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  Because the church had not withdrawn from the denomination, and the denomination had not declared the church withdrawn (or excommunicated) prior to the dispute, the courts determined the dispute was internal and further court intervention was barred by the ecclesiastical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.

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.