Articles Posted in Religious Corporation Law

hare-krishna-300x181A recently reported case in New York State Supreme Court (Nassau County) addresses issues covered in prior blog posts as they relate to the New York Religious Corporation Law.  Kelley v. Garuda (Index No. 7016/2004) is a case involving a dispute regarding the International Society for Kirshna Consciousness and a temple located in Freeport, New York.

The International Society for Krishna Consciousness is known by the acronym “ISKCON”.  In this case, the Krishna temple had been “taken over” by certain individuals who were espousing a religious doctrine contrary to that being promulgated by ISKCON.  They were running the Temple and were not being answerable to ISKCON, who claimed the authority to own and run the temple in question.

This dispute left the Court with a tricky legal situation.  The First Amendment to the United States Constitution states, in pertinent part, that Congress shall “make no law respecting an establishment of religion, or prohibiting the free exercise thereof.”  This puts Courts in a difficult position when a dispute arises within a religious institution.  As in the ISKCON case, our firm has handled many cases in which there may be conflicts between different factions in a religious institution.  These cases may involve any religion.  The question then arises whether a Court can get involved in deciding such disputes without running afoul of the First Amendment.

fatherOur firm wants to extend its best wishes to all Dads for a happy Father’s Day.  We would like to mention some gift ideas of a legal nature that cannot be purchased in an ordinary department store.

Your Father may be on the verge of retirement.  As such, he may be in the market for a qualified attorney  who will negotiate and document the terms of his business sale.  Such a sale may involve preparation of a contract of sale, coordination of the payoff of a business or equipment loan, closing document drafting and the like.  Once the transaction is complete, your Dad can enjoy a care-free retirement.

If your Father is not ready to retire, he may have an ongoing business in the process of relocation.  Our attorneys would welcome the opportunity to negotiate the commercial lease for the new space. We would negotiate its terms in a manner most favorable to dear old Dad.

church-300x225News reports have recently discussed the Archdiocese of New York and their seeking Court approval to mortgage church-owned property.  The purpose behind such action is for the Church to obtain a loan of $100,000,000.00 from JP Morgan, Chase, N.A., backed by a mortgage on Church-owned property located at 457 Madison Avenue in midtown Manhattan.  The loan proceeds will apparently be used to pay monetary settlements to the victims of the Church child abuse scandal.

Laymen may be asking why Court approval is necessary for such a transaction.  If an individual owns property, and seeks to obtain a mortgage on the property in order to raise funds, generally, Court approval is not needed.  The difference in this situation is that the Archdiocese of New York is a Religious Corporation, and, as such, is subject to the New York Religious Corporations Law.

As prior blog posts have discussed, any New York Religious Corporation seeking to buy property, sell or lease property, or obtain a loan backed by a mortgage on property it owns, must obtain approval of the New York State Attorney General’s Office.  The reason behind this statute is to make sure that a religious institution is not “sold out” from under its members by unscrupulous individuals or leaders.  Most religious institutions, of course, do not own the large real estate portfolio that the Archdiocese of New York does, and may own a single building which is used for its offices and place of worship.  The Religious Corporation Law protects all such institutions by requiring Court approval for such important real estate transactions, in order to insure that loan proceeds are used for purposes that congregants will believe will advance the legitimate interests of the church.

reliestphotoMany of our readers are about to celebrate Rosh Hashanah.  We wish those who observe a happy and healthy new year.  At this time of year, those of the Jewish faith tend to reflect upon their acts during the past year and to set goals for improvements in the following year.  Attorneys can provide the opportunity for one’s religious, moral and ethical values to be reflected in a final legacy, such as a Will or Trust.   This post will discuss the means by which your attorney will insure that your values are properly contained within your estate documents.

Primarily, we suggest that you meet with a skilled professional , who is prepared to discuss your ethical values.  The meeting should not only address the standard discussion of who should serve as fiduciaries (those named in the Will to act on behalf of the estate such as executors, trustees and guardians) and who should inherit your assets.  For instance, a couple with minor children typically needs to determine who will serve as guardians to raise their children if they pass away.  If religion is important to such a couple, they may want to appoint someone of the same religious background who will be instructed to continue the religious instruction and ritual observance to which the children have been accustomed.  It is possible that a separate fiduciary may need to be named to handle financial matters for the children when a religiously sensitive guardian has been selected.

Discussions should be undertaken as to the distribution of assets.  Authorizing a trust to distribute assets for religious education and travel, in addition to the standard education expenses, may be appropriate.  Charitable matters should also be considered.  If charitable giving is an important value to the client, we discuss the means by which charitable giving can be accomplished.  Gifts made during lifetime typically have less significant tax consequences and the donor may be recognized personally for the contribution.  However, the donor may need the assets during her lifetime and would rather part with them at a later time.  Charitable trusts can also be established if appropriate.  Our firm commonly coordinates with various organizations that are prepared to assist in the establishment of such charitable trusts.

touroRecently in the news is a story relating to control over Touro Synagogue, located in Newport, Rhode Island.  The Touro Synagogue was built prior to the Revolutionary War and is one of the oldest congregations in the United States.  As with many older institutions, over the centuries, the original congregation and their descendants eventually moved from the area in question.  Many of these individuals settled in New York, and formed a new congregation, named Shearith Israel.  The original congregation in Rhode Island dwindled and even fell dormant for a period of time.

According to the Court records, there is a dispute between the current congregation of Touro Synagogue, now named Jeshuat Israel, and the New York congregation, Shearith Israel, over who was the rightful owner of the Touro Synagogue, and who has the right to make decisions such as the sale of ornaments in order to raise funds.

Our firm has handled similar cases involving control over religious institutions.  Many churches and synagogues experience changing congregations and conditions over a long period of time.   Depending on the location of the institution, members may move from the area, causing a sharp decrease in active membership.  At that point, the institution must decide whether to continue in its present location, or consider moving to another part of the New York where membership may increase.  Moving an institution will usually involve the sale of the current location.  Such a sale must be approved by the Board of Trustees or other governing body of the institution in question.  Prior blog posts have discussed the handling of legal disputes relating to control over a religious corporation.

pope.jpgPope Francis’ first visit to the United States has managed to inspire numerous people. Yesterday’s speech before Congress mesmerized all of those in attendance, regardless of their religious or political affiliation. The Pope’s message has been unifying to all witnesses, which is why many people have been so excited by his visit, even though many of us are not Catholic and may not agree with his specific positions.

What happens when a religious leader is divisive instead? This post will examine the legal ramifications when the leader of a religious institution is the source of conflict among congregants. It is not unusual for clients to consult us concerning disputes within their religious institutions.

In the event that the congregants choose to continue to worship together under the leadership of another clerical leader, steps may need to be taken to legally terminate the relationship with the spiritual leader. As we discussed in a prior post , the spiritual leader may be classified as an independent contractor or employee, depending upon the circumstances. An independent contractor may be dismissed more readily.

rabbi.jpg Our firm is often retained to represent parties relating to their employment at religious institutions. Such employment refers to, among other persons, the clergy, whether it is a Rabbi or Cantor at a Synagogue, a Minister or Reverend at a Church, or an Imam at a Mosque. A dispute may arise between a clergyperson and the institution at which they officiate. Such disputes may be the result of the termination of said employment, the interpretation of an employment agreement, or the failure of the institution to make payments pursuant to a retirement agreement or pension. This blog post will discuss the various legal issues relating to such disputes.

The first issue relating to a clergy’s employment is whether the individual at issue is an independent contractor or an employee. An exact legal definition of these categories is beyond the scope of this post. However, many smaller institutions attempt to categorize their clergy as independent contractors. This usually means that no taxes are withheld from their pay, and they are free to set their own hours and employment conditions. An employee is subject to W-2 tax withholding, and must generally keep regular hours and is subject to a greater degree of control by the institution in question.

If the individual clergy is classified as an employee, the next question is whether there is a written legal contract for their employment. Most clergy will have a written agreement with the religious institution which sets forth their terms of employment, salary (including any bonuses or pensions), benefits, renewal terms, and duties which they are expected to perform. Such agreement will usually be for a set period of time (for example, five years), and may contain provisions for renewal after expiration.

sages.jpgNews outlets have recently reported a case involving a dispute over the sale of a synagogue located on the Lower East Side of New York City. Certain individuals, claiming to be members of the Board of Trustees, have submitted a petition to the New York State Attorney General seeking approval for a sale in the amount of Thirteen Million Dollars.

At issue is a dispute over whether the individuals who claim to be Board Members are, in fact, legally elected Board Members of the institution in question. Since the synagogue has been in existence for seventy-six years, there are many legal issues related to the authority of any individuals may have the authority to petition the Court to allow a sale of the property, which is also being used as a nursing home for the aged. An excellent overview of this highly contentious case to date may be found by reviewing a recent article in the New York Observer.

Readers of this blog may recall that this subject has been written about by us previously. A dispute involving a Hindu temple was analyzed in a recent post. Of course, every case has its own unique set of facts, but it is important to note that Courts are reluctant to intervene in decisions that are essentially religious in nature, for example, if a spiritual leader decides to excommunicate certain members. Such excommunicated members will have a difficult time finding a Court to overturn such a decision, due to First Amendment concerns.

buddha.jpg A recent case decided by a New York Appellate Court relates to a dispute over governing and control of a Buddhist Temple. To summarize, the Master of the Temple, Mew Fung Chen, excommunicated 517 members over a dispute relating to control of the Temple, which had locations in both Brooklyn and Manhattan. At a special meeting, the Board of the Temple voted to close the Manhattan Temple and excommunicate the followers of an alleged “rogue monk,” Master Ming Tung. Ming Tung’s followers constituted a majority of the congregation at the time of the excommunication.

Ming Tung filed a lawsuit in Supreme Court, New York County seeking to invalidate the results of the special meeting. The lawsuit also sought to have a Court-ordered new meeting, which would be monitored by a Court-appointed official. Obviously, with a majority of the membership, Ming Tung’s followers would likely have taken control of the Buddhist Temple had such a new meeting been ordered.

The Supreme Court (in New York State, this is the trial court, or lowest level of Court) initially granted the motion of Ming Tung and his followers for injunctive relief. This relief stayed the excommunication and ordered that an annual membership meeting be held, at which all members, including the excommunicated members, could be present and vote on the future of the Temple. However, the defendant, the China Buddhist Association, appealed the decision to the Appellate Division of the Supreme Court, and the First Judicial Department reversed the trial Court’s decision.

shareholdermtg.jpgMay and June of each year tend to be “annual meeting season” for our cooperative and condominium clients. At such meetings, the shareholders of cooperatives and unit owners of condominiums elect their board of directors or board of managers. Those who serve on boards are hard working volunteers, participating on a weekly if not daily basis. Those who attend annual meetings may only attend one meeting a year to question and judge those who participate on their behalf on a constant basis. This blog post will address how to properly conduct annual meetings and why smoothly run annual meetings are important. Although our law firm also conducts annual meetings for condominiums and religious corporations, this post will be limited to cooperative corporation annual meetings.

Why do we have annual meetings? Such meetings are necessary to elect directors at regular intervals, so that the same people do not maintain their posts indefinitely contrary to the will of shareholders. An Offering Plan would have been filed by the sponsor of the cooperative with the New York State Attorney General Real Estate Finance Bureau when the building was converted to cooperative ownership. One of the documents contained in such Offering Plan is the By-Laws. As in any corporation, the By-Laws provide the roadmap for the governance of the corporation. It is common for By-Laws to provide that annual meetings for the election of directors are to be held in a particular month of a year. The cooperative need not hold its meetings in the specific month stated in the By-Laws (who wants to meet in January during a blizzard),blizzard.jpg it merely needs to hold its meetings at regular intervals each year. The By-Laws specify that the notice of annual meeting is to state that the business to be conducted is to elect directors and to conduct other business specifically identified in the notice, should state the time, date and place of the meeting, and who needs to sign the meeting notice. Our attorneys also pay careful attention to each client’s By-Laws provision regarding the number of days required for the advance notice of the meeting. Usually cooperative By-Laws require that written notice of the annual meeting be delivered at least “x” days but no more than “y” days in advance of the meeting. The By-Laws will also indicate how many directors are to be elected and if there are particular disqualifications (such as a director must also be a shareholder).

Once the meeting commences, the first step is to determine if there is a quorum, the proper number of shares represented for the decisions made at the meeting to be legally valid. The By-Laws identify how many shares constitute a quorum, perhaps a majority of shares issued or a majority of units are represented. Usually, shares can be represented by attending in person or by proxy (the delivery of a signed document instructing how one’s shares are to be voted or who may vote one’s shares on her behalf). It should be noted that certain legal acts or acts as identified by the certificate of incorporation may have a more stringent definition of quorum than the standard director election. As it is inconvenient to adjourn the meeting due to failure of quorum requirements, we encourage our clients to collect as many proxies as possible in case a shareholder cannot attend.