Also: Deeds

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