Religions Corporations in the United States

RELIGIOUS CORPORATIONS IN THE UNITED STATES.

1. Legal Basis.

The corporation formed for the purposes of religion is an important element in American ecclesiastical organization. The American religious corporation differs in origin, function, and power from the ecclesiastical corporation known to European law which is the product of canon law, and has been developed by analogy from the corporation of the civil law based upon the Roman law. It is not an American development of the English legal ecclesiastical corporation, which is composed entirely of ecclesiastical persons and subject to ecclesiastical judicatories. The religious corporation in the United States belongs to the class of civil corporations, not for profit, which are organized and controlled according to the principles of common law and equity as administered by the civil courts. Distinction is necessary between the corporation and the religious society or church with which it may be connected. The church is a spiritual and ecclesiastical body, and as such does not receive incorporation. It is from the membership of the religious society that the corporation is formed. The corporation exercises its functions for the welfare of the church body, over which, however, it has no control. It can not alter the faith of the church, or receive or expel members, or dictate relations with other church bodies. While the religious corporation is frequently organized to carry on some religious enterprise without connection with a local church body, the greater number of religious corporations in the United States are directly connected with some local church body, and it is in this connection that their powers and duties will be considered.

2. Method of Incorporation.

Only a sovereign power can create a corporation, and this power now rests with the legislative branch of the state governments and of the federal government. Prior to the American revolution religious corporations were created either by royal charter or by provincial authority derived from the crown. After the revolution they were incorporated either by special acts of the state legislatures or under the provisions of general statutes. In its charter are contained the organic law of a corporation and the legal evidence of its right to the exercise of corporate franchises. When incorporation is effected under the provisions of a general statute, the terms of such a statute applicable to that particular corporation are by law read into its charter. Such a charter is a grant of powers by the State, and it also has the nature of a contract in such a sense that it can not thereafter be altered or revoked without the consent of the corporation unless the State has reserved to itself the right so to alter or revoke. The general statutes under which 474religious corporations can now be formed in most of the American states contain provisions authorizing the legislature to alter, amend, or repeal any charter granted. Another limitation of corporate powers is that charters granted to corporations by the State may be seized either for non-use or misuse of powers. Further, the granting of a charter does not prevent a state from exercising to a reasonable extent its police or judicial powers. In some states the duration or life of a religious corporation is limited by statute. If no limit is specified, the corporation may enjoy a perpetual existence. The life of a religious corporation dates in law from its organization, not from the time it began to exercise its corporate powers. That a religous corporation is a corporation de facto may be proved by showing the existence of a charter at a prior time, or by showing some law under which it could have been created and an actual use of the rights claimed to have been conferred. Where such a body has for a number of years and in good faith exercised the privileges of a corporation, its legal incorporation will be presumed. If the statute which provides for the incorporation of religious societies does not make incorporation obligatory upon such societies but merely prescribes the mode of incorporation, in case there is no evidence that a society took any of the steps prescribed or assumed to act as a corporation, its incorporation under the statute will not be presumed. But a mere use of corporate powers limited to the maintenance of religious observances is not sufficient to establish a corporation de facto (Van Buren vs. Reformed Church, 62 Barb. N. Y. 495).

3. Corporations Sole and Aggregate.

Classified as to the number of natural persons vested with corporate powers, religious corporations are either aggregate or sole. By far the greater number are aggregate, composed of three or more persons. The corporation sole is found where one person holding an ecclesiastical office is by law vested with all the attributes of a corporation. Such corporate attributes attach to the office and pass to each succeeding incumbent, thereby maintaining continuously the life of the corporation. During a vacancy in the ecclesiastical office the law regards the corporate functions as suspended merely and not as destroyed. The ecclesiastical corporation sole has not been favored in American legislation. It is expressly forbidden in the states of Delaware, Michigan, New York, and Pennsylvania. It is provided for by statute in the states of Oregon and New Jersey. Massachusetts and several other states have granted charters of incorporation to single church officials by special legislative acts. The object of the churches in securing such incorporations was to make more effective certain features of their polities. Incorporation of this kind has been sought by denominations having an episcopal form of polity. Thus the Oregon statute provides for the granting of corporate powers to bishops, overseers, and presiding elders. The composition of the religious corporations aggregate depends upon the provisions of the statute in each state, and in this matter the states are broadly divided. The language of many statutes is to the effect that any religious society or church may become incorporated by following a prescribed procedure. The language of other statutes is to the effect that religious societies or churches having appointed or elected trustees, the same may become a civil corporation. This difference is not as radical as would appear, for in cases where the law permits churches to be incorporated, provision is made for the election or appointment of trustees in whom are vested the corporate functions, thereby leaving to the church body the sole duty of producing such trustees. Under either system the corporations have the same functions in law. In a number of states supplemental provisions have been enacted to provide corporations composed of certain officials for the benefit of churches of particular denominations.

4. Objects of Incorporation.

The primary object of religious incorporation in the United States is the care of real property devoted to the purposes of religion. In the corporation as such is vested the of title to church property. Along with the vesting of such title go all the attributes of legal ownership, to be exercised, however, solely for the benefit of the religious body which the corporation serves. In this relation the corporation is a trustee and the church is the party with the full beneficial interest. While the corporation so serves the church, it is not with in the jurisdiction of the church judicatories, but is responsible for the proper performance of its duties to the civil courts, before whom it may be brought by any party in interest. The courts have recognized, in. addition to the primary trust for the holding of specific property and its right use for the benefit of a certain religious body, religious corporations as possessing the inherent capacity of executing additional trusts of a distinctly religious, charitable, or educational nature if not too far removed from the primary object of the particular corporation acting as trustee. With this sanction many special trust funds have developed in the hands of local religious corporations. The dissolution of a local church body does not cause the dissolution of the corporation so long as there is real property to be held or transferred or trusts to be administered.

5.Powers.

In order properly to perform their functions religious corporations are now vested with ample powers. The granting of increased powers was a marked feature of legislation during the second half of the nineteenth century. Conspicuous was the increase in the amount of real property which religious corporations might hold. Moreover, all the normal powers of private corporations have been recognized as belonging to religious corporations. Specifically, these corporations have power to preserve their existence by filling vacancies. They may for their own government adopt by-laws, which, however, may not be inconsistent either with the provisions of the statute under which the corporation was organized or with the rules adopted by the church body with which the corporation is connected. If the local church is a member of some denominational organization, the by-laws of a local 475religious corporation may contain nothing adverse to the denominational connection of the local church body. If a corporation is found to have adopted such by-laws, the remedy is in the civil courts where such by-laws and all corporate acts based upon them will be nullified. Another power is that of adopting and using a corporate seal. This seal is affixed to all formal documents signed by the officers of the corporation as such and should appear over all instruments intended to bind the corporation. The religious corporation must act as a body in regular meeting. The separate and individual acts of members of the corporation, even though such acts are by a majority of the whole number, are not binding upon the corporation and can not of themselves create corporate liability. A power either specifically granted or necessarily implied is that of purchasing, leasing, exchanging, or mortgaging all forms of real property, provided that such property is necessary and convenient for the purposes of the church body. This question is decided by the civil courts alone. A religious corporation may not engage in business transactions for profit. It may, however, hold revenue-producing property, not used by the church, as investment in the form of an endowment. It has the implied if not the express right to contract money obligations to be evidenced by bonds or notes. The mortgaging of real property by a religious corporation generally requires the consent of some superior ecclesiastical authority, as well as an order of court. Because one of the objects of religious incorporation is to give a legal person standing in court, such corporations have the right to sue and be sued, to plead and be impleaded, in courts of law and of equity. It is in the civil courts and not in the ecclesiastical courts that the religious corporation has standing; and it is from the civil courts that orders or writs will issue, directing or restraining corporate action. A corporation has the right to be represented by counsel, and the necessary cost of litigation is recognized as a legitimate expense. Unlike private corporations, the religious corporation can neither merge nor dissolve without the consent of the local church body and the higher church authorities. The statutes provide when and how there can be a consolidation of such corporations, and also under what circumstances a religious corporation can proceed to its own dissolution.

The American law of religious corporations has developed largely with reference to local churches; yet the practise of incorporation by superior ecclesiastical bodies and by special organizations, such as mission and educational boards, has become general. These general corporations do not differ in their legal character from the local corporations; but because their property interests are widely distributed throughout the possessions of the United States and in foreign lands, they come more often under the jurisdiction of the federal courts and the tribunals of foreign countries.

George James Bayles.

Bibliography: W. H. Roberts, Laws Relating to Religious Corporations: Collection of the general Statutes of the States and Territories, Philadelphia, 1896; Laws Relating to General Religious and Non-Business Corporations (New York), Albany, 1899; R. C. Cumming, Membership and Religious Corporations, ed. A. J. Danaher, ib. 1900–04; C. T. Carr, General Principles of the Law of Corporations, New York, 1905.