Corporate Usurpation and Trespass – the Keys to the Kingdom?

As churches have grown both in membership and accumulation of assets, both become the subject of considerable interest to those looking to benefit from them. It is easier to rocket up the numbers of members in a church by draining nearby churches. It is easier to build personal wealth or the wealth of a church formed from a split if the assets of another or predecessor church can simply be absorbed or liquidated. Thus, churches are targets. Because of their volunteer nature, non-denominational churches are especially at risk.

In International Society of Krishna v Britten, 2018 NY Slip Op 32787 (King County, NY 2018), the trial court stopped the $58,000,000 sale of church property by a faction of the church board. The organizational documents of the denomination required that board members could be removed by the denomination. The organizational documents also required denominational consent to sale of church property. The Court held that there was no ecclesiastical issue intertwined with the corporate law applicable through the organizational documents of the denomination. Thus, the faction of the local church board that sought sale of the church property was removable by the denomination and written consent of the sale from the denomination could be required.

Whether a local church board has gone rogue or is well intended does not matter to a Court if neutral organizational documents control or allow exertion of denominational control. Even a well intended church board that might in desperation resort to corporate usurpation will be unable to overcome organizational documents. However, non-denominational churches that get too comfortable in sloppy documentation of membership lists, church board governance minutes and reports or lack either will have only their organizational documents, if they can be identified, to fall back upon to fend off usurpation from within or without in expensive and avoidable litigation. Good stewardship includes these things as much as lawn care and coats of paint.

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