In late 2016, and summarized in a post here March 11, 2017, in the case of Church of God in Christ, Inc. v L.M. Haley Ministries, Inc., Slip. Op. (Tenn. App. 2016), the Plaintiff was attempting to assert hierarchal control over church property of one of its daughter churches when the local church leadership “went rogue.”  The founding Pastor of the church died and the presiding bishop installed a “speaker – rotation” system to prevent “dissension among those vying” to become the new Pastor.  But, two years later the presiding bishop died and a new presiding bishop was appointed.  The new bishop had the authority to appoint a new Pastor and appointed himself to be Pastor.  But, when the new bishop in the role as the new Pastor tried to assume control of the church assets he was blocked by local church leaders.  The opinion does not explain the motive.  Because the church had not withdrawn from the denomination, and the denomination had not declared the church withdrawn (or excommunicated) prior to the dispute, the courts determined the dispute was internal and further court intervention was barred by the ecclesiastical abstention doctrine.  The court would not declare the denomination’s rights to the assets of the affiliated church and the court would not confirm the new bishop as the new Pastor pursuant to the denomination’s governing documents.

On September 21, 2017, the Supreme Court of Tennessee opinion was issued reversing the intermediate appellate court and trial court, holding that the ecclesiastical abstention doctrine did not foreclose application of neutral principles of law.  The Plaintiff denomination, pursuant to its control documents which were adopted by the local church prior to the dispute, was awarded control of the assets of the daughter church including its real property.  It was interesting to note that the Supreme Court of Tennessee was careful to explain that the result would be the same if either the deed or the hierarchical control documents contained reversionary clauses, but that both were not required.

The better practice is for hierarchical churches to maintain reversionary clauses in both the denominational control documents and the local church deed.  But, in some if not by now most states, failure to put the language in the deed does not impair denominational enforcement of the reversionary clause.  Also, strategic (or fraudulent) related party transfers of the deed that attempt to strip the reversionary clauses of their impact are ineffectual.

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