An intra-congregational dispute over control of church bank accounts led the Wakefield Missionary Baptist Church to a schism that forced out a senior pastor, saw church doors locked, and resulted in competing factions worshipping under the banner of a once-united unincorporated association. In McKnight v. Wakefield Missionary Baptist Church, Inc., 2022 NCBC 10, the Business Court confronted a tangle of disputes between dissident church factions largely out of its reach given the First Amendment’s edict that the judiciary may not “resolve ecclesiastical questions” or resolve “controversies over religious doctrine and practice.”

The Court found a path under which “neutral principles of law” would allow it to determine whether a purported vote of the church’s congregation to approve the pastor’s dismissal and reorganize itself as an incorporated entity was valid. Over its 150-year existence, Wakefield had been a congregational church that was self-governing and that in a more recently adopted constitution and bylaws entrusted that authority in its members. Id. ¶ 3. But when the congregation approved movement of Wakefield’s property into the new incorporated form, a dissident faction challenged and sought to undo the splintering.

A challenge to that action in North Carolina faced long odds given that the “congregation has the right to control the church,” including the authority to change its customs and rule upon earlier church decisions. Graham v. Lockhart, 42 N.C. App. 377, 379 (1979). Thus, the Business Court determined that when the incorporated entity re-opened and its 37 members in attendance unanimously ratified its change in form, the movement of Wakefield’s property, and the termination of its pastor, the church’s governing body had “declared the matter closed.” NCBC 10, ¶¶ 7, 18.

But even that deference to the boundaries of North Carolina law left the Court resolving a dispute using “neutral principles” that could not fully resolve even the underlying controversy over the propriety of the congregation’s action. For instance, congregants who didn’t join the group which incorporated thought they still constituted Wakefield, and that those “who voted for ratification had ceased to be church members.” Judge Conrad noted that “[t]he Court has no business rendering a decision that would, in effect, excommunicate church members for siding with one faction over another in matters of church governance.” Id. ¶ 17.

Yet, even in ruling that the Court could not “overrule the congregation’s edict,” a “neutral” decision about who constituted the church’s governing body was weighted with the baggage of which of Wakefield’s congregants could continue to worship under a dearly held 150-year-old church banner and which could not. Id. ¶ 20.

Trade Name Infringement

The Business Court’s decision was also freighted with the responsibility to tackle which of Wakefield’s dissident groups could appropriately use its name. Judge Conrad observed that, too, posed tricky First Amendment issues because “[w]hat a church or other house of worship chooses to call itself is, after all, an expression of its religious identity.” Id. ¶ 58. Perhaps that is why, the Court noted, the North Carolina Supreme Court has avoided resolving “whether an injunction may be issued to forbid one church to use a name similar to that of another church.” Id. (quoting Bd. Of Provincial Elders v. Jones, 273 N.C. 174, 184 (1968)). The issue was resolved, ironically enough, on the principle that:

“[t]he right to use the name inheres in the institution, not in its members; and when they cease to be members of the institution, use by them of the name is misleading and, if injurious to the institution, should be enjoined.”

Daniel v. Wray, 158 N.C. App. 161, 173 (2003). Here, then, the power of the congregation’s members fueled the change in corporate form, but it was then the newly formed entity that controlled use of the Wakefield name as its organizing label.

Takeaways

• Even when carefully avoiding “ecclesiastical questions,” North Carolina courts tread rocky ground in making neutral determinations about who constitutes a church’s governing body that can control its property.
• A congregation has wide latitude to chart its own course, but even here there were limits to the newly incorporated Wakefield’s ability to claim contributions made to its competing, dissident congregation were rightly its property. As the Court noted, there was no “evidence to show that donors intended their money to go” anywhere beyond the factional congregation within which they chose to worship. NCBC 10, ¶ 55.

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