BYLAWS AMENDMENTS AS ESCAPE HATCHES

The local church existed for 163 years and had been voluntarily affiliated with five different denominational groups.  Thus, this was not the situation often seen in which the local church was actually founded by the denomination.   The local church decided to disaffiliate due to theological issues from the fifth but the denominational document imposed a property trust on the local church.  The disaffiliation process led to a final break and the denomination sought foreclosure on the local church property pursuant to the property trust.  However, a couple of years before commencement of the disaffiliation process, the local church amended its corporate bylaws and removed the property trust.  Thus, in the foreclosure action, the local church submitted a defense based on the bylaws that contained no property trust clause.  It worked.

In Presbytery of the Twin Cities Area v Eden Prairie Presbyterian Church, Inc., Slip Op. (unpublished) (Minn. App. 2017), the summary judgment for the local church was affirmed.  The court noted that the denominational document only recently had been amended to claim that property “is a tool for the accomplishment of the mission” and based on that language the denomination claimed the property dispute was ecclesiastical and had to be resolved by the denomination.  However, while the denominational document prohibited revocation of the property trust clause by the local church, it did not preclude bylaws amendments by the local church.  Therefore, because the trust language was erased from the local church bylaws by an amendment that was not prohibited, it was valid.

The court held there was no proof that the hierarchical “ruling” of the denomination in support of the property trust was inviolate because it did not appear to be a matter of “polity or faith.”  There was no proof it was a matter of “polity or faith” because the local church was not prohibited by the denominational document from amending its bylaws.  Thus, without an ecclesiastical issue the neutral principles doctrine looked at the applicable church bylaws, found no remaining property trust after the amendment of the bylaws, and entered judgment for the local church.

The court also rejected “this notion” that property was a “temporal tool for the accomplishment of the mission of Jesus Christ in the temporal world” that would always be an ecclesiastical issue.  Even if it was true, the local church had been paying for its property for a century before it joined the fifth denomination and the denomination could not claim it was acting as trustee for the contributions of denominational members except in the last third of the local church’s existence.

For local churches considering severing denominational ties, the lesson is that the foundational documents of the local church may still be lawfully amended in some instances. A denominational property trust might be neutralized.  For denominations, the lesson is to limit unapproved local church bylaws amendments.  Another technique is to make sure the title documents reflect the property trust.  However, a notation on title documents might impair credit worthiness for future refinancing or under an existing mortgage may not be possible.

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