Note. This author published this article and then an online booklet which critiqued and exposed the false Ecclesiastical Law Center (“ELC”) teachings by Ben Townsend concerning the ordinary trust which have been available to the public for many years online and some in printed form. In the booklet, the author also explained the problems with the ELC method of church organization, something the author discovered as he studied in preparation to write the booklet. After the first eight chapters of the booklet were published, Townsend, leader of the ELC, admitted in an article that he did not know much about trusts and that the ordinary trust is not a legal entity (see chapters 9, 10, and 13 below). Then, in another article, Townsend admits that the ordinary trust is not a legal entity, but states that the law can be changed. Links to the booklet:
Contrary to the teaching of the ELC the ordinary trust is not a legal entity as are some other kinds of trusts such as business trusts and charitable trusts. Each of these types of trusts are very distinct. This article will compare the ordinary trust to the business trust. The article is not at all exhaustive since to totally cover the subject would require a book of some length. Suffice it to say that the ELC grabs concepts from the law of various types of trusts (but not from the law of ordinary trusts) and also from business organizations such as corporations and creates a hodgepodge trust law totally divorced from reality in supporting its contentions that the ordinary trust is a legal entity. What does the law of ordinary trusts say? This article will answer that question and distinguish the ordinary trust from the business trust. A similar study can be made of the ordinary trust as compared to other types of trusts such as the charitable trust.
As to the ordinary trust:
“The fundamental nature of a trust is the division of title, with the trustee being the holder of legal title and the beneficiary that of equitable title. By definition, the creation of a trust must involve a conveyance of property.
“A ‘trust’ exists where the legal title to property is held by one or more persons, under an equitable obligation to convey, apply, or deal with such property for the benefit of other persons. A trust has been defined as a fiduciary relationship with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it. The Restatement definition is similar, providing that a trust, when not qualified by the word ‘resulting’ or ‘constructive,’ is a fiduciary relationship with respect to property, arising from a manifestation of intention to create that relationship and subjecting the person who holds title to the property to duties to deal with it for the benefit of charity or for one or more persons, at least one of whom is not the sole trustee.
“Caution: A trust consists not only of property, but also of the trust instrument, the trust’s beneficiaries and trustees, and the trust administrator [if any].” (76 AM. JUR. 2D Trusts 1. (2007).)
A trust has been defined as a fiduciary relationship5 with respect to property, subjecting the person by whom the title to the property is held to equitable duties to deal with the property for the benefit of another person, which arises as a result of a manifestation of an intention to create it. The type of trust I recommend consists of the trust estate, a trustee, and a beneficiary (the Lord Jesus Christ). The parties to the trust agreement which I recommend are:
“the ‘settlor’ or ‘trustor’ who is the church who creates the trust. The trust is not the church and the church is not the trust.”
“the ‘trustee’ is the person appointed, to execute a trust, and the one in whom an estate, interest, or power is vested, under an express or implied agreement to administer or exercise it for the benefit of another. In other words, a trustee is a person who holds legal title to property under an express or implied agreement to apply it, and the income arising from it, to the benefit of another.
“the ‘beneficiary’ is the person for whose benefit property,’8 sometimes referred to as the ‘cestui que trust.’ A ‘beneficiary’ is one for whose benefit a trust directly and specifically provides.
See 76 American Jurisprudence (AM. JUR.) 2d, Trusts as a beginning point to study the ordinary trust.
The law states as follows concerning the ordinary trust:
“A trust is not a legal entity. 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. A trust is not a legal ‘person’ which can own property or enter into contracts, rather, a trust is a relationship having certain characteristics.” (See the picture taken from 76 American Jurisprudence 2d (AM. JUR. 2d), Trusts § 3 (2007)).
The ELC teaches that the trust is a legal entity. They are partially correct in that some types of trusts are legal entities. However, the ELC does not quote from the law concerning ordinary trusts as to the legal entity status of the ordinary trust (see above). They do this to establish their incorrect position that the trust utilized the Biblical Law Center and the ordinary Bible trust used by this ministry are legal entities. They quote from the law concerning, for example, business trusts. See pages 175-177 of Approved by Man: A Case for Biblical Reasonableness by Wright/Townsend, for an example of where they quote from the law of business trusts and apply it to the ordinary trust. In American Jurisprudence, the law of business trusts is covered in volume 13 whereas the law concerning ordinary trusts is covered in volume 76. Notice that 63 volumes separate these two types of trust; this corresponds with the difference between the two. The two are very distinct.
The law makes very clear that business trusts are distinct from ordinary trusts and are legal entities:
“One of the distinctive devices by means of which individuals may combine their resources to operate a business for profit is the so-called business trust or “Massachusetts trust,” which may be comprehensively defined as an unincorporated business organization created by an instrument by which property is to be held and managed by trustees for the benefit and profit of such persons as may be or may become the holders of transferable certificates evidencing the beneficial interests in the trust estate.1 Such an organization has also been frequently termed a ‘common-law trust.’”2(13 AM. JUR. 2D, Business Trusts, § 1 (2007)
“The business trust is created by the voluntary act of the parties and is based on a contract; it is intended for the purpose of carrying on some kind of business or commercial activity for profit.1 Stated more simply, a business trust is a business organization in a trust form. 2” (13 AM. JUR. 2D, Business Trusts, § 2 (2007).
“Business trusts differ from ordinary trusts in that the primary purpose of the Massachusetts or business trust is to conduct a business for profit while the object of the traditional trust is to hold and conserve particular property, and its powers are incidental to this purpose.1 Earmarks of a business trust not usually found in an ordinary trust include the following characteristics: beneficial shares,2 centralized management, continuity of life, transferability of interests, limited personal liability,3 a profit motivation, and the ability of the shareholders to remove the trustees with or without cause.4” (13 AM. JUR. 2D, Business Trusts, § 6 (2007).
“It generally is held, so far as pure legal principle is concerned and apart from any declaration to the contrary in a statute or constitution, that a Massachusetts or business trust is not a corporation.1 However, while a business trust is not a corporation, it has some of the attributes of a corporation2 and is similar in its practical effect.3 Some courts have expressly held that a given business trust falls within the legal definition of a corporation.4 Business trusts are sometimes and for some purposes, by constitution or statute, placed in the same category as corporations or, by definition, classified as such.5 The fact that a business trust is regarded as a corporation for certain purposes, however, does not mean that the corporate analogy will be indiscriminately applied or that the organization will be treated as a corporation for all purposes.6” (13 AM. JUR. 2D, Business Trusts, § 7 (2007).
See Spurious rationale for church incorporation: to hold property (Section VI, Chapter 7 of God Betrayed; Chapter 7 of Separation of Church and State) for an explanation of the ordinary trust. That chapter shows how the ordinary trust comports perfectly with Bible principle and why this author now co-labels the ordinary trust a Bible trust.
Introduction: Ecclesiastical Law Center Exposed
For many years, the Ecclesiastical Law Center (“ELC”) has publicly attacked the Biblical Law Center (“BLC”) and the BLC method whereby churches establish an ordinary (Bible) trust by adopting a Declaration of Trust (“DOT”). The position of this author for many years has been that churches should look at all points of view, study to make sure they are not being misled, and then proceed according to Bible principle for the Glory of God. He had been asked to respond to ELC misinformation and attacks several times over the years, most recently by his pastor, Pastor Jason Cooley after he read Chapter 18 of Betrayed by Man,a book by Robin Wright and Ben Townsend of the ELC. Motivated by the obvious falsehoods in ELC writings which are disseminated to many sincere and good men of God and which attack and misrepresent the DOT and the ordinary trust thereby created while promoting a very ill-advised method for a church to hold property in trust for the Lord Jesus by the pastor for the church, this author finally decided to take on the task.
This is not about the ELC, the BLC, or this ‘Separation of Church and State Law’ ministry. This is about the Lord Jesus Christ and his churches and the truth; that is why believers should be concerned about these matters, even though the issues and answers may initially seem complex. You may be a pastor of a church who has organized according to the recommendations of the ELC or according those of the BLC or this Old Paths Baptist Church “Separation of Church and State Law” ministry (“SCSLM”). You may believe the literature and teachings of your particular leaders. However, the ELC teachings are so different from those of this ministry that only one can be valid legally and biblically. For that reason, churches and pastors who are concerned about the biblical doctrine of the church need to find out which one is right. The author humbly submits that there is nothing more important than keeping the bride and wife of Christ pure and chaste and that all sides of this controversy must set aside their pride and diligently seek the truth in order that the church you are a member of may be prepared in the matter of church organization for His coming.”
Is the church you are a member of being prepared for His coming?
Ephesians 5.23-27, 30-32 states:
“For the husband is the head of the wife, even as Christ is the head of the church: and he is the saviour of the body. Therefore as the church is subject unto Christ, so let the wives be to their own husbands in every thing. Husbands, love your wives, even as Christ also loved the church, and gave himself for it; That he might sanctify and cleanse it with the washing of water by the word, That he might present it to himself a glorious church, not having spot, or wrinkle, or any such thing; but that it should be holy and without blemish…. For we are members of his body, of his flesh, and of his bones. For this cause shall a man leave his father and mother, and shall be joined unto his wife, and they two shall be one flesh. This is a great mystery: but I speak concerning Christ and the church.”
As the informed believer reads the articles which examine the parts of Chapter 18 of Betrayed by Manand related ELC writings, he will see the good, the bad, and the ugly about the ELC position for church organization.
The ELC method, by written declaration, creates a trust arrangement, places property in the legal name of a trustee for the church who holds and administers property and monies (the trust estate) for the Lord Jesus Christ the true, equitable, and beneficial owner of the property (and money). The trustee(s) has (have) a fiduciary duty under God and man to manage the trust estate, not for the benefit of the trustee(s), but for the benefit of the true, equitable, beneficial owner, the Lord Jesus Christ. As long as no disputes over, for example, ownership of property or some other property dispute, tort claims for injures sustained on church property, or use of funds (tithes, offerings, and gifts) arise, the ELC method will work fine and the inherent weaknesses of the ELC method and the inaccuracies in ELC teachings will not come to the forefront. Even then, unless the issues are tackled by one who is knowledgeable about ELC writings which expose the truth about their trust arrangement, the weaknesses and inaccuracies of the ELC method may not be discerned. However, should a lawyer study their writings and the relevant law, he will likely uncover his line of attack. Should he find out about and study this booklet, he will definitely discover how to mount an effective attack, unless the ELC corrects the flaws in their self-created and self-acclaimed system.
The ELC trust arrangement negatively implicates the church who utilizes their method by declaring that “The property should be held by the church in trust for the Lord Jesus Christ, who is the true and beneficial owner,” “Actually, the church, by the Pastor, can execute a deed on behalf of the Lord Jesus Christ,” etc. These written declarations are not included in a Declaration of Trust to be adopted by a church which organizes under the method recommended by the ELC; rather, the declarations are in publications which teach ELC methods. Needless to say, their published declarations do not adequately describe the type of trust intended, the duties of the trustee, provisions for successor trustee in the event the trustee resigns, dies, etc., and other matters. These written declarations, especially when studied in conjunction with other ELC teachings, effectively set the church up as a legal entity, as opposed to a spiritual entity only. Their system is not a Bible system, as they like to say, but a legal system which establishes a church as a legal entity It would be far better for an ELC church to adopt a properly written DOT declaring exactly the nature of the trust established, the legal status of the church, etc. Should attacks against an ELC church arise, a properly worded DOT which establishes an ordinary trust, not the type trust now established by the ELC methods, could be produced to establish that the church is not a legal entity, that the trust is an ordinary (Bible) trust (as it now stands, the logical conclusion from ELC teachings is that the church utilizing ELC methods is a legal entity and therefore can sue, be sued and act legally).The ELC method is not according to knowledge and it therefore grieves our Lord and can result in problems for ELC churches. The articles which follow in this series delve more deeply into the matters asserted in this paragraph.
The ELC runs a continuing campaign to convince others that the BLC (and now this SCSLM) are liars and that their methods are bad, should not be used, etc. Nothing could be farther from the truth. The ordinary (Bible) trust (and a properly worded DOT which creates it) recommended by this ministry and the BLC, as will be shown (and already has been shown in books and online writings) is biblical and has been recognized by the American law as a non-legal entity, a relationship with property and assets. Thankfully, churches can utilize an ordinary trust without placing themselves under the jurisdiction of civil government–the church is not the trust nor is the trust the church. The church remains a spiritual entity as long as she does not in some manner act legally; and she remains separate from the ordinary trust.
ELC attacks include sloppy false legal arguments (at best), lies, distortions, personal attacks, etc. Some of those will be exposed for what they are in the accompanying chapters. Straight forward language is the only way to get at the truth and, as will be shown in this series, the ELC has no problem either directly or indirectly, without any proof, calling truthful BLC statements lies, no problem with fabricating false, bad motivations on the part of the BLC for the alleged lies, no problem formulating ridiculous legal arguments, no problem with distorting, lying, and publishing recommendations for church organization without knowledge, understanding, and wisdom. This booklet will prove all this.
This author has seen no ELC written or online publication which, for example, looks at the law of ordinary trusts, the law upon which DOT and ordinary trust thereby created and which the BLC and the “Separation of Church and State Law” ministry recommend. Instead, the ELC mischaracterizes the ordinary trust recommended by the BLC and by this ministry as a business or charitable trust. Business and charitable trusts are legal entities. The ordinary trust is not; yet, relying on business trust and charitable trust law instead of ordinary trust law, the ELC continues to claim, against clear truth, that the ordinary trust is a legal entity. Here are two of many ludicrous examples of false ELC claims:
“The Ecclesiastical Law Center advises churches to not use a Declaration of Trust, a corporation, an unincorporated association, or any legal entity to hold their church assets and property.” (From Betrayed by Man, page 180)(My comments: Here again, the ELC not only misrepresents the ordinary trust, but also condemns their own method. The ordinary trust is not a legal entity. Furthermore, the church who places tithes, offerings and gifts into an ordinary trust has no assets. The ELC church has assets which are held in trust for the benefit of the true owner of the property, the Lord Jesus Christ. The ELC church is a legal entity since she holds property and has assets.)
“And placing church property in Trust is no different from placing it into a Corporation.” (From Betrayed by Man, page 177)
By “Trust” in the above statements, the ELC means all trusts, thereby including the ordinary trust (a fiduciary relationship with property which is a non-legal entity) with trusts which are legal entities such as business trusts and charitable trusts. In other words, the ELC again misrepresents the ordinary trust by effectively stating that all trusts are the same. The statement also equates placing a church in trust with incorporating a church; this is ridiculous because an ordinary trust has no resemblance to a corporation. An incorporated church is a legal entity. The ELC, in attacking the ordinary trust, cites 13 (“13” is the volume number) AM. JUR. 2D (AM. JUR. 2D is the abbreviated form of American Jurisprudence 2d, a highly regarded legal encyclopedia) Business Trusts and 15 AM. JUR. 2D Charitable Trusts. They never refer to 76 AM. JUR. 2D Trustswhich covers ordinary trust law. 61 large volumes separate volumes 15 and 76 of American Jurisprudence and that separation corresponds with the difference between the ordinary trust and business and charitable trusts. They also cite reported cases which mention charitable trusts and business trusts in attacking ordinary trust law. This type analysis by the ELC is either completely dishonest or the result of incompetence in dealing with legal matters. This booklet will thoroughly analyze, in detail, all these matters. The assertions of this author will be proven beyond any doubt.
The ELC, in its church organization methodology, relies on trust law. The language used by the ELC in its published declaration makes that clear; language such as “property held in trust,” “for the Lord Jesus Christ, who is the true and beneficial owner,” and “the Pastor, can execute a deed on behalf of the Lord Jesus Christ.” All of the elements of a trust are in that language. Since Robin Wright, the brains behind the ELC, had some knowledge of trust law, this reliance is not without knowledge (See Section 2 Give and Take, an article by Ben Townsend of the ELC that was published after Chapters 1-8 of this booklet were published online). However, the ELC disqualifies their method as creating an ordinary (Bible) trust by saying that “The property should be held in trust for the Lord Jesus Christ,” “Actually, the church, by the Pastor, can execute a deed on behalf of the Lord Jesus Christ,” etc. This is ugly because the ELC proposes a trust which sets a church up as a legal entity while virulently opposing the ordinary trust which keeps a church in its spiritual only status (non-legal entity status). This booklet will prove all this beyond all doubt.
This brings up a very important question: If the ELC is what they set themselves up to be – experts in trust law – then why do they always cite law and cases which deal with business and charitable trusts and never from the law of ordinary trust in their attacks against the ordinary trust promoted by the BLC and this “Separation of Church and State Law” ministry? Could it be that they knowingly wish to mislead others as they attack the ordinary trust with accusations that it is a legal entity? Business and charitable trusts are legal entities and the ordinary trust is not. Or could it be that they have never read the law of ordinary trusts? Or could it be that they got the language and ideas for their form of trust from the law of business trusts and/or the law of charitable trusts, but then attempted to distinguish their “trust” arrangement from those laws? Or could it be that they got the language and ideas for their method from the law of ordinary trust but do not wish to bring it up because they do not wish to bring attention to the fact that they have created some type of trust, something which they may have done because they do not understand these matters? Or could it be that a man who was later to start the ELC talked at length with Al Cunningham, while attorney Cunningham was alive and while the to be ELC leader was still a member of Indianapolis Baptist Temple, and – as a novice to legal matters – tried to create something with the elements of the ordinary trust which Attorney Cunningham recommended to churches but with changes which make the church which utilizes the method a legal entity, and then claim that what they were creating was biblical and not legal and that the concoction has all kinds of alleged benefits for a church? Al Cunningham was a great friend to Indianapolis Baptist Temple and Dr. Greg Dixon and spent a lot of time there.
In one place in their writings, they make the confused argument that there will be no lawsuits because you cannot take the true or equitable owner, the Lord Jesus Christ, to court (See Approved by God, p. 150). They state that this is so because lawsuits can be leveled against legal entities only, not spiritual ones. That statement is partly true – lawsuits can only be taken against legal, not spiritual entities. However, when money or property are taken to court, the legal owner, not the true, beneficial, or equitable owner in the trust situation, will be made a party to the action. ELC churches, by published ELC admission, are legal entities which can be taken to court (See, e.g., Approved by God, pp. 149-150 (ELC churches “hold property in trust for the Lord Jesus Christ;” “the church, by the Pastor, can execute a deed on behalf of the Lord Jesus Christ;” etc. See also, Chapter 3 of Approved by Man where the ELC makes clear that it handles “legal church problems”). A church can hold property (in trust or otherwise), execute a deed (by a pastor or anyone else), or be taken into court only if she is a legal entity. ELC churches are legal entities. BLC and SCSLM are New Testament churches; they are not legal entities; and they cannot be taken to court.
Anytime anyone initiates a lawsuit for damages (slips on the ice at the church entrance and is damaged, etc.), a property tax challenge, or any type challenge involving a legitimate dispute over property (especially real estate) or money, the appropriate court (or agency) will assume jurisdiction and decide the dispute. Effectively, there can be no legal action for damages on property, if there is no one with a duty, or if there is no legal owner. In the case of one damaged because of the knowing, intentional, or negligent action of another who has a duty to maintain safety of a facility, the probable course of action will probably be to sue the church (which means those in the church) (1) if there is no clearly worded declaration that makes clear that the church owns nothing and is not a legal entity or (2) if there is proof that the church is a legal entity. The latter can be established as to the ELC church as well as other types of legal entity churches such as incorporated (including corporation sole) churches. In other types of disputes, if there is no legal owner, the court (or agency) will take jurisdiction over the property or money and decide to whom it belongs if ownership is at issue or whether a crime or tort was committed in the handling of the property or money. In the case of a church who is places tithes, offerings, gifts, and properties into an ordinary (Bible) trust, the church is a legal entity and cannot be sued; the legal owner of the property is the pastor/trustee.
Consider in more detail liability for damages to someone injured on the property due to the negligence of someone in charge. For example, suppose a person falls on ice while entering the premises of the real estate used as the church meetinghouse due to the negligence of the one (the legal entity/trustee) in charge of the property (the legal owner) and/or the person delegated to remove the ice from the entrance, if any. The injured party’s lawyer will seek out the legal owner, who will not be hard to find. An investigation will be done. That is when the ELC church can be, due to the published statements of the ELC, implicated as the legal entity who holds legal title to the property. When the church is implicated, the members are implicated since the members are the church. Should that scenario arise, the church would be better off incorporated, from a worldly perspective (but see, Spurious rationale for church incorporation: limited liability/incorporation increases liability of church members(Section VI, Chapter 6 of God Betrayed; Chapter 6 of Separation of Church and State) for the heavenly perspective). However, when the recommendations of the BLC and this “Separation of Church and State Law” ministry are followed, the church cannot be implicated and the insurance company from whom the trust (not the church) has bought liability insurance on the real estate will take care of the damages. Of course, should the party responsible for the real estate be proven negligent or responsible for not removing the ice, he and anyone given the responsibility to remove the ice can also be included in the lawsuit; this is true no matter how the church is organized. And this is as it should be. It is biblical and it is legal to hold one who intentionally, knowingly, recklessly, or with negligence injures another or causes another to be injured.
Should a lawyer who knows the ELC teaching and the basic law of the various types of trusts be involved in any legal action against land, money, or against one responsible for injury and damages to another, that lawyer could establish that the ELC church is a legal entity and include the church in the dispute, something which ELC publications establish; an impossibility for the church which places tithes, offerings, and gifts into an ordinary trust which is a non-legal entity in which a trustee administers the trust estate for the benefit of the true, equitable, beneficial owner or the property, the Lord Jesus Christ and is careful not to inadvertently act legally and thereby set herself up as a legal entity. Fortunately for the ELC, no lawyer before the publication of this booklet was called to take the time to study out ELC teaching.
These matters will be explained in much more detail, with cited authority, in the accompanying articles, the links to which will be included at the beginning of this article as they are completed. May everyone put aside their pride and seek the truth, for His Glory. Addressing all these matters will be require a little time and study by the novice. You who are interested in these things must patiently go through these articles and do some self-study to determine the truth. Following this teaching as it develops piecemeal will give the interested party time to check the assertions of this author and sources and do some study yourself. If anyone who has studied the teachings of the ELC or the teachings of this “Separation of Church and State Law” ministry is confused or has an honest disagreement based on in-depth studies, this author will be glad to examine an issue with you. Again, if this author can be shown to be wrong, he will publicly repent and present corrections.