Tag: church property

CHURCH BUILDING REPAIR AS A SECULAR PURPOSE

Reported in a prior posting on this website was the United States Supreme Court opinion in Trinity Lutheran Church of Columbia, Inc. v Comer, 137 S. Ct. 2012 (2017).  In Comer, Missouri disallowed payment of a grant to a church to install a rubber surface on its otherwise concrete playground.  The Supreme Court held that the neutral purpose, safeguarding playing children, was not a violation of the Establishment Clause.  Indeed, the Supreme Court went on to point out that excluding an applicant just because the applicant was a religious organization was discriminatory.  That decision was relied upon in Taylor v Town of Cabot, 2017 VT 92.

In Taylor, the Supreme Court of Vermont tentatively upheld a municipal vote that approved an award of $10,000 of building repair and restoration funds for repair of an “historic church” building against the Vermont equivalent of an Establishment Clause challenge.  The decision was a reversal of a preliminary injunction issued by the trial court before Comer was issued.  Thus, the case was returned to the trial court for further proceedings which still could eventually result in a decision against the church and in favor of the tax protestors.

While the decision might seem to be favorable to the church, and the Town of Cabot may have been defending the case, at some point someone may decide this much litigation over $10,000 is simply too much and the church might return the money.  Indeed, the Vermont Supreme Court held that if the trial court on remand again decided the award violated the Vermont constitution the money might have to be repatriated by the church.  Churches that take governmental money of any kind run such a risk.  Historically important church buildings might not be economic to preserve.  Nevertheless, just because an applicant for governmental funds is a church by itself should not result in denial as long as the funds have a secular purpose not reasonably related to establishment of worship.

TOO MUCH ECCLESIASTICAL ABSTENTION? – 2nd Ed.

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.

ARCHEOLOGICAL CHURCH LAW

Sometimes a church has existed so long that not only has it outlived its institutional memory but may have existed long enough to cross from one legal era to another.  While such a church is so rare that it might be expected that any resulting legal problem might not be generally instructive, that is not true.  Indeed, church litigation often swirls around missing insurance policies, old sets of superseded church bylaws, or contracts that simply lapsed but no one recalled it so that it could be renewed or extended.

The case of First Congregational Church of Harwich v Eldredge, 2017 WL 3581629 (Mass. Land Court, 2017), the church was founded on a land title from 1743.  The separation of church and state in Massachusetts, according to the Court, did not occur until 1833.  The church cemetery had to be maintained by the Town of Harwich because of the Great Depression and a state statute authorized such private cemeteries to be preserved in that era of financial calamity.  The church by the 20th Century came to use one section of the cemetery and the Court held that the filed titles did not end the church’s ownership of that part of the cemetery and also held the church owned that portion of the cemetery, if for no other reason, by adverse possession.

The church was able to prove the alternative ownership theory of adverse possession through both publicly filed documents the document archives of itself and the Town.  For example, one letter from 1989 had been inscribed with identifiable handwritten notes of a telephone call that tended to establish the Town was on notice for adverse possession purposes of the church’s claim to that part of the cemetery.  In the age of the scanner, keeping hard copy is no longer essential if the digital version is reasonably well preserved against mishap.  A combination of local storage and cloud storage can assure document survival.  Most external portable hard drives will fit in safe deposit box if cloud storage is not deemed acceptable.  But, all document storage, hardcopy or digital, requires disciplined process implementation and training each successive generation of church office personnel.

HIERARCHIAL CHURCH TITLES AND TRADEMARKS

For some reason, some in the judicial branch have difficulty refraining from interfering in internal denominational matters when the local church or local diocese tries to escape from the parent organization with the local land holdings, too, rather than simply leaving and starting anew.  This seems odd given that these assets are generally amassed by local church members over a period of decades or even centuries that thought they were supporting their denominational church.  The new leadership or congregation in the local church may in recent times decide it can no longer as a matter of conscience support the parent church, but that does not automatically relieve them of the duties they may owe the denomination as to church assets accumulated by prior generations of members.

Episcopal Church litigation has focused the judicial microscope on denominational documents, land titles and ecclesiastical process as well as the hesitancy of some in the judicial branch to abstain as noted above.  In Protestant Episcopal Church, et al, v The Episcopal Church, ___ SE2d ___, 2017 WL 3274123 (SC 2017) it took four justices each writing separately to reverse the trial court (and there was a dissent).  The guiding finding was that the Defendant was the parent church in a hierarchical church and that the Plaintiffs were subordinate church entities.  Once this finding was made, the Ecclesiastical Abstention Doctrine required the Court to defer to the ecclesiastical decision-making by the parent church.  The Court concluded (quoting) “what happens to the relationship between a local congregation that is part of a hierarchical religious organization when members of the local congregation vote to disassociate is an ecclesiastical matter over which civil courts generally do not have a jurisdiction.”  Thus, the denominational requirement that the subordinate church entities held title to local church property in trust for the parent church was enforceable as were the federally registered trademarks.  Indeed, one of the concurring opinions suggested the Plaintiffs were “masquerading” as an authorized diocese in an effort to secure their land titles.  The autonomic reflex of the Court to switch to “neutral principles of law” regarding trust issues and property title issues was deemed inapplicable given the applicability of the Ecclesiastical Abstention Doctrine and the resulting deference to ecclesiastical due process imposed by the parent church.

The lesson for local churches is to be prepared to buy the property from the parent church or be prepared to leave it behind when disassociating and before announcing the disassociation.  With most local churches, the denominational parent will be unable or unwilling to keep the local church property and payoff remaining mortgages and maintenance costs and will negotiate a reasonable and affordable sale of the rights.  But, if the parent church decides to play “hardball,” the local church may be forced to relocate.

THE PRIESTHOOD OF THE LAW

Pastors, priests and professional ministers will sometimes bristle at the idea of “lay persons” infiltrating their profession and exercising their duties and functions.  It should come as no surprise that in secular courts, the church entity, typically a corporation or association, cannot be represented by the clergy but must be represented by a lawyer.  The “must” is not enforced by the lawyers, their advocacy for or against the law notwithstanding, but rather by the courts.

In Horowitz v Stewart Title, Order (D. Haw. 2017) the church leadership brought suit on behalf of the church corporation against a title company to enforce a real estate title insurance policy.  The case was dismissed because the church corporation was not represented by a lawyer.  The dismissal was “without prejudice” because the church corporation could engage counsel and refile the case (within certain time limits).  The church leadership had no claims in their individual capacities so their claims were dismissed.  The transfers of title and the attempts through foreclosure to obtain clear title were sufficiently convoluted that a more careful study of the court file would be required to accurately trace the motives and rights of the participants.  However, the allegation was that the real estate title in question was worth $6,000,000.  That would seem, if true, to have been enough to justify retention of competent legal counsel.

Nevertheless, the lesson to this point is that a church entity cannot represent itself in court and it cannot be represented by non-lawyer clergy or leadership.  That same rule applies to every corporate or alter ego entity and that is the law in every state or federal court.  The reason it probably should be the law, beyond my own bias in favor of full employment for lawyers, is that the entity may represent the assets and capital of a group of people, whether they be stockholders, stakeholders, donors or other participants and courts and governments want a licensed lawyer representing such group ownership so that accountability may be imposed when needed.

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.

COMPELLING GOVERNMENT INTEREST IS ALWAYS COMPELLING – ESPECIALLY WHEN IT IS ABOUT TRAFFIC

There is nothing more annoying than when a statute passed to remediate a wrong is simply defined out of existence by judicial fiat.  The Religious Land Use and Institutionalized Persons Act (“RLUIPA”), 42 U.S.C. § 2000cc et seq is such a statute.  The statute sets forth:

No government shall impose or implement a land use regulation in a manner that imposes a substantial burden on the religious exercise of a person, including a religious assembly or institution, unless the government demonstrates that the imposition of the burden . . . (A) is in furtherance of a compelling governmental interest; and (B) is the least restrictive means of furthering that compelling governmental interest.

One would think the word “compelling,” the word “and” and the word “least” are simple and clear.  But, not so in the United States Court of Appeals for the 6th Circuit.  In the 6th Circuit, in Livingston Christian Schools v Genoa Charter Township, Slip. Op. (6th Cir. 2017), it took 22 pages to sweep these three words out of the way.

In order to deny a church and a religious school a “special use permit” for the school, the governmental interests that were compelling were:  traffic, that the church, not the school because it was a separate entity leasing space from the church, had a “history of failing to comply with its previous special-use permits” by being “disruptive,” and “inconsistency with the single family residential zoning of the surrounding area.”  Compelling these reasons were not by any rational view.

The 6th Circuit has a history of religious organization hostility and proudly recited it in the opinion.  For example, the 6th Circuit held in 2007 that denying a building permit so a church could build a multi-purpose building including a gymnasium was a “mere inconvenience” and not a “substantial burden.”

In the Livingston Christian Schools opinion, the 6th Circuit held that the school had another piece of property available to it that was only 12.1 miles from the subject property.  In other words, parents would have to drive in the morning and in the afternoon 25 miles to cover the round trip during the high traffic times of the day in a suburban traffic setting.  (In Oklahoma City, where I am located, we only have rush thirty minutes but my friends on both coasts are envious.)  I rather suspect that if the traffic was as compelling a governmental interest as the 6th Circuit held it to be, then that mileage would have strangled the school in short order.  The court noted the school had 139 students before its move to the church property, might have had 190 afterwards, but with the uncertainty of location looming because of the permit denial, might have an uncertain future.  That was not, however, “substantial.”

The 6th Circuit was critical of the school for not providing financial records or enrollment records to prove the necessity of its move to the church property it wanted to lease.  Given the enrollment noted above, it is surprising the school had sufficient resources to litigate at all, much less appeal.