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5 entities’ trustees acted illegally, Mo. convention legal opinions report

JEFFERSON CITY, Mo. (BP)–Trustees of five Missouri Baptist Convention entities broke the law by amending their charters to take sole authority for appointing trustees and to eliminate the state convention from the trustee selection process, according to three law firms hired to offer legal opinions on the matter.

A summary of the law firms’ findings was presented to the Missouri Baptist Convention (MBC) executive board April 9 at the Windermere Conference Center and copies will be mailed soon to the approximately 2,000 Southern Baptist churches throughout Missouri. The summary also will be available on the MBC’s website.

“Individual trustees and agency officials may have personal liability for actual and punitive damages,” the legal summary states. “Legal theories could include breach of fiduciary duty, breach of contract, misrepresentation, civil conspiracy, misappropriation or conversion of assets.

“The filing of the unauthorized amendments with the Secretary of State was unlawful,” the summary notes. “The amendments contained false statements that no member or third party approval was required. Filing false records is a Class A misdemeanor.”

The legal opinion also states, “MBC officials have the legal capacity or ‘standing’ to seek legal remedies for the wrongful actions listed.”

MBC leaders would not say whether they will go to court over the trustee actions at Missouri Baptist College, The Baptist Home, the Missouri Baptist Foundation, the Word & Way newsjournal and the Windermere Conference Center. “We want to sit down with them and resolve this,” said MBC First Vice President Kenny Qualls, pastor of Springhill Baptist Church in Springfield. “If we can’t do that, the next step would be binding Christian arbitration. We want to send a clear message that God can intervene and change peoples’ hearts.”

MBC President Bob Curtis, pastor of Ballwin Baptist Church, Ballwin, and Gary Taylor, chairman of the MBC’s Legal Opinion Task Force and pastor of First Baptist Church of O’Fallon, have requested meetings with the presidents and board chairmen of the five entities to discuss the lingering controversy.

Separate private meetings would be held between Curtis and Taylor and each entity’s president and board chairman at the Baptist Building in Jefferson City. Letters requesting the meeting have been mailed asking for a response by April 19.

“Missouri Baptists now have available to them the information that three independent law firms have agreed upon as it relates to the actions of the five agencies that have become self-perpetuating,” Curtis said. “Gary Taylor and I plan to meet with the presidents and board chairmen of each agency with a desire to discuss biblical restoration and reconciliation. And we would encourage all Missouri Baptists to pray to that end.”

Baptist Press sought to contact leaders of the five entities for comment April 9; only James Smith, president and treasurer of the Missouri Baptist Foundation, offered comment. Those not responding included Randy Fullerton, board chairman for Missouri Baptist College and pastor of Fee Fee Baptist Church near St. Louis; Frank Shock, president of Windermere; Larry Johnson, president of The Baptist Home; and Robert Johnston, board chairman of the Word & Way and pastor of the First Baptist Church of Rolla.

“The Missouri Baptist Foundation regrets that the Missouri Baptist Convention has sought to argue its legal position in the media,” Smith said. “The Missouri Baptist Foundation remains committed to providing financial support for all the mission and ministry efforts of Missouri Baptists. We want to assure Missouri Baptists that we will continue to operate faithfully as we have for 56 years. Our mission has not changed.

“I hope these matters are resolved as quickly as possible,” Smith said. “I predict when our story is told and the facts about the foundation’s historic relationship with our convention are known, these issues will be quickly resolved.”

The legal opinions assessing trustee actions at the five entities are the latest development in the continuing high-stakes battle between leaders of the state convention who hold a pro-Southern Baptist Convention outlook and a disgruntled minority of anti-SBC moderates and liberals attempting to form a separate state convention.

The Baptist Home, a three-facility retirement home for senior citizens, has a $30 million endowment and assets of $10 million. Windermere owns about 1,300 acres at the Lake of the Ozarks in south central Missouri, including 3.5 miles of shoreline, valued at more than $8 million, according to its July 2001 balance sheet, while other reports place its actual value far higher. Missouri Baptist College, established in 1964 and with more than 3,000 students, describes itself as “an evangelical Christian, liberal arts college.” It is regarded as a theologically conservative school, although the trustee action raised fear among conservatives that it would slide into liberalism as have various Baptist schools in other states.

The law firms’ opinions came in response to messengers at the MBC’s annual meeting in October who overwhelmingly approved motions to escrow $2.1 million in funds earmarked for the five entities and to seek legal counsel. The MBC action was taken after moderate and liberal trustees amended the five entities’ charters to create self-perpetuating trustee boards.

Trustees have offered a variety of reasons for their actions, ranging from ascending/descending liability to convention politics. MBC leaders have countered that trustees only acted when it became clear that a recent string of conservative victories in state convention elections would soon shift the balance of power on each board.

The issue of liability “could not justify board members’ actions in adopting charter amendments without approval by the MBC,” the legal summary states. “Such concern would not require, and cannot legally justify amending the charter without the approval of the MBC.

“Liability insurance is the normal way to protect against the risks of litigation,” the legal summary continues. “Both the MBC and all agencies have such insurance. Prior lawsuits against MBC agencies have not successfully implicated the MBC. Likewise prior lawsuits against the agencies of the Southern Baptist Convention have not successfully implicated the parent corporation. Ascending liability is not a genuine risk.

“Other similar excuses by board members, such as concern for political influences in the state denomination, cannot justify unlawful, unauthorized charter changes.”

The five-member Legal Opinion Task Force was appointed by Curtis following the vote by messengers last October. The task force selected Michael K. Whitehead as legal counsel and charged him with the responsibility of choosing three of the top legal firms in Missouri to give the MBC independent opinions. The three firms selected were Bryan Cave, with offices in St. Louis and Kansas City, the largest law firm in the state and one of the 50 largest in the nation; Stinson, Mag & Fizzell of Kansas City; and Sandberg, Phoenix & von Gontard of St. Louis. They presented their opinions in March to Whitehead who interpreted the opinions for the task force.

Each firm received governing documents of the MBC and each of the five entities, according to the Legal Opinion Task Force in its report on the legal findings to the MBC executive board. The firms also reviewed the reports of five MBC study committees from 1925 to 1978 and each firm prepared a legal opinion letter that analyzed the documents under Missouri law.

“The result of this process was a unanimous verdict by all the law firms: the unauthorized amendments to agency charters violated Missouri law,” the legal summary states. “This is not a ‘gray area’ or ‘close question.’ The law is clear that the Missouri Baptist Convention has the legal right to control these agencies.”

The legal summary containing the law firms’ opinions contains 11 points, many citing Missouri statutes and laws such as the Missouri Non-Profit Corporation Act.

“The Missouri Baptist Convention is a ‘member’ of all five agency corporations and as such must approve any charter amendments,” the legal summary states. “The boards failed to treat MBC as a member, and hence the charter amendments are void. A ‘member’ of a non-profit corporation is defined in the Missouri Non-Profit Corporation Act as follows: ‘without regard to what a person is called in the articles or bylaws, any person or persons who on more than one occasion, pursuant to a provision of a corporation’s articles or bylaws, have the right to vote for the election of a director or directors. The Missouri Baptist Convention constitution and the governing documents of each of the five agencies gave Missouri Baptist Convention the right to vote for election of directors or ‘trustees’ of the agencies.

“The status as member is not dependent on a title conferred by the corporation’s articles or bylaws. Rather the statutory test is operational. Based on this test, Missouri Baptist Convention is the sole ‘member’ of each agency, with all the statutory rights of membership.

“One of the statutory rights of a member is to approve charter amendments. A board cannot unilaterally amend its charter to become independent and self-perpetuating, without strict notice requirements and member approval,” the summary states, citing specific Missouri statutes.

Other points covered in the legal opinions include:

— Prior to the trustee actions, three entities’ charters (The Baptist Home, Missouri Baptist College and Missouri Baptist Foundation) required that the charters could only be amended with the approval of the MBC. The opinions go on to say Missouri law requires that any charter changes must have the “written” approval of the MBC and that the trustee actions were invalid because the MBC did not approve in writing, “but expressly disapproved in writing.”

— Trustees cannot legally justify their actions by citing prior study committee reports on ownership of entities. The opinions cite in particular the 1978 MBC study committee on the “Ownership of Institutions.” It was created after it was suggested that MBC ownership of its entities would be more secure if the all entity assets were titled in the MBC corporate name. The study committee opposed the move to re-title for several reasons, but primarily because the MBC already had beneficial ownership of the entities by virtue of all the governing legal documents, even though the separate corporations held legal title. The legal summary quotes the observation of the study committee: “The fact that the Missouri Baptist Convention does not own each institution in name should not cloud our vision so as to blind us to the fact that Missouri Baptists throughout the convention do effectively control the six (now five) institutions that are the subject of this report.” The legal summary states, “Nothing in this study report, or the others, hints that the agencies are autonomous from the beneficial ownership and control of the MBC, as prescribed in the governing documents of the MBC and of the individual agency.”

— “The MBC has supported the agencies through the MBC Cooperative Program with the expectation that MBC would maintain ownership authority and accountability over the agencies,” the summary says, noting, “The unauthorized amendments by the agency trustees constituted a breach of trust or breach of fiduciary duty toward the Missouri Baptist Convention.”

The legal summary concluded by stating, to correct the problem, the Missouri Baptist Convention should require the five entities’ boards, at a minimum, to do the following:

— Recognize new trustees duly elected by the MBC and remove any trustees not duly elected by the MBC.

— Rescind the amended charters and restore their former charters.

— Account for all actions taken in the interim, and be willing to rescind any decisions that are not approved by the MBC executive board.

The legal opinions are the latest bad news for the beleaguered moderate/liberal movement in Missouri. Moderates/liberals have now lost four straight presidential elections, despite campaigns to raise more than $350,000 to defeat conservative candidates. Meanwhile, the political front for the movement, Mainstream Missouri Baptists, has closed its doors and its former director, Rob Marus, left the state. Former MBC Executive Director Jim Hill resigned last fall, citing his unwillingness to work with the growing number of conservatives in his midst. Hill has since taken a lead role in organizing a new “Baptist General Convention of Missouri.” Hill’s brother, Drew, another prominent leader in the movement and pastor of the First Baptist Church of Sedalia, told members of his congregation in a Feb. 14 letter he would no longer take part in the formation of a new state convention. Drew Hill hosted the first two organizational meetings of the new convention at the Sedalia church.

“I regret most of all that my own personal involvement in the forming of a new state convention has been the source of much of the controversy within our church,” Drew Hill wrote. “So as of today I am withdrawing from all participation and leadership in the new Baptist state convention. I will no longer be involved at any level or in any way in this effort.”

The new rival Baptist General Convention of Missouri has scheduled its first meeting for later this month at Fee Fee Baptist Church.

    About the Author

  • Don Hinkle