Tag: church bylaws

UNINCORPORATED ASSOCIATIONS AND CHURCH CORPORATIONS

In the beginning, all churches were unincorporated associations.  The demands of modern accounting and property ownership, including liability risk management, pressed the unincorporated association to incorporate.  However, in order to successfully incorporate, the unincorporated association has to follow steps outlined in the law of the state of residence.  Even done amicably, such a transition can be challenging to volunteer led churches and pastors that do not also happen to be lawyers.  In the middle of a church split, the transaction cannot be completed in most states.

An example of this is Church of the First Born of Tennessee, Inc. v Slagle, Slip Op. (Tenn. App. 2017).  Church of the First Born outlived two generations of founders and desperately needed a new organizational structure that would ensure smooth leadership transitions going forward.  This was especially true after the church grew into a multi-campus church and established a church school sited on what probably was millions of dollars of real estate.

Before such an amicable restructuring took place, a church split arose.  The Court was unsure whether the split arose due to the financial pressures of supporting the church school or whether it was a doctrinal issue that arose because after the founders passed away, new leadership did not command the unanimity that the founders earned but surrendered upon their passing.  While the dispute roared around those issues, indeed, those issues were not terribly critical to the resolution.

The Plaintiff was a newly minted church corporation that tried to step into ownership of some of the church assets on behalf of one side of the split.  But, because asset ownership transfers are impossible unless all of the members of the unincorporated association have notice and vote to approve the transaction, the mere incorporation by one group in the split did not have the effect of transferring assets.  The Plaintiff was, therefore, without standing to bring any claim at all and the case was dismissed.

Church leaders have a duty to recognize their own mortality and plan for leadership succession in a fair process.  While many church leaders bristle at the idea of church bylaws or other written policies adopted as the governing rule of the church by a vote of the members, every church that does not have them and does not periodically review and update them increases the risk that a rift in the membership will shatter the peace of the church or in fact doom the church.  A church that can own millions of dollars of property should be able to hire a competent lawyer to lead the church to adopt bylaws or written rules.  Incorporation is a low cost and relatively well understood first step and makes asset management much easier.

FIRING THE PIANO PLAYER

It is hard to imagine a church that has a constitution and bylaws so primitive that they still require that termination of any and every church employee be the subject of a public congregational meeting and vote.  Not only would feelings run high in such a meeting, what might be said might make it impossible to salvage the church leadership or other employees.  While the senior most pastor employed by the church might need to be subjected to a congregational meeting and vote in some traditions and denominations, it is hard to imagine a valid purpose for subjecting subordinate ministry staff, support or clerical staff to such a chaotic process.

Nevertheless, in Lippard v Holleman, Slip Op. (NC App. 2017)(unpublished), the piano player with 34 years of tenure was presented for termination to the congregation for a vote.  But, after what is described as a full court press by the senior pastor, the congregation voted to retain the plaintiff.  Both leading up to this meeting and in the events afterward, the piano player alleged she and her husband, a deacon, were defamed by the senior pastor and music minister.  The case was procedurally tortured by the withdrawal of the piano player’s first lawyer, assignment to multiple judges, and the new lawyer filing an entirely new lawsuit.

The defendants alleged the Ecclesiastical Abstention Doctrine deprived the court of jurisdiction.  Of course, the problem was the justification put forward by the senior pastor for termination did not stay private, did not stay in the congregational meeting, and was alleged to have been untrue.  The appellate court reversed the trial court dismissal and sent the case back to the trial court to be heard as a defamation case.

One lesson is that the church should have had modern bylaws making employment issues private and the exclusive domain of the church board or the senior pastor.  (The choice between these two is usually made based on the tradition of the denomination or the church as to the authority to accord to each but in this discussion it will be assumed the selection of the church board, whatever it might be called, is the preference.)  Modern bylaws would have required the piano player’s husband to be excused from a board meeting about the employment of his wife.  The likelihood a pastor could survive in a congregation that would not support his recommendation to replace a staff member or clerical person, including a piano player, seems low.

Another lesson for pastors and church board members is that employment issues should be treated as confidential, especially in “at will” jurisdictions.  Indeed, one might argue the “civil procedure” set forth in Matthew 18:15 starts in private in its first stage, and only in the escalated stage does it go to the congregation or the public, and then only on disciplinary matters.  Employment, which is a financial relationship, should rarely, if ever, be treated as a disciplinary matter unless there is simply no choice.  Otherwise, spilling out into the street and the civil secular courts is more likely.