Jerald Finney
Copyright © September 13, 2012

Pastors and churches today, generally speaking, are enticed by everything but the truth. Many Christians are easy prey for the humanistic, inaccurate, heretical, and/or apostate teachings of many Bible Colleges, churches, online “ministries,” television “ministries,” etc. Today’s spiritual quacks use business models, lies about civil law, psychology, and other inappropriate fields of study to attempt to achieve their secular goals for individual, family, church, and civil government. In order to implement their methods and plans, they must reject the foundation of truth; thus, they build their houses upon Biblical heresies. When Biblical history, precept, and teaching obviously contradict the earthly desires and mindsets of such pastors and other believers, they, instead of remaining true to the Lord, rush to adopt the ways of the world and twist truth to support and condone their perverted beliefs, practices and teachings. Their motivations are fear, greed, power, pleasure, and their own temporal happiness.

A prime example, among many, of enterprises designed to take advantage of earthly minded believers is StartCHURCH (online at http://startchurch.com). StartCHURCH is outside their field of expertise both Biblically and legally. A Biblically knowledgeable believer can quickly spot many spiritual heresies, distortions, and lies in the information posted on http://startchurch.com. In addition to the spiritual ignorance of StartCHURCH, the organization further delves into another field in which it demonstrates itself either totally inept and/or dishonest: the legal arena. They combine Biblical heresies with legal falsities. Only one example of their dishonesty or ineptitude will be documented in this article.

Someone recently forwarded to this author an online advertisement from StartCHURCH which is reproduced in relevant part in En1. That ad used fear, a familiar tactic, to get the interest of pastors and church members. Additionally it demonstrates that StartCHURCH is not of sound mind. “For God hath not given us the spirit of fear; but of power, and of love, and of a sound mind” (2 Timothy 1:7). After its attempt to arouse fears, the article gives a listing of seminar dates and times and issues which StartCHURCH will address at those seminars. Upon reading the advertisement, this author, a licensed attorney knowledgeable in church and state law, immediately realized that it was, at a minimum, misleading. It contradicted what he has learned from an intense study of civil law and what he has extensively taught concerning liability of church members. Consequently, he went to the law library and looked up the case mentioned in the ad, Hutchins v. Grace Tabernacle United Methodist Church. The entire case, with Lexis/Nexis headnotes, is reproduced in En2.

The author(s) of the ad and the accompanying article, which can be read in its entirety by clicking “All Members of One Church Get Sued at the Same Time” or by reading En3 below, is (are) extremely deceptive. Yes, as the article points out, the plaintiff in the case attempted to include all the members, in addition to the church and one employee, as defendants in the suit. Plaintiff sued defendant church and an employee in tort and contract and later filed a request to certify the action as a class action (to include all members of the church). However, the court ruled that the plaintiff would not be allowed to sue all the members. The court said:

“The members of an unincorporated association are not bound by the unauthorized or ungratified representation of a member….  If the members of an association assent to or ratify a contract in its name, they become liable under them….  Members of an unincorporated association may become liable for a contract by estoppel….  Members of an unincorporated association are individually liable for tortious acts of agents or employees of the association if the tort is committed within the scope of their authority” (See En2 below to verify all quotes and to ascertain whether this author is being truthful about the case while StartCHRUCH is misleading, as alleged). The court affirmed the order of the lower court which denied plaintiff’s request to certify her action against defendant church and employee as a class action because defendant church could not adequately and fairly protect the interests of the class. In other words, the court said the plaintiff could not sue all the members of the church.

Thus, the case supports what the author, a practicing attorney, knows and teaches and not the thesis of StartCHURCH. No matter how a church is organized, (a) member(s) of that church can only be charged or sued for crimes or torts in which the legal elements are proven or admitted and in which (that) (those) member(s) were somehow personally involved; that is, took an active part, authorized, or encouraged.

Furthermore, neither unincorporated association or corporate status are the best way to protect church members from liability. The best way is the manner advocated by Jerald Finney, the author of this article, and others with whom he is associated. A church can choose to operate in conformity to both Biblical principle and American civil law; and, in so doing, not only please the Lord Jesus Christ but also, among other things, minimize exposure to liability from criminal charges and civil suit.

Most importantly, a church who becomes an earthly, or legal, entity such as a corporation or unincorporated association violates Biblical principle and grieves the Lord. Jesus Christ makes clear that institution of the church (made up of local autonomous New Testament churches only), is His bride. He also compares the church to a wife, He being the Husband (See Ephesians 5:22-33). He wants no other authority over His bride.

Jerald Finney explains all the Biblical and legal principles, facts, and consequences involved on his websites, books, and audio teachings. See En4 for more information. Unlike StartCHURCH and many similar “ministries,” Finney’s motivation is love for the Lord Jesus Christ. He has not made any money in his “Church and State Law” ministry. He has received love gifts (which he reports as income to the Internal Revenue Service), but those gifts and income from the sale of books are far outweighed by the expenses of the ministry. His goal is “the glory of God.”

Jerald Finney challenges StartCHURCH or any other such “ministry” to examine his teachings and debate him on any matter with which they take issue. He also challenges believers to grow in knowledge and wisdom so that they can begin to please the Lord in the matter of church and state law.

Endnotes

En1.                  All Members of One Church Get Sued at the Same Time

Several years ago a church in Texas ran into some trouble when a man wanted to sue the church. The problem, however, was that the church was not incorporated, and so it could not be sued. Instead, he filed a class action lawsuit against every member of the church. Could he sue every member? Does the law allow members to be sued personally? The court that heard the case stated, “An unincorporated association is a voluntary group of persons, without a charter, formed by mutual consent for the purposes of promoting a common enterprise.” The court also stated, “Members of an unincorporated association are individually liable for tortious acts of agents or employees of the association if the tort is committed within the scope of their authority” (Hutchins v. Grace Tabernacle United Pentecostal Church).

Unincorporated churches with voting members are most at risk

This court case brings up something that ought to make its members think twice about their . . . click here to read the entire article

The Conference   That Has Helped Thousands of Pastors Sleep Well During   this conference we will cover many topics that are absolutely critical to   operating your church or ministry in a way that simultaneously benefits the   church and pastor while protecting all involved from the ever-increasing   scrutiny of the government. Many pastors confess that they know their   church books are a mess, but they feel too intimidated to do anything about   it. They often times lose sleep over it. This conference has you in mind!

…

En2. 

ERA L. HUTCHINS, Appellant v. GRACE TABERNACLE UNITED PENTECOSTAL CHURCH AND CLIFFORD PARKER, Appellees
No. 01-90-00481-CV
COURT OF APPEALS OF TEXAS, First District, Houston
804 S.W.2d 598; 1991 Tex. App. LEXIS 285
January 31, 1991, Delivered
January 31, 1991, Filed

PRIOR HISTORY: [**1] On Appeal from the 333rd District Court; Harris County, Texas; Trial Court Cause No. 89-17354; Hon. Davie Wilson.

DISPOSITION: Order affirmed.

CASE SUMMARY

Procedural History: Plaintiff appealed an interlocutory order of the 333^rd District Court (Texas) denying her request to certify an action against defendant church and employee as a class action under   Tex. R. Civ. P. 42.

Overview: Plaintiff sued defendant church and employee in tort and contract. Plaintiff sought actual and punitive damages, return of real property, a declaration of her rights and status under a lease, and in injunction against defendant church, its members, and its employees to prevent them from harming or returning to the property. Plaintiff later filed a request to certify the action as a class action under Tex. R. Civ. P. 42. The trial court denied the request and plaintiff appealed. The appeals court affirmed he denial because defendant church could not adequately and fairly protect the interests of the class. The court noted that while the members of the association who signed the contracts could be liable, as an unincorporated association, defendant church could n be liable for its own contracts. Hence, as a party who could not be liable, defendant church was not in a position to be the representative party for those who could be.

OUTCOME: The appeals court affirmed the denial of plaintiff’s request to certify her action against defendant church and employee as a class action because defendant church could not adequately and fairly protect the interests of the class. The court reasoned that as an unincorporated association, defendant church could not be liable for its on contracts, while the members of the church could be liable.

Hn1 An unincorporated association is not liable on its contracts, which are regarded as the liability of the individuals who sign them. The members of an unincorporated association are not bound by the unauthorized or unratified representations of a member. If the members of an association assent to or ratify a contract in its name, they become liable under them. Members of an unincorporated association may become liable for a contract by estoppel.

Hn2 Members of an unincorporated association are individually liable for tortious acts of agents or employees of the association if the tort is committed within the scope of their authority.

Hn3 Tex. R. Civ. P. 28 authorizes suit by or against an unincorporated association in the common name for the purpose of defending or enforcing a substantive right, but does not enlarge or diminish any substantive rights or obligations of parties. Rule 28 does not create in an unincorporated entity ability to hold real estate.

Hn4 The burden of proof is on plaintiff to establish her right to maintain an action as a class action.

Hn5 The standard the appellate court uses to review a district court’s refusal to certify a class is whether the court abused its discretion. The trial court abuses its discretion when it does not apply the law to the undisputed facts.

Hn6 The principal question underlying all class action decisions is: Will a class action furnish the most economical method for adjudicating a large number of related cases? If the answer is yes, and if the party moving for the certification of a class proves all the necessary elements for a class in Tex. R. Civ. P. 42, the trial court abuses its discretion in refusing to certify a class.

Hn7 Under Tex. R. Civ. P. 42(a), a party may bring a class action suit if: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class, and (4) the representative parties will fairly and adequately protect the interests of the class.

Hn8 In determining whether to certify a class, it is not necessary that all questions of law and fact be common to the class, just the principal ones.

COUNSEL: Bruce Ian Schimmel, Stephen P. Dillion, Houston, Texas. Don Stocking, Conroe, Texas.

JUDGES: Michol O’Connor, Justice. Chief Justice Evans and Justice Hughes also sitting.
OPINION BY: O’CONNOR

OPINION

The question here involves the propriety of the trial court’s refusal to certify a suit as a class action. Era L. Hutchins, plaintiff, appeals from an interlocutory order denying her request to certify a class action under TEX.R.CIV.P. 42, which is an appealable interlocutory order under TEX.CIV.PRAC. & REM. CODE ANN. § 51.014(3) (Vernon Supp. 1991). We affirm.

1. The liability of associations

The underlying suit involves the liability of an unincorporated religious association and its members for the contracts and torts of a church. An unincorporated association is a voluntary group of persons, without a charter, formed by mutual consent for purposes of promoting a common enterprise. BLACK’S LAW DICTIONARY 1373 (5th ed. 1979). Hn1 An unincorporated association is not liable on its contracts, which are regarded as the liability of the individuals who sign them. Summerhill v. Wilkes, 133 S.W. 492, 493 (Tex.Civ.App. — Dallas 1910, no writ)(contract signed by the chairman of the building committee was not the liability of the unincorporated church association). The members of an unincorporated association are not bound by the unauthorized or unratified representations of a member. Kiteman v. Lacy, 144 S.W. 1184, 1186 (Tex.Civ.App. — Austin 1912, no writ). If the members of an association assent to or ratify a contract in its name, they become liable under them. Hardy v. Carter, 163 S.W. 1003, 1010 (Tex.Civ.App. — Amarillo 1914, writ dism’d or ref’d)(op. on reh’g). Members of an unincorporated association may become liable for a contract by estoppel. Abrams v. Brent, 362 S.W.2d 155, 158-59 (Tex.Civ.App. — Austin 1962, writ ref’d n.r.e.).

Hn2 Members of an unincorporated association are individually liable for tortious acts of agents or employees of the association if the tort is committed within the scope of their authority. Golden v. Wilder, 4 S.W.2d 140, 143-44 (Tex.Civ.App. — Fort Worth 1928, no writ)(op. on reh’g).

2. Plaintiff’s allegations

Plaintiff sued Grace Tabernacle United Pentecostal Church, and an employee of the Church, Clifford Parker, in tort and contract. Plaintiff seeks actual and punitive damages, return of the Malone Street property, a declaration of her rights and status under the lease, and an injunction against the Church, its members, and its employees to prevent them from harming or returning to the Malone Street property.

In her petition to certify a class action, plaintiff made the following claims: Plaintiff and her husband owned several contiguous lots in Tomball, known as 612 Malone Street, which they acquired piecemeal through deed, foreclosure on a deed of trust, litigation, and adverse possession. The Church building and parking lot are located on the Malone Street property. On August 15, 1972, plaintiff’s husband and V.E. Hall, a trustee of the Church, entered into a five-year lease for the Malone Street property. The lease was extended by oral agreement. Since 1987, the Church has refused to pay rent under the lease. Parker told plaintiff and her husband that he would help them clear their title to lots 27 and 28 by representing them before the local taxing authorities and by informing them when the Malone Street property was to be sold for taxes. Instead, Parker and the Church, in violation of a fiduciary duty to plaintiff and her husband, bought a fractional interest in lots 27 and 28 of the Malone Street property at a tax foreclosure sale.

Because the Church is an unincorporated entity, plaintiff contends the individual members are jointly and severally liable for breach of contract and the misconduct of the Church and Parker. Plaintiff states she is entitled to maintain a class action under TEX.R.CIV.P. 42 against all individuals who were members of the Church or have become members since September 1987 to the date of judgment.

Assuming for purposes of this opinion only that plaintiff will be able to prove all allegations in her petition, the question is how plaintiff can establish liability against the members of an unincorporated association. Plaintiff has only two choices: Plaintiff can join all members of the Church, past and present, going back to September 1987, or plaintiff can bring the suit as a class action. Plaintiff chose to bring the suit as a class action. The issue for this appeal is whether, on this record, the trial court erred in refusing to certify the suit as a class action.

3. The Church’s response

The Church filed a response to plaintiff’s motion for certification, stating there is no showing that the class should be liable for tortious conduct such as misrepresentation and conspiracy. The Church says that, because it is a voluntary organization subject to changes in membership, not all members would necessarily be liable for conspiracy or misrepresentation of the Church or of Parker. The Church contends there are individual members who have individual defenses that are inconsistent with the defenses of the Church and Parker. Thus, the Church goes on to say, it would be a burden for the attorney for the Church to inform all the members of their individual defenses.

The Church suggests that if any willful conduct is demonstrated against the Church, the liability for individual members can be satisfied in post-judgment proceedings. The Church cites no authority to support its suggestion that individual liability be established in post-judgment proceedings.

The Church also argues that under TEX.R.CIV.P. 28, plaintiff is required to sue the Church and is prohibited from suing the individual members. The Church misreads the rule. Hn3 Rule 28 authorizes suit by or against an unincorporated association in the common name for the purpose of defending or enforcing a substantive right, but does not enlarge or diminish any substantive rights or obligations of parties. TEX.R.CIV.P. 815; Parrish v. Looney, 194 S.W.2d 419, 424 (Tex.Civ.App. — Galveston 1946, no writ). Rule 28 does not create in an unincorporated entity ability to hold real estate. Id.

In brief, the Church wants both the advantage of an unincorporated entity (no liability for the entity), and at the same time wants the advantage of a corporate entity (no liability for its members).

4. The hearing on the certification

At the certification hearing, Hn4 the burden of proof was on plaintiff to establish her right to maintain an action as a class action. Life Ins. Co. of the Southwest v. Brister, 722 S.W.2d 764, 770 (Tex.App. — Fort Worth 1986, no writ). To support her motion to certify the class, plaintiff introduced the Church’s answers to interrogatories and the documents attached to the answers. Other than that evidence, the hearing was limited to argument of counsel.

5. The appeal

In two points of error, plaintiff maintains the judge erred in denying the certification of a class action on the issues (1) of title and possession of real property, and declaratory and injunctive relief, and (2) the damage issues.

Hn5 The standard we use to review a district court’s refusal to certify a class is whether the court abused its discretion. Parker County v. Spindletop Oil and Gas Co., 628 S.W.2d 765, 769 (Tex.1982); Townplace Homeowners’ Ass’n, Inc. v. McMahon, 594 S.W.2d 172, 177 (Tex.Civ.App. — Houston [1st Dist.] 1980, writ ref’d n.r.e.). The trial court abuses its discretion when it does not apply the law to the undisputed facts. Wiggins v. Enserch Exploration, Inc., 743 S.W.2d 332, 334 (Tex.App. — Dallas 1987, writ dism’d); see Camp v. Shannon, 162 Tex. 515, 518, 348 S.W.2d 517, 519 (1961).

6. Prerequisites to a class action

Hn6 The principal question underlying all class action decisions is: Will a class action furnish the most economical method for adjudicating a large number of related cases? Wente v. Georgia-Pacific Corp., 712 S.W.2d 253, 255, 257 (Tex.App. — Austin 1986, no writ). If the answer is yes, and if the party moving for the certification of a class proves all the necessary elements for a class in rule 42, the trial court abuses its discretion in refusing to certify a class. Plaintiff claims that she satisfied all the requirements of subpart (a) of rule 42.

Hn7 Under rule 42(a), a party may bring a class action suit if

(1) the class is so numerous that joinder of all members is impracticable;

(2) there are questions of law or fact common to the class;

(3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and

(4) the representative parties will fairly and adequately protect the interests of the class.

a. Numerous members of the class

The first requirement is that the class be so numerous that joinder of all members is impractical. As part of its answers to interrogatories, the Church filed a list of 76 members of the Church. We hold that 76 potential defendants are a sufficient number of parties to meet the first requirement.

b. Common questions of law and fact

The second requirement is that questions of law or facts are common to the class. The central question of law in this case will be the liability of the individual members of an unincorporated church for the actions of the trustees. The central question of fact in this case will be whether the membership ratified or assented to the actions of the trustees, or if the membership is estopped to deny the actions of the trustees.

The Church contends that the individual members will assert different factual defenses, whether they were members at the time the Church did not pay its rents. Hn8 It is not necessary that all questions of law and fact be common to the class, just the principal ones. Franklin v. Donoho, 774 S.W.2d 308, 312 (Tex.App. — Austin 1989, no writ). Here, plaintiff plead that all members are responsible for the actions of the Church and its trustee under the theory of respondeat superior. At trial, the principal questions will be common to all members of the Church; if a person was not a member of the Church at the time of non-payment of the rent, that person would not be a member of the class.

c. Claims or defenses of representatives are typical

The third requirement is that the claims or defenses of the representative party are typical of the class. Plaintiff has named the Church as the representative party. Plaintiff’s claims against the Church are the same as plaintiff’s claims against the members of the Church: the Church and its members owe plaintiff for unpaid rent and for torts committed by the Church; plaintiff wants a declaratory judgment that she owns the land; and plaintiff wants an injunction against the membership from returning to the Malone Street property. In addition, plaintiff has claims against the trustees: the trustees defrauded her by taking property at the tax sale.

d. The class representative

The last requirement is that the designated class representative will fairly and adequately protect the interests of the class. In the pleadings for the certification of the class, plaintiff asked that “the Defendant Church” be appointed as the class representative. The Church is an unincorporated association that cannot be liable for its own contracts, see Summerhill, 133 S.W. at 493, or torts, see Kuteman, 144 S.W. at 1186. Liability belongs to the members of the association who sign the contracts, Summerhill, 133 S.W. at 493, or to the members when agents or employees of the association commit torts within the scope of their authority, Golden, 4 S.W.2d at 143-44. Accordingly, we hold that the Church, which cannot be liable, is not in a position to be the representative party for those who can be.

We affirm the order.

En3.

All Members of One Church Get Sued at the Same Time
March 12, 2002 by Paul Rivera

Several years ago a church in Texas ran into some trouble when a man wanted to sue the church. The problem, however, was that the church was not incorporated, and so it could not be sued. Instead, he filed a class action lawsuit against every member of the church. Could he sue every member? Does the law allow members to be sued personally?The court that heard the case stated, “An unincorporated association is a voluntary group of persons, without a charter, formed by mutual consent for the purposes of promoting a common enterprise.” The court also stated, “Members of an unincorporated association are individually liable for tortious acts of agents or employees of the association if the tort is committed within the scope of their authority” (Hutchins v. Grace Tabernacle United Pentecostal Church).

Unincorporated churches with voting members are most at risk

This court case brings up something that ought to make its members think twice about their legal status as a church. There are many churches that have voting members who vote on many issues such as salaries, purchase contracts, and other important things like real estate transactions and lease agreements. In essence, when members of the unincorporated church vote on a particular item, they are taking upon themselves potential personal liability because they become a direct personal party to the contract or transaction. This could bring disastrous results.

One of the first acts of a church

Incorporating ought to be one of the first acts of any church. In 2010, approximately 1,000 churches per month were sued. That number is likely to keep rising because today, many churches are starting in homes, hotel conference rooms, and schools, which means they have to sign more contracts and enter into unusual contracts. It is important to ensure that your church forms a legal structure to protect its members, board, and trustees. As mentioned before, incorporating should be done before conducting your first service.

What happens when you incorporate your church?

The legal concept of an artificial person exists where state law has created laws recognizing a corporation. The laws of all fifty states allow churches to create a corporation that exists separate from that of its members, officers, and board. The church uses the corporation to conduct its business and manage its assets.

What is indemnification?

When a church forms a corporation, it receives special power to indemnify its pastors, board members, and employees from liability for the action they take in behalf of the church. This allows one to serve on the board with the confidence of knowing that the acts he/she performs in behalf of the church will not come back to haunt him/her.

Where is your church?

Right now, there are many churches operating on a deficient legal foundation. Most pastors I have met state that from the first day they started their church, they had always intended on doing things the right way, but then ministry, preaching, and life got in the way. That does not have to be you. Today is the best day to start getting right.

[Added by Jerald Finney: To learn how to do things the right way, disregard all teaching and advertisments from StartCHURCH, and begin to study your Bible and the writings of Jerald Finney (see En5 below). Contact Jerald Finney at no charge when you are knowledgeable and ready to do things God’s way.]

En4. One may have access to all of Jerald Finney’s teachings at no cost by going to his “Separation of Church and State Law” website. Two of his books, The Most Important Thing: Loving God and/or Winning Souls and Render Unto God the Things that Are His: A Systematic Study of Romans 13 and Related Verses have now been completely reproduced on that website (click the links to go to the online versions of the books). The other two books are in the process of being reproduced there. All his books are covered in his audio teachings which are on that site. One may find his other website “Church and State Law,” to be useful as well.

God Betrayed/Separation of Church and State: The Biblical Principles and the American Application (Link to preview of God Betrayed): may be ordered from Amazon by clicking the following link: God Betrayed on Amazon.com or from Barnes and Nobel by clicking the following link: God Betrayed on Barnes and Noble. All books by Jerald Finney as well as many of the books he has referenced and read may also be ordered by left clicking “Books” (on the “Church and State Law” website) or directly from Amazon by going to the following links: (1) Render Unto God the Things that Are His: A Systematic Study of Romans 13 and Related Verses (Kindle only); (2) The Most Important Thing: Loving God and/or Winning Souls (Kindle only); (3) Separation of Church and State/God’s Churches: Spiritual or Legal Entities? (Link to preview of Separation of Church and State/God’s Churches: Spiritual or Legal Entities?) which can also be ordered by clicking the following Barnes and Noble link: Separation of Church and State on Barnes and Noble.