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The Ownership of Church Property: Denominational Trust Clauses and Civil Litigation

Written by Daniel P. Dalton on June 5, 2014 Category: Business Law & Transactions

Within the past decade, there has been a surge of litigation concerning the ownership of property as it relates to a local church. Local congregations are faced with the unfortunate choice of leaving a denomination and dispensing with the real and personal property that is typically held in trust by the denomination. A body of case law has developed concerning this issue, and a recent Michigan Court of Appeals decision captioned, Chabad-Lubavitch of Michigan, et.al., v. Dr. Dov Schuchman et. al. Michigan Court of Appeals Case No. 312037 (Decided May 22, 2014) has addressed the issue within the context of the state court intervention of a religious property dispute

By way of background, the First Amendment provides that “Congress shall make no law respecting an establishment of religion, nor prohibiting the free exercise thereof….” When applying the Establishment Clause of the First Amendment to religious property questions, the Supreme Court has held that the resolution of church issues that would cause excessive entanglements with religious beliefs preclude civil court intervention. Watson v Jones, 80 US (13 Wall) 679; 20 L Ed 666 (1871) For example, inquiring into the adequacy of the religious reasoning behind the dismissal of a spiritual leader is not a proper task for a civil court. Hosanna Tabor Evangelical Church v. EEOC, U.S. S. Ct, decision, January 12, 2012. In determining whether it may exercise jurisdiction over dispute allegedly implicating the Establishment Clause, a court must determine whether the dispute is an ecclesiastical one about discipline, faith, internal organization or ecclesiastical rule, custom, polity, or law or whether the case is one in which courts should hold a religious organization liable for purely secular disputes between third parties and a particular defendant, albeit a religiously affiliated organization. Bennison v Sharp, 121 Mich App 705, 712; 329 NW2d 466 (1982).

One approach that was used to resolve questions of church property use and ownership, and has since been deemed unconstitutional, is the “implied trust/departure from doctrine” method. Utilizing this method, disputes concerning the ownership or use of church property between a denomination and a congregation, or between factions within a congregation, were resolved by awarding the property to the party deemed by the court to most closely adhere to the founding religious doctrines. This approach was held to violate the establishment clause of the First Amendment to the U.S. Constitution. Presbyterian Church v. Mary Elizabeth Blue Hull Memorial Church, 393 U.S. 440 (1969).

The remaining methods used to resolve property disputes are referred to as “hierarchical/deference” and “neutral-principles of law.” The U.S. Supreme Court, for purposes of legal analysis of these issues, has adopted a two-fold classification of churches – “congregational churches” and “hierarchical churches.” The Court has held that either method of resolving church property disputes is constitutional. However, whichever method is used, the U.S. Supreme Court has clearly stated that there can be no consideration by the states’ courts of doctrinal matters, whether they be the ritual and liturgy of worship, the tenets of faith or church polity. If interpretation of the instruments of ownership would require the civil court to resolve a religious controversy, the court must defer to the resolution of the doctrinal issue by the authoritative ecclesiastical body.

Of particular note is that the Supreme Court held that, in the absence of express trust language in a deed or charter, the “hierarchical theory” could be applied to resolve church property disputes. (Emphasis supplied.) In other words, the court would defer to the decision of the ecclesiastical court(s). Watson v. Jones, 13 Wall 679, 20 L.Ed 666 (1872). In Jones v. Wolf, 443 U.S. 595 (1979), the Supreme Court elaborated on the meaning of the “neutral principles of law” method, articulated several benefits of using that method, and encouraged its adoption by the states. Also in Jones v. Wolf, the U.S. Supreme Court stated that when the constitution of the general church has an express trust in favor of the denominational church, the civil courts will be bound to give effect to the express trust as the result indicated by the parties. Id. at 606.

Recently, the Michigan Court of Appeals looked at the issue of property ownership in Chabad-Lubavitch of Michigan, et.al., v. Dr. Dov Schuchman et. al. Michigan Court of Appeals Case No. 312037 (Decided May 22, 2014). The Court explained that the approach to a civil court’s resolution of a dispute over church property turns on which of three “general headings” apply. Bennison, 121 Mich App at 713.

The first class is “where property is purchased for the use of a religious congregation, ‘so long as any existing religious congregation can be ascertained to be that congregation or its regular and legitimate successor, it is entitled to the use of the property.’ ” Id. at 714.

The second class is where property is held by a congregation that, by nature of its organization, is “strictly independent of other ecclesiastical associations,” and “owes no fealty or obligation to any higher authority.” Id. If the second class is applicable, the dispute is governed “by the ordinary principles which govern voluntary associations.” Id.

The third class involves a situation where the property is held by “a religious congregation or ecclesiastical body which ‘is but a subordinate member of some general church organization in which there are superior ecclesiastical tribunals with a general and ultimate power of control more or less complete in some supreme judicatory over the whole membership of that general organization.’ ” Id.

This third class describes hierarchical denominations. Lamont Community Church v Lamont Christian Reformed Church, 285 Mich App 602, 615-616; 777 NW2d 15 (2009). “The determination of whether a denomination is hierarchical is a factual question.” Id. at 615. If a religious denomination is hierarchical, the “ecclesiastical abstention doctrine” applies. Id. at 616, Smith v Calvary Christian Church, 462 Mich 679, 684; 614 NW2d 590 (2000). Under this doctrine, “civil courts may not determine the correctness of an interpretation of canonical text or some decision relating to government of the religious polity.” Smith, 462 Mich at 684. “Religious doctrine refers to ritual, liturgy or worship and tenets of the faith. Polity refers to organization and form of government of the church.” Maciejewski v Breitenbeck, 162 Mich App 410, 414; 413 NW2d 65 (1987) Instead, courts must “defer to the resolution of those issues ‘by the highest court of a hierarchical church organization.’” Lamont Community Church, 285 Mich App at 616.

Thus, when a denomination is hierarchical, Michigan courts will apply the ecclesiastical abstention doctrine, and will not use neutral principles of law to resolve the dispute. Lamont Community Church, 285 Mich App at 624-625. A religious organization is part of a hierarchy when it “is but a subordinate part of a general church in which there are superior ecclesiastical tribunals with a more or less complete power of control.” Bennison, 121 Mich App at 720. In Lamont Community Church, 285 Mich App at 618, the Court explained further that a denomination is organized in a hierarchical structure when it has a “central body which has regularly acted within its powers,” in contrast to denominations that are organized in the “congregational structure,” that have “all governing power and property ownership remaining in the individual churches.”

The professionals at Dalton & Tomich PLC are currently engaged by local congregations seeking to leave their denominations throughout the United States. Please feel free to contact us to discuss your case.

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