Rector, Church Wardens & Vestrymen of St. Bartholomew’s Church v. Committee to Preserve St. Bartholomew’s Church, 68 N.Y.2d 71 (1986)

A religious corporation may use its funds for activities incidental to its support and maintenance, including income-producing activities, as long as the proceeds support the corporation’s spiritual objectives.

Summary

This case addresses whether St. Bartholomew’s Church’s use of funds to develop a commercial office tower on its property violates Religious Corporations Law § 5, which requires funds to be used for the “support and maintenance” of the church. The Court of Appeals held that the church’s activities did not violate the statute. The Court reasoned that Religious Corporations Law § 5 permits a church to engage in activities incidental to its maintenance, including efforts to improve its financial condition through real estate development, provided the proceeds are used to support the church’s spiritual objectives, and the trustees act honestly and fairly.

Facts

St. Bartholomew’s Church, a designated landmark, sought to construct an office tower on its property through a long-term lease arrangement. The New York City Landmark Preservation Commission repeatedly denied the church a certificate of appropriateness. A group of parishioners challenged the church’s expenditure of funds to contest the landmark designation and pursue the office tower development plan, claiming it violated Religious Corporations Law § 5.

Procedural History

The parishioners filed suit seeking a declaratory judgment and an injunction to prevent further expenditure of church funds on the office tower project. The lower courts dismissed the claim. The Court of Appeals affirmed the dismissal, holding that the church’s actions did not violate Religious Corporations Law § 5.

Issue(s)

Whether the use of St. Bartholomew’s Church funds to pursue the development of a commercial office tower on church property constitutes a violation of Religious Corporations Law § 5, which requires funds to be used for the “support and maintenance” of the church.

Holding

No, because the development plan is incidental to the maintenance and upkeep of the religious corporation as it is designed to improve the financial condition of the church and to support its activities.

Court’s Reasoning

The Court reasoned that Religious Corporations Law § 5 provides an orderly method for administering church property and ensuring it is used for the benefit of the religious group. An incorporated church is free to engage in enterprises that are incidental to its maintenance. The court emphasized that a church can invest in income-producing property to preserve its funds and ensure its continued viability, stating that trustees are empowered to administer church property in a way that makes assets more productive to assure the continued viability of the corporation’s spiritual objectives. Any profit-making activities are subject to the limitation that the proceeds must support the lawful purpose of the spiritual church. As long as the profit-seeking activity is reasonably incidental to the church’s support and maintenance, and directed towards meeting the needs of the spiritual church, judicial interference is unwarranted. The court stated, “[w]here, as here, the profit-seeking activity undertaken by the trustees of a religious corporation is reasonably incidental to its support and maintenance, and is directed toward assuring that the needs of the ‘spiritual church’ will be met, there is no occasion for a court’s interference in the process.” The Court deferred to the church members’ determination of the prudence of the investment, finding no evidence that the trustees acted dishonestly or unfairly, or abandoned church purposes for commercial gain.