Category: Church Governance

CHURCH ASSOCIATIONS – THE 19TH CENTURY IS OVER

Most denominations, their subdivisions and local churches, generally prove their existence and right to own property by incorporating.  However, while this may be the best practice, it is not the only way.  Indeed, prior to the era of incorporation, most churches were associations of members and most denominations were associations of churches.  While most now have governing documents and corporate documents filed with a regulatory authority, for purposes of real estate ownership if nothing else, that was not always the case even during the latter stages of the Twentieth Century.  One of the reasons the organizational structure of the “association” fell into disuse was because of the need to obtain clear title to own real estate and bank accounts.

In Embassy University v Institute in Basic Life Principles, Inc., 2020 IL App (2d) 191140-U (2020), the trial court dismissed the case because the defendant alleged the Plaintiffs could not prove they were an association, and, indeed, could not prove up their own existence in order to be a party to a lawsuit.  The Plaintiffs were claiming they were part of an association of churches or parachurch organizations and that the defendant owed them a fiduciary duty in the disposition of denominational assets.  Further, to prove the point, the defendants noted that the Plaintiff university’s name was a “DBA” and not the name of the underlying entity.  The appellate court reversed so that through discovery, and if necessary trial, the Plaintiffs could prove they were an association with the defendant imposing on the defendant a fiduciary duty as to denominational assets.

The lesson of history has been that associations have a harder time proving their existence, their governance, who can speak for them, and who can own their property.  The Plaintiffs in the reported case might have an easier time than some because their founder, William Gothard, Ph.D, is still living, well known, even though he had to depart from leadership for a time, and can testify as to the formation of most of the entities.  The Plaintiffs should have incorporated.  It is still the cheapest and tried and true method of becoming an entity that can own property and accounts.

SOVEREIGN CHURCHES

While in recent months, especially in Oklahoma, there has been considerable angst regarding the scope of the sovereignty of tribal governments, virtually the same type of issue arises with regard to denominational authority.  Indeed, some denominations resolve certain disputes by convening a court.  It may be called an “Ecclesiastical Council” rather than called a court, or by some other name, but nonetheless it is a court.

In Church of God in Christ, Inc. v L.M. Haley Ministries, Inc., Slip Op. (Tenn. App. 2020), the appellate court affirmed summary judgment in favor of the denomination.  The local church’s long time pastor died.  He was succeeded for a couple of years by a “Jurisdictional Bishop” that appointed himself as pastor.  However, the successor died.  For a time, the position of “Jurisdictional Bishop” remained vacant and so, too, as a result did the pastorate of the local church.  Tiring of the circumstances, the local church in a congregational vote attempted to terminate its “jurisdiction” membership and transfer to another denominational jurisdiction.  However, the original denominational jurisdiction appointed a “Jurisdictional Bishop” and he in turned appointed himself pastor of the local church.  The faction of the local church that led the attempt to change denominational jurisdictional membership refused to relinquish control of the local church property or assets to the “Jurisdictional Bishop” appointed as pastor.  To resolve the dispute with the local church, the denomination convened an “Ecclesiastical Council” to decide the matter.  The council affirmed the appointment of the “Jurisdictional Bishop” as local church pastor and excommunicated the dissenting faction.  The local church led by the dissenters resisted and the lawsuit was filed to enforce the decision of the denomination.  The courts refused to review the “Ecclesiastical Council’s” decision, treated it as binding and worthy of deference, and granted judgment to the denomination.

The governing documents of the denomination and the local church made ecclesiastical inquiries unnecessary.  Once the denomination established its authority to select the pastor, its authority to hold the local church property in trust, and its authority to excommunicate the dissenters, the denominational decision was treated deferentially.  To avoid such an outcome, the local church should have obtained a documented “acceptance” from the denominational jurisdiction to which it tried to transfer by congregational vote.  Further, the acquiescence of the losing denominational jurisdiction should have been negotiated.  Both efforts would have been cheaper than litigation and more likely to be successful.

INTERNAL CHURCH DEFAMATION

Typically, as long as the dispute among church members about church matters stays within the congregation the words said will not be actionable defamation.  Courts are barred from considering doctrinal issues by the Ecclesiastical Abstention Doctrine inspired by the First Amendment.  Thus, in order to avoid doctrinal issues lurking in ill chosen words among church members, courts refuse to hear internal defamation claims.  After all, while accusing someone of “lying” might be defamatory, it might be doctrinal if the claim is that they are lying about Scriptures in order to mislead the flock.

In Lippard v Holleman, Slip Op. (NC App 2020), the North Carolina Court of Appeals had to render the first decision in that state about whether statements made between members in a church regarding a church dispute were actionable defamation.  The church pianist and the Minister of Music began a dispute over assignment of church service solos that escalated into an intractable conflict.  Several, if not numerous, sessions to achieve “reconciliation” were attempted to no avail.  Finally, the Senior Pastor recommended termination to the Board of Deacons.  Eventually, the Board of Deacons recommended termination to the Personnel Committee.  Eventually, the Personnel Committee recommended termination to the congregation.  However, the congregational vote did not produce votes exceeding three-quarters of the voting membership in favor of termination.  As a result, the pianist remained employed and the dispute wore on until finally the pianist resigned and sued the pastor and music minister for defamation.

Defamation is almost impossible to win, truth is a defense, and wrongdoers rarely have the resources to respond in damages.  Nevertheless, oral statements and written statements should be temperate and truthful.  Oral and written statements should remain among the church membership.  If the constitution and bylaws of a church require a laborious termination procedure like that set forth in the case reported, they should be amended.  Laborious termination procedures will prolong an internal dispute to the detriment of everyone.  Fair and reasonable severance, even overly generous severance, is better than laborious termination processes.  Laborious termination procedures turn the process into a popularity contest based on a prolonged internal political campaign.

WHEN ONLY MONEY REMAINS

Denominational determinations that a church or parish is no longer viable usually start with a nearly empty church building the remaining membership of which, no matter how faithful, can no longer financially bear the burden of the corporeal existence of the church. Even without a mortgage, church buildings require maintenance, grounds must be maintained, and parking lot potholes must be filled.

In St. Cyrillus v Polish National Catholic Church, Slip Op. (unpublished) (NJ App. 2020) the local church building was destroyed by fire. All that was left of the church property was the land and the $1,000,000 paid out under the fire policy. The church building could not be rebuilt for $1 million but the local church had no fund-raising plan to accumulate the difference. The local church membership prior to the fire had dwindled. The denomination dissolved the local church and took control of the land and money. The trial court granted summary judgment to the denomination. The appellate court affirmed. The governance documents of the local church required the local church to obey hierarchical rulings as did the governance documents of the denomination.

The process by which a non-viable church is swept from existence is usually foreclosure by a lender. However, in those rare instances in which a church is no longer viable, and under denominational control, denominational decision making will likely be binding. For churches not under denominational control, winding up the affairs of the church, once the excruciating decision to do so has been made, an asset merger with a viable congregation is the most pain free method.