Crocker v. Stevens

• Decision Date: 26 August 1993
• Docket Number: Nos. A93A0740,s. A93A0740
• Parties: CROCKER et al. v. STEVENS et al. BIRD & ASSOCIATES v. STEVENS et al. to A93A0742.
• Court: Georgia Court of Appeals

Page 690

435 S.E.2d 690

210 Ga.App. 231

CROCKER et al. v. STEVENS et al.

BIRD & ASSOCIATES v. STEVENS et al.

Nos. A93A0740 to A93A0742.

Court of Appeals of Georgia.

Aug. 26, 1993.

Reconsideration Denied Sept. 13, 1993.

Certiorari Denied Dec. 3, 1993.

Bird & Associates, Wendell R. Bird, David J. Myers, Atlanta, for appellants.

Strauss & Walker, John T. Strauss, Covington, Lance & Associates, Forrest J. Lance, Conyers, for appellees.

BLACKBURN, Judge.

These companion appeals arose from a petition to dissolve the Conyers Community Church, which was a nonprofit corporation, and to dispose of the church's assets. The church was organized in 1976, and its membership, at its greatest, numbered 70 to 80. By late 1989, the membership had dwindled to approximately 23, and the church's board of trustees (which included Kenneth Crocker (the church's pastor), his son-in-law, and a third individual) decided to sell the church realty to a commercial buyer for $725,000.

From those proceeds, the church satisfied a first mortgage on the property of $164,070, a second mortgage of $156,616 owed to the pastor, and the closing costs of $75,418 ($29,000 of which was paid to the pastor, who also was a real estate broker and served as co-broker in the sale.) The last church meeting took place on February 18, 1990, at which time the majority of members present approved as retirement benefits for the pastor: a lump sum gift of $100,000, and conveyance of the parsonage (after payment of the $34,038 encumbrance on it). According to Crocker and the church, church operating costs from the closing date until the last congregation, totalling $22,558, were also paid from the proceeds. The remainder of the sale proceeds was to be used to carry on the church's purpose through radio, tape, newsletter, and missionary ministry, with the pastor having control of those funds.

Subsequently, some of the church members commenced this action against Crocker and the church itself, seeking dissolution of the corporation, appointment of a receiver, an injunction against the defendants' disposing of the corporate assets, and proper disposition of those assets. The trial court appointed a receiver over some of the assets in question, and enjoined Crocker from disposing of the assets in his control. Crocker eventually asserted a counterclaim against one of the plaintiffs, Ray Stevens, for comparing him to Jim Bakker in a newspaper article.

Crocker and the church corporation moved for summary judgment, which was denied by the trial court, and then sought an interlocutory appeal with the Georgia Supreme Court. The Supreme Court, however, denied the application. The matter proceeded to trial, and resulted in a jury verdict, wherein the plaintiffs were awarded $56,616.37 of the $156,616.37 second mortgage held by Crocker; the plaintiffs were awarded the $29,000 real estate commission claimed by Crocker; Crocker was awarded the parsonage and the $100,000 retirement gift; the plaintiffs were awarded the remaining church funds totalling $207,801.63, the church's personal property, and all the interest that had accrued on the church's funds while in the control of the receiver; and the plaintiffs were awarded $30,000 attorney fees and expenses of litigation against Crocker. The trial court directed a verdict against Crocker on his counterclaim for defamation, and denied the defendants' claim for attorney fees to be paid from the church funds.

Subsequent to the trial, the court denied the defendants' motion for judgment n.o.v. and motion for new trial. It also dismissed Crocker's notice of appeal from the directed verdict in his counterclaim, because he had not filed a transcript timely. In Case No. A93A0740, Crocker appeals the trial court's direction of a verdict on the counterclaim in favor of Stevens. Case No. A93A0741 concerns the judgment entered on the jury's verdict and the dismissal of Crocker's notice of appeal on the counterclaim. Case No. A93A0742 involves the denial of attorney fees and litigation expenses incurred by the defendants.

1. Initially, we must address the issue of this court's jurisdiction to consider these appeals. OCGA § 14-3-219 provides that superior courts have jurisdiction over the dissolution of corporations and the liquidation of the corporate assets and affairs, and the trial court specifically instructed the jury on this Code section. In Claire v. Rue de Paris, 239 Ga. 191, 193, 236 S.E.2d 272 (1977), wherein a shareholder filed a petition for dissolution of a corporation and an injunction to prevent the corporate officers from disposing of corporate assets, the Supreme Court quoted the above Code section and noted that the plaintiff's complaint under that section "seeks equitable relief." In Gervin v. Reddick, 246 Ga. 56, 268 S.E.2d 657 (1980), involving an action by a majority of church members against the Board of Deacons and the church's pastor to enjoin depletion of church assets, the Supreme Court also held that courts of equity have jurisdiction over church disputes where property rights are involved. Further, a petition for dissolution of a corporation, injunction, and disposition of corporate assets may be likened to a complaint seeking dissolution of a partnership, injunction, and accounting, which has been held to be an equity action. Williams v. Tritt, 262 Ga. 173, 415 S.E.2d 285 (1992); Bettis v. Leavitt, 236 Ga. 213, 217, 223 S.E.2d 88 (1976).

In view of the above authorities, along with the fact that the Supreme Court did not transfer the previously-filed interlocutory appeal to the Court of Appeals, this court transferred these appeals to the Supreme Court by order dated March 10, 1993. However, on April 16, 1993, the Supreme Court ordered that these cases be returned to this court, without specifying the basis for doing so.

2. Crocker and the church, however, contend that any civil court's exercise of jurisdiction over this church dispute is prohibited by the First Amendment to the United States Constitution. We disagree.

"[T]he First Amendment severely circumscribes the role that civil courts may play in resolving church property disputes. It is obvious, however, that not every civil court decision as to property claimed by a religious organization jeopardizes values protected by the First Amendment. Civil courts do not inhibit free exercise of religion merely by opening their doors to disputes involving church property." Presbyterian Church in the United States v. Mary Elizabeth Blue Hull Memorial Presbyterian Church, 393 U.S. 440, 449, 89 S.Ct. 601, 21 L.Ed.2d 658 (1969).

With regard to cases involving disputes over church property, the Georgia Supreme Court has previously distinguished between two types of church government, i.e., congregational and hierarchical. A congregational church is usually strictly independent of other ecclesiastical associations, while a hierarchical church is associated with other churches that share similar faith and doctrine and have a common ecclesiastical head. Crumbley v. Solomon, 243 Ga. 343, 254 S.E.2d 330 (1979). "If the church government is congregational, then a majority of its members control its decisions and local church property. If hierarchical, then we use 'neutral principles of law' to determine whether the local church or parent church has the right to control local property. Those 'neutral principles' are state statutes, corporate charters, relevant deeds, and the organizational constitutions of the denomination. [Cit.]" Id. See also, Jones v. Wolf, 244 Ga. 388, 260 S.E.2d 84 (1979).

The instant case represents a hybrid of the above two forms of church government. It is clear that the church government cannot be categorized as congregational; although it had some elements of that form of governance, the church was organized as a nonprofit corporation, with articles of incorporation and by-laws. However, the church also was unconnected to any other churches with a common ruling convocation, and thus was not hierarchical. Nevertheless, as with hierarchical churches, the property dispute here was capable of resolution by reference to neutral principles of law, i.e., the applicable statutory provisions of the Georgia Nonprofit Corporation Code, without infringing upon any First Amendment values. In this regard, the trial court adhered to neutral principles by referring the jury to the church's articles of incorporation and by-laws and instructing the jury on the state corporate law, part of which provides that "[i]f religious doctrine governing the affairs of a corporation is inconsistent with the provisions of this chapter on the same subject, the religious doctrine shall control to the extent required by the Constitution of the United States or the Constitution of this state or both." OCGA § 14-3-180. Contrary to the defendants' contention, it appears that the trial court ensured that First Amendment values were not jeopardized.

3. Crocker and the church contend that the plaintiffs lacked standing to bring this action because they did not represent a majority of the membership. In support of that contention, they rely upon OCGA § 14-5-43, which provides in part that "[t]he majority of those who adhere to its organization and doctrines represent a church," and Heath v. Butler, 213 Ga. 411, 412, 99 S.E.2d 131 (1957), in which the Supreme Court cited the predecessor of that statutory provision and held that "[a] minority of a church membership can not act for the church."

However, OCGA § 14-5-43 "properly is to be construed as being applicable only to churches having a congregational form of government." Jones v. Wolf, supra at 389, 260 S.E.2d 84. Inasmuch as the church government in this case cannot be categorized as congregational, as discussed above, OCGA § 14-5-43 and Heath v. Butler, supra, are inapposite.

"Courts are reluctant to interpose in questions affecting the management of the temporalities of a church; but, when property is...