BOARDS AND TITLES

Church boards are called by a plethora of names and titles.  Some of the names and titles are derived from scripture, some from state statutes, and some from old traditions no longer followed.  Generally, churches do not call their board a “board of directors,” partly because of the history of church corporation statutes in some states, and sometimes to avoid business or commercial trappings.  Regardless of the name or title, church boards derive their authority from foundational documents.  Usually local church corporate bylaws at the least define the power and authority of the board(s) but denominational foundational documents can also limit a local church board’s reach or require prerequisites to the exercise of authority.

Usually, a single board member can do little or nothing.  In the past, a small church by statute might have only a single trustee (or whatever name or title is given) authorized to transact the church business.  But, in the more modern era corporate church bylaws usually require three trustees or more to transact business.

In Burns v Kingdom Impact Global Ministries, Inc., Slip Op. (NC App. 2017), one faction tried to withdraw the church from the denomination and then ousted the faction that tried to stay with the denomination.  The faction leading the withdrawal charge tried to merge a new corporation with the existing church corporation and “merge it out of existence.”  A trustee of the “merged” corporation was called upon to transfer real estate titles from the original church corporation to the “merged” surviving church corporation.  Some, and maybe all, of the board members of the original church corporation, and members of the ousted faction, sued the “merged” surviving corporation and alleged the sole trustee that signed the “merger” documents and the transfers of property titles did not have sufficient authority to do so.  The trial court and the appellate court agreed.

The corporate “merger” may have been an attempt to strip the denominational exclusivity language from the bylaws and to achieve withdrawal from the denomination.  The effort failed because the records of the congregational votes taken to authorize these actions seemed dubious to the court.  Also, the trustees that had authority to transact the church’s business did not authorize the transactions and the sole trustee that acted did not have sufficient authority to act alone.  One of the properties sought to be transferred contained a restrictive title covenant that the “merged” corporation could not meet because it was never affiliated with the denomination.  In any event, this was nearly an ignominious end for a seventy year old church.

One other lesson seems to be that churches should probably update their property titles and bylaws periodically, probably every decade, and employ competent counsel to assist.  Another would be that concentration of authority may be needed in a new church work but should be wielded by a church board acting as a collegium as soon as the church is mature enough to own real property.

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