New York Law Review

Tag: Religious Corporations Law

  • Venigalla v. Alagappan, 96 N.Y.2d 53 (2001): Abandonment of Corporate Bylaws

    Venigalla v. Alagappan, 96 N.Y.2d 53 (2001)

    A corporation’s bylaws can be deemed abandoned and abrogated if they are not used for a considerable time and this non-use is acquiesced to by the corporation’s members.

    Summary

    The Hindu Temple Society of North America adopted bylaws in 1970 calling for the election of trustees by its members, but these bylaws were never implemented and were later forgotten. For three decades, the Society was governed by a self-perpetuating board of trustees under bylaws adopted in 1978. In 2001, some members rediscovered the 1970 bylaws and demanded elections. The New York Court of Appeals held that the 1970 bylaws were invalid because they contradicted the Religious Corporations Law, which governs the Society, and because they had been abandoned due to long-term non-use and acquiescence.

    Facts

    The Hindu Temple Society of North America incorporated in 1970 under Article 9 of the Religious Corporations Law. In 1970, the Society adopted bylaws requiring the election of trustees by its members. These bylaws were never implemented or referenced. The Society operated from its inception with a self-perpetuating board of trustees, as outlined in bylaws adopted in 1978. The 1978 bylaws gave the Board of Trustees the function of final selection and appointment of its own members. Members of the Society did not challenge the validity of the 1978 bylaws until 2001.

    Procedural History

    In 2001, Society members petitioned for the removal of the board of trustees. Petitioners later discovered the 1970 bylaws and presented them to the Supreme Court as an alternative basis for relief. The Supreme Court initially treated the 1978 bylaws as valid amendments to the 1970 bylaws. The Appellate Division reversed, holding that the 1970 bylaws were never properly amended, voided the post-1970 bylaws, and directed an election. After a new election which yielded a similar board, the trustees appealed. The Court of Appeals granted leave to appeal and reversed the Appellate Division’s order.

    Issue(s)

    1. Whether the Society’s 1970 bylaws, which called for the election of trustees by the general membership, were valid given the Society’s incorporation under Article 9 of the Religious Corporations Law. 2. Whether the Society’s 1970 bylaws could be considered abandoned due to non-use and acquiescence by the Society’s members.

    Holding

    1. No, because Article 9 of the Religious Corporations Law provides for self-perpetuating boards of trustees, not boards elected by the general membership. 2. Yes, because the bylaws were not used for a considerable length of time, and this non-use was acquiesced to by the members of the Society.

    Court’s Reasoning

    The Court reasoned that the 1970 bylaws conflicted with Article 9 of the Religious Corporations Law, which governs the Society. Article 9 provides for self-perpetuating boards, where vacancies are filled by the remaining trustees, and does not require elections by the general membership. The Court also determined that the 1970 bylaws had been abandoned. Citing Pomeroy v. Westaway, the Court stated that “nonusage of a by-law, continuing for a considerable length of time, and acquiesced therein, will work its abrogation.” The Court found that the 1970 bylaws fell into “complete desuetude” for three decades, with the Society being run according to the 1978 bylaws. The Court emphasized that to allow petitioners to revive the 1970 bylaws after such a long period of non-use would be “unwise and unfair.” The Court also pointed out a founder of the society stating, “it will be self-defeating” if a temple “is organised as a cultural society with annual elections, [and] continuous change in officials …. High level people will not join if they have to stand for elections. Decision-making with clear-cut responsibility are [sic] difficult if subjected to general body meetings.”

  • Congregation Yetev Lev D’Satmar of Kiryas Joel, Inc. v. Congregation Yetev Lev D’Satmar, Inc., 9 N.Y.3d 300 (2007): Religious Corporation Property Transfer Requires Court Approval

    Congregation Yetev Lev D’Satmar of Kiryas Joel, Inc. v. Congregation Yetev Lev D’Satmar, Inc., 9 N.Y.3d 300 (2007)

    A religious corporation must obtain court approval before transferring real property, and retroactive approval will only be granted if the transfer demonstrably furthers religious or charitable objects generally, not merely the interests of one faction within the corporation.

    Summary

    This case concerns a dispute between two factions of the Satmar community over a cemetery. The Monroe Congregation sought a declaration that a transfer of a one-half interest in the cemetery property from the Brooklyn Congregation was lawful, or alternatively, for nunc pro tunc (retroactive) approval. The New York Court of Appeals affirmed the Appellate Division’s decision, holding that the transfer, made amidst a factional dispute and not clearly furthering religious or charitable objects generally, was invalid without prior court approval as required by Religious Corporations Law § 12.

    Facts

    The Monroe Congregation acquired a cemetery in 1981 which contained the grave of the Satmar movement’s founder, Grand Rabbi Joel Teitelbaum. The Monroe Congregation conveyed the cemetery to the Brooklyn Congregation in 1988, and they jointly operated it. A schism within the Brooklyn Congregation led to two rival factions with separate elections. One faction, led by Berl Friedman, transferred a one-half interest in the cemetery to the Monroe Congregation in 2001. The other faction, led by Jacob Kahan, attempted to restrict use of the cemetery by filing a declaration limiting who could encumber the property.

    Procedural History

    The Monroe Congregation sued the Brooklyn Congregation seeking a declaration that the 2001 transfer was valid, or for retroactive approval under Religious Corporations Law § 12. The Supreme Court granted summary judgment to the Monroe Congregation. The Appellate Division reversed, finding factual questions regarding the conveyance related to internal religious matters beyond court competence, and voided the conveyance because the Monroe Congregation did not establish that the transfer promoted the Brooklyn Congregation’s religious or charitable objects. The Court of Appeals granted leave to appeal.

    Issue(s)

    Whether the Appellate Division properly determined that the transfer of the cemetery property required court approval and that the Monroe Congregation was not entitled to retroactive approval of the transfer under Religious Corporations Law § 12.

    Holding

    Yes, because the transfer was not demonstrably in the best interests of the Brooklyn Congregation or furthering religious or charitable objects generally; rather, it appeared to advance one side of a factional dispute, making retroactive approval inappropriate.

    Court’s Reasoning

    The Court of Appeals based its reasoning on Religious Corporations Law § 12(1), which states that a religious corporation may not sell its real property without court approval. Furthermore, Section 12(8) dictates that when transferring property to another religious corporation for nominal consideration, the transferring corporation must show that “religious or charitable objects generally” would be conserved by the conveyance. The court emphasized that the transfer was “at least in part plainly designed to advance one side of the factional dispute.” Therefore, the Appellate Division was justified in finding that the transfer did not meet the statutory requirements for retroactive judicial approval. The court reasoned that allowing such a transfer would set a bad precedent, as it could be used as a tool in factional disputes rather than for genuinely furthering religious or charitable goals.

  • First Presbyterian Church v. United Presbyterian Church, 62 N.Y.2d 110 (1984): Resolving Church Property Disputes Using Neutral Principles of Law

    62 N.Y.2d 110 (1984)

    Civil courts can resolve church property disputes by applying neutral principles of law, examining deeds, charters, and state statutes without delving into religious doctrine.

    Summary

    First Presbyterian Church of Schenectady (First Church) sued The United Presbyterian Church in the United States of America (UPCUSA) after withdrawing from the denomination due to disagreements over UPCUSA’s financial support of certain political groups. First Church sought a declaration of independence and an injunction to prevent UPCUSA from interfering with its property. The New York Court of Appeals held that civil courts *can* resolve such disputes using “neutral principles of law,” focusing on property ownership documents rather than religious doctrine. The court found in favor of First Church, allowing it to retain control of its property.

    Facts

    First Church, organized in 1760 and incorporated in 1803, became a member of UPCUSA’s predecessor in 1789.
    In the 1970s, the congregation expressed discontent with UPCUSA, particularly regarding its funding of radical groups.
    First Church requested dismissal to another denomination, but the Presbytery of Albany denied the request and appointed an administrative commission to investigate First Church’s activities.
    In January 1977, First Church voted to sever ties with UPCUSA and retain its property.

    Procedural History

    First Church sued UPCUSA seeking a declaration of its right to withdraw and an injunction against interference with its property.
    The trial court granted the injunction but denied declaratory relief.
    The Appellate Division reversed the injunction, dismissed the complaint, and granted UPCUSA’s counterclaim, relying on deference to ecclesiastical authority.
    The New York Court of Appeals reversed the Appellate Division’s order regarding the injunction, reinstating the trial court’s original judgment (granting the injunction in favor of First Presbyterian Church).

    Issue(s)

    Whether a civil court can resolve a church property dispute between a local church and its hierarchical denomination, when the local church has withdrawn from the denomination, without violating the First Amendment’s prohibition against entanglement in religious matters.

    Holding

    Yes, because the court can apply neutral principles of law to resolve the property dispute without interpreting religious doctrine.

    Court’s Reasoning

    The Court of Appeals adopted the “neutral principles of law” approach for resolving church property disputes, as endorsed by the U.S. Supreme Court in Jones v. Wolf. This approach involves examining deeds, local church charters, state statutes, and the general church’s constitution, focusing on objective evidence of intent regarding property ownership. The court emphasized that it must scrutinize these documents in purely secular terms, avoiding reliance on religious precepts.

    The court found that First Church held record title to the property, the deeds contained no forfeiture or reversion clauses, and state law (Religious Corporations Law) did not apply due to First Church’s pre-1828 incorporation. While the UPCUSA’s Book of Order contained provisions about church governance, it lacked express trust language favoring the UPCUSA. The court stated that any inquiry into the meaning of provisions within the Book of Order by a court is constitutionally foreclosed because it would require the court to choose between the insurgent Session and the commission or “replacement Session.” The Court rejected the argument for an implied trust, noting that First Church acquired the property independently and took no action indicating an intent to create a trust. The court quoted Presbyterian Church v. Hull Church, stating that “the State has a legitimate interest in resolving property disputes, and * * * a civil court is a proper forum for that resolution”.

    The court reasoned that applying neutral principles avoids entanglement in religious controversies and allows the state to protect its interest in securing property titles. The court also noted the preference for neutral principles over deference, as the deference approach assumes local churches relinquish control to hierarchical bodies, frustrating the intent of some local churches and potentially violating the free exercise clause. The court states “[i]n applying neutral principles, the focus is on the language of the deeds, the terms of the local church charter, the State statutes governing the holding of church property, and the provisions in the constitution of the general church concerning the ownership and control of church property”.

  • Church of God of Prophecy v. Fourth Church of Christ, Scientist, of Brooklyn, 54 N.Y.2d 742 (1981): Religious Corporation’s Authority to Sell Property

    Church of God of Prophecy v. Fourth Church of Christ, Scientist, of Brooklyn, 54 N.Y.2d 742 (1981)

    A religious corporation must obtain both leave of the court and appropriate denominational authorization as required by section 12 of the Religious Corporations Law before selling any of its real property; a contract to sell is valid only if conditioned upon obtaining such court approval, and a court of equity can inquire into the fairness of the contract and its advantage or disadvantage to the religious corporation.

    Summary

    The New York Court of Appeals affirmed the Appellate Division’s order, holding that a religious corporation cannot sell its real property without court approval and denominational authorization, as stipulated by Religious Corporations Law § 12. While the corporation can enter a contract contingent on obtaining court approval, the court has the power to evaluate the contract’s fairness and its benefits to the corporation. The court found that the sale would not benefit the religious corporation, and therefore, judicial consent was appropriately withheld, invalidating the purported agreement and precluding specific performance or monetary damages.

    Facts

    The Church of God of Prophecy sought to purchase real property from the Fourth Church of Christ, Scientist, of Brooklyn. The Fourth Church of Christ entered into a contract to sell the property. The lower court determined the sale was not in the best interest of the Fourth Church and denied the sale. The Church of God of Prophecy then sued for specific performance.

    Procedural History

    The Supreme Court initially ruled against specific performance. The Appellate Division affirmed, finding that the sale would not benefit the religious corporation or its members. The Church of God of Prophecy appealed to the New York Court of Appeals.

    Issue(s)

    Whether a religious corporation can be compelled to specifically perform a contract to sell its real property when it has not obtained the required court approval and denominational authorization, and when the court determines the sale is not in the best interest of the corporation.

    Holding

    No, because the religious corporation did not obtain the necessary court approval and denominational authorization, and the court determined that the sale was not in the best interest of the corporation.

    Court’s Reasoning

    The court emphasized the requirement of Religious Corporations Law § 12, which mandates both court leave and denominational authorization for a religious corporation to sell real property. While a religious corporation may enter into a contract to sell conditioned upon obtaining court approval, the court retains the power to evaluate the fairness and advantage of the contract to the religious corporation. Citing Muck v. Hitchcock, 149 App. Div. 323, 328-329, the court noted that it has ample power to inquire into the fairness of the contract. The court found that the Appellate Division’s determination that the sale would not promote the purposes of the respondent religious corporation or the interests of its members was supported by the evidence. Because judicial consent was properly withheld, the agreement was invalid, and the plaintiff was not entitled to specific performance or monetary damages. The court stated, “in an action for specific performance, a court of equity “has ample power to inquire into the fairness of the contract and as to its advantage or disadvantage to the religious corporation, and to approve the proposed conveyance and direct it to be made where, upon all the facts, no valid reason appears for refusing such relief.” The court distinguished cases where the requirements of section 511 of the Not-For-Profit Corporation Law were met, but declined to rule on the propriety of granting permission in a proceeding like the present one where all the requirements of section 511 would have been met because approval was not granted.

  • Russian Church of Our Lady of Kazan v. Terlecky, 414 N.Y.S.2d 459 (1979): Resolving Church Property Disputes Using Neutral Principles

    Russian Church of Our Lady of Kazan v. Terlecky, 414 N.Y.S.2d 459 (N.Y. 1979)

    Civil courts can resolve church property disputes by applying neutral principles of law without delving into religious doctrine, ensuring the free exercise of religion while adjudicating property rights.

    Summary

    This case concerns a dispute between two factions within the Russian Church of Our Lady of Kazan (Kazan) regarding control of the parish and its properties. One faction sought to remain under the jurisdiction of the Metropolia, while the other attempted to align with the Synod of Bishops. The court held that the property belonged to the faction loyal to the Metropolia, the ecclesiastical body under which Kazan was originally incorporated and operated until the schism. The decision was based on neutral principles of law, recognizing Kazan’s initial and sustained affiliation with the Metropolia, without resolving any underlying religious controversies.

    Facts

    In 1942, members of the Russian community in Sea Cliff, New York, organized the Russian Church of Our Lady of Kazan under the guidance of Metropolitan Theophilus of the Russian Orthodox Greek Catholic Church of America (the Metropolia). The community committed to following the Metropolia’s statutes. In December 1942, the church incorporated under New York’s Religious Corporations Law, with a rector appointed by Metropolitan Theophilus serving as a trustee. In 1970, a schism occurred, with one faction (the appellants) attempting to secede from the Metropolia and align with the Synod of Bishops of the Russian Orthodox Church Outside Russia.

    Procedural History

    Two actions were initiated: one by the faction loyal to the Metropolia to enjoin the secessionists (Action No. 1), and another by the secessionists seeking a declaratory judgment validating their actions (Action No. 2). The trial court ruled in favor of the Metropolia faction. The Appellate Division affirmed in Action No. 1 and modified in Action No. 2 to reinstate the complaint and declare the parties’ rights. The New York Court of Appeals then reviewed the case.

    Issue(s)

    Whether the control of the property of the Russian Church of Our Lady of Kazan should be vested in a group loyal to the Metropolia, under which it was founded, or be given over to a dissident faction seeking to align with the Synod of Bishops.

    Holding

    Yes, because the Russian Church of Our Lady of Kazan knowingly and voluntarily chose the Metropolia as its governing body at its founding and consistently recognized its authority until the schism; therefore, the property rights belong to the faction that remained loyal to the Metropolia.

    Court’s Reasoning

    The court emphasized its role was to resolve the property dispute, not to delve into religious doctrine. It relied on the principle that civil courts can apply neutral principles of law to church property disputes without violating the First Amendment. The court noted uncontroverted evidence that Kazan considered itself affiliated with the Metropolia from its organization in 1942 until 1970. The church was incorporated under the Metropolia’s guidance, followed its statutes, and recognized its authority. The court found no evidence of a direct tie to the Synod of Bishops. The court quoted Presbyterian Church v. Hull Church, stating that the First Amendment commands civil courts to decide church property disputes without resolving underlying religious controversies. Because Kazan was incorporated into the Metropolia, the court reasoned that the right to the parish property belonged to the faction that remained loyal to the Metropolia at the time of the schism. The Court stated, “Civil courts do not inhibit free exercise of religion merely by opening their doors to disputes involving church property. And there are neutral principles of law, developed for use in all property disputes, which can be applied without ‘ establishing ’ churches to which property is awarded.”