Tag: Corporation Statutes

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.