Heritage Village Church and Missionary Fellowship, Inc. v. State

• Decision Date: 03 April 1979
• Docket Number: No. 7826SC769,7826SC769
• Citation: 253 S.E.2d 473,40 N.C.App. 429
• Parties: HERITAGE VILLAGE CHURCH AND MISSIONARY FELLOWSHIP, INC., Plaintiff, The Holy Spirit Association for the Unification of World Christianity, Intervening Plaintiff, v. The STATE of North Carolina, Rufus L. Edmisten, Attorney General of North Carolina, Sarah T. Morrow, Secretary of Human Resources of the State of North Carolina, and Peter S. Gilchrist, III, District Attorney for the 26th Prosecutorial District of North Carolina, Defendant-Appellants.
• Court: North Carolina Court of Appeals

Page 473

253 S.E.2d 473

40 N.C.App. 429

HERITAGE VILLAGE CHURCH AND MISSIONARY FELLOWSHIP, INC., Plaintiff The Holy Spirit Association for the Unification of World Christianity, Intervening Plaintiff, v. The STATE of North Carolina, Rufus L. Edmisten, Attorney General of North Carolina, Sarah T. Morrow, Secretary of Human Resources of the State of North Carolina, and Peter S Gilchrist, III, District Attorney for the 26th Prosecutorial District of North Carolina, Defendant-Appellants.

No. 7826SC769.

Court of Appeals of North Carolina.

April 3, 1979.

Wardlow, Knox, Knox, Robinson & Freeman by H. Edward Knox and John S. Freeman, Charlotte, for Heritage Village Church and Missionary Fellowship, Inc., plaintiff-appellee.

Melrod, Redman & Gartlan by Dorothy Sellers and Roberta Colton, Washington, D. C., Chambers, Stein, Ferguson & Becton by Jonathan Wallas and Louis L. Lesesne, Jr., Charlotte, for Holy Spirit Association for the Unification of World Christianity, intervening plaintiff-appellee.

ERWIN, Judge.

We note at the outset that plaintiffs' solicitation of funds is a religious activity protected by the First Amendment.

In Murdock v. Pennsylvania, 319 U.S. 105, 110-11, 63 S.Ct. 870, 873, 87 L.Ed. 1292, 1297, 146 A.L.R. 81 (1943), the United States Supreme Court, in striking down a license tax on the sale of religious tracts, stated:

"The alleged justification for the exaction of this license tax is the fact that the religious literature is distributed with a solicitation of funds. Thus it was stated in Jones v. Opelika, supra (316 U.S. (584) p. 597, 62 S.Ct. 1231, 86 L.Ed. (1691) 1702, 141 A.L.R. 514), that when a religious sect uses 'ordinary commercial methods of sales of articles to raise propaganda funds,' it is proper for the state to charge 'reasonable fees for the privilege of canvassing.' Situations will arise where it will be difficult to determine whether a particular activity is religious or purely commercial. The distinction at times is vital. As we stated only the other day in Jamison v. Texas, 318 U.S. 413, 417, 63 S.Ct. 669, 672, ante, 87 L.Ed. (869, 873). 'The state can prohibit the use of the streets for the distribution of purely commercial leaflets, even though such leaflets may have "a civic appeal, or a moral platitude" appended. Valentine v. Chrestensen, 316 U.S. 52, 55, 62 S.Ct. 920, 922, 86 L.Ed. 1262, 1265. They may not prohibit the distribution of handbills in the pursuit of a clearly religious activity merely because the handbills invite the purchase of books for the improved understanding of the religion or because the handbills seek in a lawful fashion to promote the raising of funds for religious purposes.' But the mere fact that the religious literature is 'sold' by itinerant preachers rather than 'donated' does not transform evangelism into a commercial enterprise. If it did, then the passing of the collection plate in church would make the church service a commercial project. The constitutional rights of those spreading their religious beliefs through the spoken and printed word are not to be guaged by standards governing retailers or wholesalers of books. . . . It should be remembered that the pamphlets of Thomas Paine were not distributed free of charge. It is plain that a religious organization needs funds to remain a going concern."

The Supreme Court recognized the need for a religious organization to raise funds in order to remain an ongoing concern. Even though an activity is religious, the State may regulate it if the regulation does not: (1) involve a religious test; (2) unreasonably burden or delay the religious activity, Cantwell v. Connecticut, 310 U.S. 296, 305, 60 S.Ct. 900, 904, 84 L.Ed. 1213, 1218, 128 A.L.R. 1352 (1940); or (3) discriminate against one because he is engaged in an activity for a religious purpose. Prince v. Massachusetts, 321 U.S. 158, 177-78, 64 S.Ct. 438, 445, 88 L.Ed. 645, 658-59, Reh. denied, 321 U.S. 804, 64 S.Ct. 784, 88 L.Ed. 1090 (1944), (Jackson, J., concurring in result, Roberts, J. and Frankfurter, J., concurring). It is with these principles in mind that we examine the Act before us.

G.S. 108-75.6 of the Solicitation of Charitable Funds Act requires charitable organizations which intend to solicit contributions within the State or have funds solicited in the State on their behalf to file an application for a license to solicit. See G.S. 108-75.6.

Under G.S. 108-75.18, the Secretary of the Department of Human Resources must revoke, suspend, or deny issuance of a license if he finds:

"(2) The applicant is or has engaged in a fraudulent transaction or enterprise.

(3) A solicitation would be a fraud upon the public.

(4) An unreasonable percentage of the contributions solicited, or to be solicited, is not applied, or will not be applied to a charitable purpose.

(5) The contributions solicited, or to be solicited, are not applied, or will not be applied to the purpose or purposes as represented in the license application.

(6) Solicitation and fund-raising expenses (including not only payments to professional solicitors, but also payments to professional fund-raising counsel, and internal fund-raising and solicitation salaries and expenses) during the year immediately preceding the date of application have exceeded, or for the specific year in which the application is submitted will exceed, thirty-five percent (35%) of the total moneys, pledges, or other property raised or received or to be raised or received by reason of any solicitation and/or fund-raising activities or campaigns."

G.S. 108-75.7(a) in pertinent part provides:

" § 108-75.7. Exemptions from licensing. (a) The following persons shall be exempt from the licensing provisions of this Part:

(1) A religious corporation, trust, or organization incorporated or established for religious purposes, or other religious organizations which serve religion by the preservation of religious rights and freedom from persecution or prejudice or by the fostering of religion, including the moral and ethical aspects of a particular religious faith: Provided, however, that such religious corporation, trust or organization established for religious purposes shall not be exempt from filing a license application with respect to secular activities, nor shall such religious corporation, trust or organization established for religious purposes be exempt from filing a license application if its financial support is derived primarily from contributions solicited from persons other than its own members, excluding sales of printed or recorded religious materials . . . .

* * * * *

(5) Organizations which solicit only within the membership of the organization by the members thereof.

* * * * *

(7) A local post, camp, chapter, or similarly designated element, or a county unit of such elements, of a bona fide veteran's organization which issues charters to such local elements throughout this State; a bona fide organization of volunteer firemen; a bona fide ambulance or rescue squad association; fraternal beneficiary societies, orders or associations operating under the lodge system; or bona fide auxiliaries or affiliates of such organizations: Provided that all of the fund-raising activities are carried on by members of such organizations or of auxiliaries or affiliates thereof, and such members receive no compensation directly or indirectly therefor.

(8) Any nonprofit community club, civic club, garden club, or other similar civic group organized and in existence for more than two years, with no capital stock or salaried executive employees, officers, members or agents, with at least 10 members with annual dues collected of not less than five dollars ($5.00) per member, in which all of the funds collected, less reasonable expenses, are disbursed pursuant to the directions of the membership or the board of directors, and with the membership being furnished at least one written report each year by the directors as to its charitable activities."

Thus, the specified organizations are exempt from complying with the licensing provisions of the Act. G.S. 108-75.3(17) defines religious purposes as follows: " 'Religious purposes' shall mean maintaining or propagating religion or supporting public religious services, according to the rites of a particular denomination." Nowhere in the Act is the term, "members," as used in G.S. 108-75.7(a)(1), defined.

Finally, G.S. 108-75.20(h)(2) prohibits a person or an organization of which such person is an officer, professional fund-raising counsel, or professional solicitor from soliciting if such person has been enjoined by any court or otherwise prohibited from soliciting in any jurisdiction, unless the Secretary shall first determine in writing that such person is entitled to solicit in such jurisdiction at the time of soliciting within this State. See G.S. 108-75.20(h)(2). Defendants contend that the Solicitation of Charitable Funds Act is consistent with the First and Fourteenth Amendments of the United States Constitution and the Constitution of North Carolina. With this contention, we do not agree.

The First Amendment of the United States Constitution provides: "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof . . . ." The Fourteenth Amendment has rendered the legislatures of the states as incompetent as Congress to enact such laws. Cantwell v. Connecticut, 310 U.S. 296, 60 S.Ct. 900, 84 L.Ed. 1213, 128 A.L.R. 1352 (1940); Palko v. Connecticut, 302 U.S. 319, 58 S.Ct. 149, 82 L.Ed. 288 (1937), Overruled on other grounds, Benton v. Maryland, 395 U.S. 784, 89 S.Ct. 2056, 23 L.Ed.2d 707 (1969); In re Williams, 269 N.C. 68, 152 S.E.2d 317, Cert. denied, 388 U.S. 918, 87 S.Ct. 2137, 18 L.Ed.2d 1362 (1967).

In Cantwell v. Connecticut, Id., 310 U.S. at 301-02, 60 S.Ct. at 902, 84 L.Ed. at 1217, 128 A.L.R. 1352 (1940), the United States Supreme Court was presented with a similarly worded statute:

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