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Chapter 7: Analysis of “Has it ever been tested in court?”

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Chapter 7: Analysis of “Has it ever been tested in court?”

Jerald Finney
Copyright © November 15, 2014

Note. This is a continuation of the examination of a chapter of an Ecclesiastical Law Center (“ELC”) Publication, Chapter 18 of Approved by God. This article looks at the sixth section of that chapter.

The sixth section of chapter 18 asks a question which, in and of itself, is very puzzling to the person studied in the law of the ordinary trusts. The question is, “Has it ever been tested in Court?” What is the “it” being referred to and what does “tested in court” mean?

Thank you, ELC, for waking up our brain cells.

Thank you, ELC, for waking up our brain cells.

Obviously, from the ELC point of view in the context of Chapter 18 and other ELC writings:

  1. “It” refers to “trust;” and, specifically, the ordinary Bible trust utilized by the “Separation of Church and State Law” ministry and the ordinary trust used by the BLC. If the word “trust” or “Declaration of Trust” is mentioned in a court case, anything else in the case is not significant to the Ecclesiastical Law Center. The mere fact that one or both of those words were mentioned in the reported case or the alleged case means that the ordinary trust has been tested in court. It matters not to the ELC should the courts have said, as in the following cases (not cited by the ELC, of course) involving ordinary trusts:
    (a) A trust is not a legal entity. (Stevens Family Trust v. Huthsing, 81 S.W.3d 664 (Mo. Ct. App. S.D. 2002), reh’g and/or transfer denied, (July 12, 2002)).
    (b) A trust is not an entity distinct from its trustees and capable of legal action on its own behalf, but merely a fiduciary relationship with respect to property. (Roberts v. Lomanto, 112 Cal. App. 4th 1553, 5 Cal. Rptr. 3d 866 (3d Dist. 2003), review denied, (Feb. 24, 2004).
    (c) A trust is not a legal “person” which can own property or enter into contracts, rather, a trust is a relationship having certain characteristics. (Dennett v. Kuenzli, 130 Idaho 21, 936 P.2d 219 (Ct. App. 1997).
  2. The ELC will only cite and consider, when attacking the BLC and the ordinary trust, cases which involve legal entity types of trusts (such as business trusts and charitable trusts) so that they can make the assertion that “it has been tested” in court.
  3. As shown below, the cases they cite prove nothing concerning the ordinary trust and  the issue of whether “it has been tested in court,” nor do the cases give any insight as to what the ELC means by “tested in court.”

This author was asked, at the 2011 Unregistered Baptist Fellowship” conference in Indianapolis, Indiana the same question, “Has it ever been tested in court?” and he has heard the question on numerous other occasions. At the time, he suspected that the questioner was affiliated with the ELC. He thought that the reference was to the ordinary trust into which BLC churches place their tithes, offerings, and gifts and the DOT which created that trust; and he further thought that by “tested in court” was meant, “Has the court disregarded the DOT and the trust thereby created and attempted to bring the church into court as a legal entity anyway?” As to the question in the last sentence, the author’s reply is:  In several cases the author knows of since beginning to work with the BLC, the court knew that the church was not a legal entity which was subject to court jurisdiction. In one case the prosecutor, in a zoning dispute initiated by the government, acknowledged that church was not a legal entity (the church put tithes, offerings, and gifts into a trust); therefore, the church could not be brought into court. In another such case involving an Indianapolis church which adopted the BLC recommended DOT and ordinary trust thereby created, the church members placed tithes, offerings, and gifts into the trust thereby created. The government challenged the zoning status of the meetinghouse. The DOT had nothing to do with the case and the government recognized that the church was not a legal entity; therefore, the court could not bring the church into the controversy. The case ended in victory and the use of the real estate for a meeting house was upheld.

Of course, the church which places tithes, offerings, and gifts into an ordinary trust for the benefit of the true, equitable, beneficial owner of the money/property is clearly not a legal entity. That is what the law says and that corresponds to reality. The church has to entrust someone with tithes, offerings, and gifts which are given to the Lord Jesus Christ. The person so entrusted is, by definition, a trustee and the true owner is, of course, the Lord Jesus Christ. Reality, biblical principle, and American law agree on this matter.

jurisdictionContrary to the assertions of the ELC, civil courts may assume jurisdiction over people and land (no matter how the land is held) when a proper suit within the jurisdictional boundaries of the court is initiated. Believers and others in America have been blessed. Christians and churches have the protections of the First Amendment which were won by the persecutions and sacrifices of our historical Baptist forefathers; the First Amendment protects the citizen in his exercise of religion, assembly, press, speech, and his right to petition the government for a redress of grievances. American civil government does not tax land being used for “religious purposes.” However, believers and churches in many countries – such as Korea, China, many Muslim countries, and many other nations – are not so fortunate. In many nations, if one is found with a tract, speaking positively of the name of Jesus, possessing a Bible, etc., either the government or the local religious mob will send him home to be with the Lord. No land or buildings will be allowed for meeting by Christians. If it is tried, they will be confiscated and/or destroyed.

The guaranteed fate of church meetinghouses in some nations.

The guaranteed fate of church meetinghouses in some nations.

Even in America, ultimately legal differences concerning land use, taxation, and ownership, if brought to the attention of the appropriate agency/court, will be decided by the agency/court. For example, should an ELC church or any other church come together as a church body at a meetinghouse in an area not zoned for religious use, the court will assume jurisdiction of the issue if and when it comes to their attention, no matter the church’s legal status. There are other possible issues concerning real estate which could result in either/or government agency or court action, but not against a non-legal entity church. The ELC admits the latter; they ask “What happens if there is a lawsuit?” (Robin Wright and Ben Townsend, Approved by God, A Case for Modern Disestablishment (Mesick, Michigan: Adorn Books, 2004), p. 150.) Their answer:

Lawsuit“There are no lawsuits. Lawsuits are leveled against legal entities, not spiritual ones. Lacking a legal organization (corporation, unincorporated association) to attack, lawsuits must ultimately prevail. There are several court cases to prove the point. Besides, it would be tough to get legal service on the owner.” (Ibid.)

Their answer is partially right and partly wrong. They are right in saying that a non-legal entity cannot be a party to a suit; but, if a piece of real estate is the center of a zoning issue, for example, the agency/court will petition the legal owner of the property. Of course, the agency/court cannot petition the Lord Jesus Christ, who under both the ELC method and ordinary trust method, is the true, equitable, or beneficial owner. If there is no legal owner of the property, the agency/court will take the necessary legal steps to take control of the property.

If there is a legal owner, the court will summon the legal owner. The ELC states:

“How can property be held to reflect the ownership of Christ over His Church? It must be held as an individual, and that individual must be the Lord Jesus Christ! The property should be held by the church in trust for the Lord Jesus Christ, who is the true and beneficial owner.  In spite of the skepticism of many, churches in 22 states have placed their property in the name of the Lord Jesus Christ without incident.” (Ibid. 149). Actually, the church, by the Pastor, can execute a deed on behalf of the Lord Jesus Christ.” (Ibid. 150).

If the government challenged the use of a meetinghouse for religious purposes because the property was not zoned for religious use, and the church using the meetinghouse were organized according to the recommendations of the ELC, the government would not attempt to subpoena the true owner, in this case the Lord Jesus Christ. The government would petition the person who executed the deed, the pastor; the pastor, by definition, would be deemed to be the trustee holding legal title to the property. This is where the ELC method could result in the church being declared a legal entity since the ELC declares that “the church, by the Pastor, can execute a deed on behalf of the Lord Jesus Christ.” (Ibid.). As has been explained in other articles, should a government lawyer know what he is doing, he could point out that the church is a legal entity and argue that the church could be brought into the suit as the true owner for whom the pastor was only acting as trustee. The reasoning the government attorney could use:

“Only a legal entity can execute a deed and only a legal entity can hold property. The church has admitted by ELC declaration, the church being an ELC church, that ‘the church can execute a deed’ and that the property should be held by the church in trust…. Since the church admittedly executed the deed (through the pastor), the church is a legal entity.”

A properly worded Declaration of Trust which establishes an ordinary trust into which a church places tithes, offerings, and gifts makes clear that the church has no property and that the church has no interest in the money/property being placed into the trust estate and that the trust estate belongs only to the true and equitable owner, the Lord Jesus Christ, to be used for His benefit.

The ELC church could try to maintain their position that the government has no jurisdiction. The ELC might recommend that no one appear to admit jurisdiction or that someone, perhaps the trustee, make a special appearance to challenge jurisdiction only.

To begin such a case, the appropriate agency (many actions start in government agency with provisions for appeal into court should the final agency decision be contested) the agency or court would have to serve some legal entity. Every citizen of this country in his right mind is a legal entity.

Should they serve the pastor and he not appear, the agency or court would probably decide the issue (in court by a default judgment). Should they serve the church and an authorized representative of the church not appear, the result would be the same. Should the church appear and assert that she was not a legal entity, the agency/court would need proof that the church was not a legal entity. The government attorney, if he was familiar with the issue and ELC teachings, could argue that the church, by the ELC’s own admission and declaration is a legal entity such as a business trust or charitable trust.

Should a church appear and lose the jurisdictional issue, what would the next step be? The church would have already admitted that the court had jurisdiction over the jurisdictional issue by making an appearance. The court would probably and correctly rule that the church was a legal entity. Therefore, disregarding the court decision on that issue would be futile and non-appearance thereafter would probably result in a default judgment.

Approved by Man, p. 180

Approved by Man, p. 180

The first paragraph of the ELC article begins:

“It has been repeatedly reported by the BLC that the Declaration of Trust (‘DOT’) has never been tested in court. However, the DOT was filed and tested in the Indianapolis Baptist Temple case. And it did not succeed in protecting that church entity. To further reveal the blindness of those who propagate this document, it has been tested time and time again in every court jurisdiction over the last two hundred years. It is a document that courts recognize as a Trust agreement on which it can have jurisdiction and decide cases. If anything, this document in the IBT case could have been used by the court to prove they had jurisdiction over IBT.”

Approved by Man, p. 181

Approved by Man, p. 181

That whole first paragraph is a total distortion of what happened in the IBT (“Indianapolis Baptist Temple”) case. To fully and rationally explain all that happened in that case would require a lot of time and explanation. Suffice it to say for now and for purposes of the analysis of this section of Chapter 18 that the ELC effectively concedes in the last sentence of the above quoted paragraph that the court did not use the IBT trust document to prove they had jurisdiction over IBT. This author will offer the following true statement: the court did not (which, as pointed out, the ELC concedes in the paragraph above) and could not have used the trust document to prove they had jurisdiction over IBT.

IBT has continued since the court case was settled and the government confiscated the property. IBT has operated under a DOT since and has not been summoned into court or agency proceeding. The property tax exemption allowed the property owner who leases the property in which IBT meets (not IBT) still gets a property tax exemption on the property since the property is used for religious purposes, even though the local property tax board has contested the exemption more than once. Of course, IBT was not summoned or subpoenaed since IBT is not a legal entity.

The section “Has it ever been tested in court” then briefly mentions three cases with brief comments. The three cited cases, the ELC comments, and the ELC “reasoning” (a term loosely used here), are examined below. The first case mentioned is Tort Claimants Committee vs. Roman Catholic Archbishop. There is no citation to that case, but the author of the chapter states that the case is a “July 2006 case in Portland.” Then they state that “the court decided the following about a Declaration of Trust:

“Determining whether the Declaration of Trust created a valid, enforceable charitable trust requires interpretation of the Declaration of Trust. Under Oregon law, “[t]he same rule of construction applies in the interpretation of an instrument creating a trust as controls in construing any other document, to wit, that the intention of the maker of the instrument must, if possible, be determined and given effect.”

I did a Westlaw search of Oregon courts of appeal, Oregon Supreme Court, and United States Tax Court using the case name given in the article as well as the name of each party. I found no such name. If there is indeed such a case, any reliable writer would have included the citation so that the case could be easily found. The authors did give the citations for the next two cases, and I easily found and read them. (See below). I can therefore only analyze what is written in the first article about the alleged case, Tort Claimants Committee vs. Roman Catholic Archbishop.

On its face, it is not on point, even though the statement quoted is valid. It applies to a charitable trust, not an ordinary trust and the Declaration of Trust which created it.

The second case mentioned is “Church of Scientology vs. Commissioner, 83 TC 381. All the ELC says about this case in their article is: “the court found five Scientology groups were using a Declaration of Trust to channel ‘Tithe’ money into bank accounts overseas.”

I pulled that case up on Westlaw and examined it. (See En 1 for a summary of the case.). The case is not on point for many reasons besides the main point relevant to this this article: the trust involved was a charitable trust. I include a summary of the 105 single spaced on 8 ½ x 11 inch page case in En 1.  One can go to the law library read the case to verify the truth of this author’s assertions.

These were two of the eighteen issues in the case, the only two issues involving “charitable trust”:

11) Does the application of common law charitable trust doctrine to churches, requiring their conformity to fundamental public policy standards evidenced by criminal or civil statutes, violate the free exercise clause of the First Amendment because there are less restrictive ways of regulating church-sponsored misconduct?
12) Does the retroactive application of public policy standards derived from the common law of charitable trusts to petitioner’s operations deprive petitioner of due process of law in violation of the Fifth Amendment? Church of Scientology vs. Commissioner, 83 TC 381, 384 (1984).

Again, a charitable trust is a legal entity. An ordinary trust is not. Nothing in this case is relevant to the ordinary trust or the ordinary Bible trust and the churches who place their tithes, offerings, and gifts into such a trust. Read the summary in En 1 (or the case) to verify this.

The final case cited by the ELC in this section is Presbytery of Indianapolis vs. First United Presbyterian Church, 143 Indiana Appellate 72.

“The Appellate Court, Bierly, J., held that decision of authorized judicatory of hierarchial church denying petition of local congregation for leave to withdraw and take with it certain property was binding on state courts, notwithstanding that title may have been in corporation as grantee; use and occupancy of local church was matter of ecclesiastical government which could not constitutionally be impaired by any state legislation nor by any action by state judiciary. Reversed.” (Presbytery of Indianapolis vs. First United Presbyterian Church, 143 Ind. App. 72 (1968)).

As to the factual conclusions, the court said:

“This property appears to have been purchased * * * in the ordinary way of business, * * * and conveyed to the trustees by a general warranty deed, without condition of limitation. It is entirely clear that no trust, express or implied, is attached to the title. Appellants (plaintiffs) at no time had any interest in the property except as members of a congregation which was an integral part of the ecclesiastical society known as the Cumberland Presbyterian Church. Our only duty is to determine the identity of the ecclesiastical successor of the original grantee. This we have seen has been determined for us, since the union of the Cumberland Church (which was incorporated and acquired the property as a corporation before combining with the Presbyterian Church) with the Presbyterian Church carried into the United body all its property. The validity of that union appellants cannot question, and in it they must acquiese or defy the decrees of the church to which they pledged allegiance. Consciences cannot be bound, and if in the assertion of individual opinion and conscientious dictates appellants segregate themselves from the body of the church, they must depart as they came in—empty-handed. The court did not err in overruling appellants’ motion for a new trial.” Ibid. 83-84.

The ELC quotes in their short article the following from pages 85-86 of the opinion: “The appellee church received aid through the years from the United Presbyterian Church of North America in a total sum of $45,436.31, which has never been repaid; the appellee never executed a resolution and Declaration of Trust as required by the General Assembly of the Church of North America.”

Thus, the ELC saw those words, “Declaration of Trust” and “trust,” in this case, left out the “charitable” before “trust,” included one quote out of context which contained those words, and never gave any explanation as to why that phrase in this case showed that “it has been tested in court.”

By the way, neither this “Separation of Church and State Law Ministry” nor the BLC will help a Presbyterian Church to establish an ordinary trust. It is impossible to help a Presbyterian church because the ordinary trust is as recommended by these ministries is not compatible with Presbyterian theology.

Now to the final paragraph of the section of the ELC article, “Has it ever been tested in court”:

“Many pages of the book could be filled with cases similar to the ones above. This Declaration of Trust is not a secret modern way for unincorporated churches to hold property. It is a way for the pastor to become the sole legal Trustee of all the church assets.”

Yes, should someone use the ELC method of legal research and analysis, many cases (probable thousands) similar to the cases above could be cited which have absolutely nothing to do with anything relevant to the ordinary trust and the DOT recommended by the BLC or this ministry and any rationale definition of “has it ever been tested in court?” If relevance is not to be considered, all one need do to find such cases as cited by the ELC is a Westlaw or LexisNexis search for cases which contain the word “trust” and/or “Declaration of Trust” select a few such cases and cite perhaps a sentence or two from each selected case which contain the  “trust” or “Declaration of Trust,” and/or make some nonsensical comment.

A New Testament church who puts tithes, offerings, and gifts into an ordinary trust should be careful not to do anything which makes them a legal entity: open bank account, contract, etc.

A New Testament church who puts tithes, offerings, and gifts into an ordinary trust should be careful not to do anything which makes them a legal entity: open bank account, contract, etc.

The ELC is right about the DOT when they say it is not secret and it is not modern. It has been around for hundreds of years. The concept was established by God. As to the last sentence of the ELC quote above, the ordinary Bible trust created by the DOT recommended by this author and the ordinary trust recommended by the BLC is not a way for the pastor to become the sole legal Trustee of all the church assets. When a properly worded DOT creates an ordinary trust into which a church places tithes, offerings, and gifts given to God in trust for the benefit of the true owner of the property to be administered by the trustee who has a fiduciary duty under God to use all the trust estate for God, the church remains a non-legal entity which cannot sue, be sued, contract, go into debt or act legally in any way; such a church, under the ordinary trust recommended by the “Separation of Church and State Law” ministry, has no physical assets; all the assets of such a church are spiritual. Note: Should such a church act legally (open a bank account, get insurance, etc.), the church becomes a legal entity in spite of the fact of the ordinary trust or DOT. Read the online PDF of Quick Reference Guide for Churches Seeking to Organize According to New Testament Principles for nutshell information on pitfalls for the church which utilizes the ordinary trust.

Note that a church which places tithes, offerings, and gifts in an ordinary trust estate gives to God. The church does the giving and – unlike gifts to a corporate church, a business trust church, or a charitable trust church, which are given to the corporation the business trust, or the charitable trust – the giving is to God.

None of the cases cited by the ELC make any point at all concerning the DOT and the ordinary trust created thereby; they support nothing the ELC is trying to argue. Truly, this whole ELC section is total nonsense and will serve to convince only those who are unknowledgeable concerning these matters. Most of the good folks who follow the ELC teachers never will have the time to do the studies necessary to examine ELC writing and teaching and therefore are easy prey to outright fallacies. The real tragedy is that good, well-meaning, born-again pastors and believers have followed these teachings, some for many years.

Endnote

Summary of Church of Scientology vs. Commissioner, 83 TC 381, 384 (1984):

Petitioner, a Church incorporated in the State of California, was granted tax-exempt status in 1957 under sec. 501(c)(3), I.R.C. 1954. In 1967 respondent sent petitioner a letter revoking its exemption following audit of petitioner’s records which was in part sparked by litigation involving the tax-exempt status of an affiliated Church of Scientology. Subsequent to issuing the letter of revocation, respondent conducted several audits of petitioner’s records for various tax years and also reviewed the tax status of several affiliated churches. Petitioner was also investigated by several intelligence groups which respondent specially formed during 1969 through 1975 to investigate taxpayers allegedly selected by essentially political criteria. During the period that petitioner’s taxes were under administrative review, petitioner conspired to prevent the IRS from determining and collecting taxes due from petitioner and affiliated churches. Petitioner sold religious services, books, and artifacts according to a fixed fee schedule through its branch churches and franchises. Petitioner’s profits from these sales were not less than $1,494,617.53 in 1970, $881,131.18 in 1971, and $1,707,287.17 in 1972. Petitioner maintained large cash reserves in a sham corporation and in a bogus charitable trust controlled by key church officials including petitioner’s founder. HELD, petitioner was not the victim of selective enforcement of the tax laws since the notice of deficiency was based on valid regulatory considerations. HELD FURTHER, various other asserted constitutional rights of petitioner not violated. HELD FURTHER, petitioner was not operated exclusively for an exempt purpose under sec. 501(c)(3), I.R.C. 1954, since petitioner had a substantial commercial purpose, since its net earnings benefited key Scientology officials, and since it had the illegal purpose of conspiring to impede the IRS from collecting taxes due from petitioner and affiliated churches and thus its activities, dictated at the highest level, violated well-defined public policy.


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