Category: church splits

AUTHORITY OVER CHURCH PROPERTY – Who Has It?

Determining the ownership of church property requires in denominational churches more than a copy of the deed.  Likewise, determining who has authorization to act upon behalf of the property owner, to transfer or encumber the ownership interest, may require inquiry into governing documents from a denomination and the local church.  This is especially true when the attempted transfer of ownership arises from a dissident faction

In Romanian Orthodox Episcopate v Estate of Carstea, Slip Op. (Mich. App. 2022), the trial court determined that application of Neutral Principles of Law, enforcing the denominational governance documents, required quieting title in the denomination.  The appellate court affirmed the decision, but held Neutral Principles of Law did not apply because the dissident group, led by a disciplined and laicized former priest, did not have authority to transfer title to the new church corporation.  The denominational governing documents allegedly prohibited “defecting parishes from retaining church property.”  Therefore, even if the local church sought disaffiliation, the local church did not have right, title or interest in the church property with which to transfer the property to the new church corporation.

Generally, a local church in good standing in its denomination will have authority to transfer property or mortgage its property in usual and customary business transactions.  A written waiver by the denomination may also be required by a lender.  Even in usual and customary business transactions, the local church should confer with the denomination consistent with the governing documents.  Almost never, however, will a defecting congregation be able to keep its church property if the denominational governance documents prohibit it. 

THE NO BYLAWS PROVISION SCENARIO

We have repeatedly reported church governance cases that turned in favor of the church because the church had and followed its own governance documents, of which bylaws are usually a center piece.  Of course, implicit was the assumption the bylaws were complete in dictating the policies and procedures of church governance to be followed.  Not all bylaws are complete.

In Auguste v Hyacinthe, Slip Op. (FL App. – 2022) the trial court dismissed the case based on the Ecclesiastical Abstention Doctrine.  The Plaintiffs alleged the procedure used to reconfigure the board of directors violated state law and that there were no provisions in the bylaws that supported the procedure for ouster used.  The procedure allegedly used by the Defendant, after the founder died, was filing unauthorized annual reports with the Florida Department of State listing himself as director and pastor of the church and removing the plaintiffs as church officers.  The Plaintiffs alleged the filing arose from a meeting of a “small portion of the church membership,” held “secretly,” and a resolution ousting Plaintiffs adopted by a rump of the board.  The Defendants argued that no provision in the church bylaws provided for this removal procedure and that Neutral Principles of Law, such as the state statute governing non-profit corporations, required other procedures.  The appellate court reversed the dismissal for determinations whether bylaws procedures were in existence or followed. Church founders should have carefully crafted governance documents in place to securely transfer positions and authority to the appropriate successors.  Church bylaws, like any other corporate non-profit, should have governance documents drafted or at least edited by a lawyer.  Governance documents should clearly specify the procedures for hiring or appointing and terminating church employees, including senior pastors, and other church officers.  What is not needed in the first generation of leadership will undoubtedly be essential in every other.

CHURCH COPYRIGHTS AND TRADEMARKS

Most of churches have done very little to copyright or trademark their marketing (aka evangelism) symbols.  During the pandemic of 2020, with the rise of fully on-line services, copyright and trademarking of a church or pastor’s online persona might have been expected.  Few seem to have done so.  To do either correctly requires engagement of a qualified attorney.  Most church materials are not strictly of commercial value.  Such materials have a short “shelf life” and are easily duplicated in forms that do not violate copyrights or trademarks.  By the time most churches consider copyrights or trademarks, it is too late for a host of reasons to obtain an enforceable right, usually because the church has spread its materials far and wide without protection and tolerated even close “copycats” much less remotely similar ones.

In Aquarian Foundation v Lowndes, Findings of Fact and Conclusions of Law, Slip Op. (WD Wash. 2022), the federal trial court in a bench trial concluded the claim of the church to protect its copyright and trademark was not enforceable against the Defendant.  The church founder copyrighted his own material and owned the copyright.  The copyright was of his teaching materials and was transferred in his Will to the church.  Many years before his death, the founder gave a written license for use of the materials to the Defendant.  The church revoked the license long after the Defendant posted the materials online and used the trademarked name for many years.  In order to revoke the license, the church had to give two years notice but attempted to make the revocation immediate.  At trial the church could not prove loss of revenue from the alleged infringements.  At trial the church tried to present testimony of a handwriting expert to prove the license given to Defendant was a forgery.  However, the methodology used by the expert, use of exemplars that could not be proven to be authentic, was rejected by the Court.

Copyrighting and trademarking intellectual property is not easily done.  Infringement enforcement may take years and may be subject to setoffs and adjustments.  See e.g., Bright Tunes Music Corp. v Harrisongs Music, Ltd., 420 F. Supp. 177 (S.D.N.Y.1976) (“My Sweet Lord,” George Harrison, former Beatle); ABKCO Music, Inc. v Harrisongs Music, 508 F. Supp. 798 (SDNY 1981) (“$587,000” after adjustments).  Church intellectual property has a very limited shelf life and is easily replicated without obvious duplication.  Much church intellectual property is fair game for “fair use.”  17 USC §107.

NON-PROFIT CORPORATION STATUTES

One of the sources of Neutral Principles of Law which can be applied to resolve church disputes that spill into the street, including church governance disputes, is the state statute governing non-profit corporations in the state in which the church corporation was formed.  Typically, the statute comes into a church governance dispute when the church organizational documents do not resolve a governance issue.  Because most churches using common sense incorporate and do so with modern organizational documents periodically updated, such statutes do not often decide governance issues.

In Church in Bloomfield v Park, Slip Op. (Mich. App. 2022), the church was incorporated for many years.  But, after incorporating, the church never adopted any bylaws.  The Articles of Incorporation did not specify the means by which officers were elected or the terms to which they were elected.  For a period of time, the church allegedly did not hold a properly noticed annual meeting or an election of officers.  The church bought a residence property and sought to have the property rezoned so that worship services could be held in the residence.  The rezoning was not successful so the church, or some faction, sought to sell he property.  Another faction allegedly resisted.  A faction sought a court order compelling a properly noticed annual meeting as required by the state non-profit corporations statute.  The trial court compelled the meeting because the church organizational documents did not specify any method of electing officers.  The appellate court affirmed.  The appellate court held that the enforcement of the non-profit corporations statute upon church governance not otherwise specified in the church organizational documents was not an ecclesiastic matter.  The Ecclesiastical Abstention Doctrine did not deprive the court of jurisdiction or limit the court’s ability to order compliance with the state corporations statute.

The church did not have to incorporate, even though for many reasons that is a good practice.  Once the church incorporated, it was free to adopt governance documents like bylaws and set its own procedures.  Once the church incorporated, it became subject to state corporation statutes that apply in the vacuum of organizational governance documents.  Churches that fail to complete effective organizational governance documents and then maintain them over time are subject to chaos, disorder and usurpation.  Oh, yes, and legal fees.