Southern Ohio State Exec. Offices of Church of God v. Fairborn Church of God

• Citation: 61 Ohio App.3d 526,573 N.E.2d 172
• Decision Date: 29 March 1989
• Docket Number: No. 88,88
• Parties: SOUTHERN OHIO STATE EXECUTIVE OFFICES OF CHURCH OF GOD et al., Appellants, v. FAIRBORN CHURCH OF GOD et al., Appellees. * CA 71.
• Court: United States Court of Appeals (Ohio)

Page 526

61 Ohio App.3d 526

573 N.E.2d 172

SOUTHERN OHIO STATE EXECUTIVE OFFICES OF CHURCH OF GOD et al., Appellants, v. FAIRBORN CHURCH OF GOD et al., Appellees. ^*

No. 88 CA 71.

Court of Appeals of Ohio, Second District, Greene County.

Decided March 29, 1989.

Jerome G. Menz, Xenia, for appellants.

Thomas P. Whelley, II and Melanie R. Mackin, Dayton, and Phillip L. Beard, Xenia, for appellees.

GRADY, Judge.

Appeal is taken by plaintiff-appellant, Southern Ohio State Executive Offices of Church of God, from the judgment and decision of the Court of Common Pleas of Greene County.

A complaint for declaratory judgment was filed below by plaintiff-appellant asking the court of common pleas to determine certain issues arising from its relation to defendant-appellee, Fairborn Church of God. A counterclaim for declaratory judgment on the same issues was then filed by defendant-appellee.

The matter in issue between these parties concerns real property titled in the name of the Fairborn Church of God. Appellant ("Executive Offices") asked the court to declare that the Fairborn Church of God ("Fairborn Church") was and is required to obtain the prior permission of the Executive Offices before conveying any interest in that real property, and to find that Fairborn Church held title to the real property in trust for the Executive Offices. Appellee, Fairborn Church, asked the court to declare that it holds title in fee simple, without any trust or right of reversion benefiting the Executive Offices, and that no permission from the Executive Offices is required of the Fairborn Church to convey its rights in the real property.

After consideration of motions for summary judgment, supported by extensive legal memoranda, exhibits and depositions, filed by both parties, the common pleas court found in favor of the Fairborn Church. The court determined that the Executive Offices, and the Church of God in general, have no interests, legal or equitable, in real estate owned by the Fairborn Church, and ordered that the Fairborn Church is entitled to transfer, sell or otherwise convey its real estate without obtaining the consent of the Executive Offices.

First Assignment of Error

"The court below erred to the prejudice of plaintiffs-appellants upon its incorrect application of the neutral principles of law doctrine."

The "neutral principles of law doctrine" cited by Executive Offices is a decisional method mandated by the United States Supreme Court for use in resolution of intrachurch property disputes. Its purpose is to avoid incursions by the civil courts into matters of religious dogma, doctrine or practice, the freedom of which from government interference is guaranteed by the First Amendment.

The essence of the case advanced by Executive Offices is that the history of its relationship with Fairborn Church requires the law to find that Fairborn Church holds title to the real property in trust, express, implied or constructive, for the benefit of the Executive Offices.

The facts presented to the court below show that the Fairborn Church of God is a local congregation of the Church of God, of Cleveland, Tennessee. That organization operates through a constituted General Assembly, which acts as a judicatory body in matters of ecclesiastical doctrine and government, and a General Executive Committee. The chief officer of both is a General Overseer. His counterpart on the state level is the State Overseer, and on the district level is the District Overseer. The State Overseer is also appointed by the General Executive Committee.

The State Overseer conducts general evangelistic duties and has authority to appoint district overseers and pastors of local churches. The State Overseer also has authority to authorize the organization of local churches and, together with the district overseer, has authority to approve the selection, purchase and construction of all real property of the church.

Executive Offices is an Ohio not-for-profit corporation, acting by and on behalf of the Church of God, of Cleveland, Tennessee, its General Assembly and Executive Committee. The chief executive officer of Executive Offices is a District Overseer. During most of the times concerned herein that person was Harold B. Thompson.

The Fairborn Church of God is organized as a not-for-profit corporation in Ohio, and has been so organized since 1963. Its pastor and corporate chief executive officer is Reverend Ancil Carter, who began his association with the denomination in 1948 as a minister. Rev. Carter has served as pastor of Fairborn Church for many years, both before and since incorporation. Additionally, Rev. Carter served as District Overseer of the Southern Ohio Executive Offices from 1970 to 1987.

The current Fairborn Church is a successor to several unincorporated associations: the Church of God, Fairborn; the Church of God at Wright View Heights; and, the Church of God at Fairfield. Each of those operated as local congregations of the Church of God, of Cleveland, Tennessee.

After its consolidation, Fairborn Church gave consideration to the need for mortgage loans to support its real property needs. It was learned that in Ohio it is difficult for unincorporated associations to obtain such loans from lending institutions, or was in 1963 when the problem arose. Reverend Carter, who was then as now pastor of Fairborn Church, discussed this matter on several occasions with the State Overseer, Reverend F.W. Goff, who gave permission to Carter and the congregation to incorporate. Articles of Incorporation for Fairborn Church were thereafter filed on July 8, 1963. It is clear that the motivation for incorporation was to facilitate mortgage loans and other real property transactions. Shortly after its incorporation Fairborn Church sought and obtained its first such loan.

According to its Articles of Incorporation, the corporate purposes of Fairborn Church are:

"To form and become the Fairborn Church of God under and in accordance with the General Assembly of the Church of God and to do all things not prohibited by law, and which are in accordance with the teachings of the General Assembly of the Church of God."

It is and for many years has been the position of the General Assembly of the Church of God that real property held by a local church is held in trust for the use and benefit of the Church of God, of Cleveland, Tennessee. A rule was adopted by the General Assembly that any conveyance of real estate to a local church was to be made by a deed form prescribed by the General Assembly and containing the following language: "The said Local Board of Trustees shall hold title to, manage and control the said real estate for the general use and benefit of the Church of God, having its general headquarters in Cleveland, Tennessee, and for the particular use and benefit of the local congregation of the said Church * * *." The deed form goes on to require that conveyances must be approved by a local church conference presided over by the State Overseer. Further provisions require conveyances to the State Board of Trustees should the local church cease to exist. The General Assembly required that the deed form be used by local churches, and that if it could not be used in its form that similar language benefiting the state and national churches be employed in deeds.

The foregoing requirements, which pre-date the 1963 incorporation of the local church, were known to Rev. Carter, pastor of Fairborn Church. Between 1960 and 1986 Rev. Carter regularly attended the biannual meetings of the General Assembly and other business meetings at which such requirements were discussed. However, and contrary to those requirements, from the date of its incorporation in 1963 Fairborn Church failed to either use the prescribed Church of God warranty deed form or its terms benefiting the Church of God in the course of its real property transactions. Instead, standard warranty deed forms were employed, and those documents on their face settled fee simple title clearly and exclusively on the corporate entity of Fairborn Church.

Prior to its incorporation, Fairborn Church conformed to the deed requirements of the General Assembly. In 1951, the Church of God, one of the predecessor unincorporated associations that later formed Fairborn Church, received land from Mary L. Hall, a widow, on a Church of God warranty deed form containing the beneficial provisions discussed above. After its incorporation, however, no real estate transaction by Fairborn Church employed the deed form or its special language. None of those subsequent transactions was approved by the State Overseer or the district overseer and permission of those officers was not sought by Fairborn Church. At least four such acquisition transactions took place between 1963 and 1986.

In 1986, Fairborn Church undertook purchase of one hundred fifty-six acres of land financed by mortgage. Of that land, a part was to be conveyed to a private developer in a transaction that would produce a substantial profit for Fairborn Church. In a related transaction, Fairborn Church offered to sell some of its property to a church of another denomination, which alerted the State Overseer to the lack of beneficial passages in the titles in the name of Fairborn Church. Thereafter, the Executive Offices acted to protect its interests by making and filing with the county recorder an affidavit asserting its interests in lands owned by Fairborn Church. This action cast a cloud on the titles. The declaratory judgment action below, as brought by both sides, asked resolution of that issue.

It is clear that there are no material issues of fact before us. Fairborn Church and its pastor, Rev. Carter, were fully aware of the requirements of the General Assembly of the Church of God that the local church employ deed forms or language benefiting the national church. Fairborn Church did not act in accordance with those requirements....