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First Church of Deliverance v. Holcomb

OPINION FILED DECEMBER 1, 1986.

THE FIRST CHURCH OF DELIVERANCE ET AL., PLAINTIFFS-APPELLEES,

v.

GLADYS HOLCOMB ET AL., DEFENDANTS-APPELLANTS.



Appeal from the Circuit Court of Cook County; the Hon. Anthony J. Scotillo, Judge, presiding.

JUSTICE BUCKLEY DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 16, 1987.

This action was brought by plaintiffs, First Church of Deliverance and Reverend Eugene D. Gray, the church's minister and current president of its board of directors, to enjoin the church's bank, convalescent home, and members of its former board (defendants) from dissipating the church's assets or interfering with the management of the church. A temporary restraining order was issued, and after a hearing, the trial court granted a preliminary injunction in favor of plaintiffs. Defendants appeal, contending that: (1) the trial court erred in denying their motion for directed verdict with respect to plaintiffs' standing to institute this suit, and (2) the trial court erroneously granted a preliminary injunction against them. For the following reasons, we affirm.

The background of the present controversy may be summarized as follows. The First Church of Deliverance, located at 4315 South Wabash Avenue in Chicago, was founded in 1929 by the late Reverend Clarence H. Cobbs. In 1977 Cobbs incorporated the church as an Illinois not-for-profit corporation. When Cobbs died in 1979, Gladys Holcomb became president of the board of directors, and in January 1981, Eugene Gray was appointed as Cobbs' successor.

On January 11, 1985, an annual church meeting was held with anywhere from 300 to 1,000 members in attendance and Gray presiding. The meeting was called pursuant to oral and written notice. As of that day, the members of the church's board of directors were Gladys Holcomb, Kinard Holcomb, Arthur Sloan, Gervaise Hill, Ralph Goodpasteur, and Beatrice Miller, all of whom were present at the meeting, and the board's attorney was Bernard Fried. The same board, with the exception of Goodpasteur, also governed the Convalescent Home of the First Church of Deliverance.

After Gray introduced Garland Watt as his personal attorney, determined whether there were any outsiders present, and addressed certain preliminary matters, the meeting was held open to the general membership, who expressed various concerns about the church's finances. Shortly thereafter, a church member rose and recited a resolution requesting the removal of the current board members from office. A motion was then made recommending Gray, Ralph Goodpasteur, and three other individuals, along with Garland Watt as church counsel, to constitute the new board. It is disputed as to whether both motions were approved by acclamation of those in attendance, but most witnesses agreed that it was not the custom of the church to "vote." The nominations were accepted.

On January 12, 1985, the new board held its first meeting. Two days later, this action was filed against Seaway National Bank of Chicago, the Convalescent Home of the First Church of Deliverance, and Gladys Holcomb, Arthur Sloan, and Bernard Fried, the ousted board's president, secretary, and attorney respectively. In their complaint, plaintiffs sought an accounting, and among other things, to preclude defendants from disposing of, negotiating, or transferring church assets or taking any other action interfering with the ownership rights of the church. A temporary restraining order was issued, and a hearing on plaintiffs' motion for a preliminary injunction was conducted in which the trial court first considered the validity of the January 11 meeting removing the former board. The following evidence was initially presented with respect to that issue.

Ralph Goodpasteur, a past and current member of the board, testified that annual church meetings led by Reverend Gray had been held since 1981, usually at the beginning of the year. During these meetings, which Gray announced both verbally and in the church bulletin, upcoming events were discussed. The church's bylaws, however, were never voted on, referred to, or consulted at these meetings, and no elections had ever been conducted.

Ethel Alexander, a member of the new board, testified, like Goodpasteur, that Gray announced annual church meetings as well as presided over them. According to Alexander, while no prior elections had taken place, the resolution requesting the removal of the old board and the nomination of the new board were received by acclamation of those present at the January 11 meeting. She further stated that when Gray called for additional recommendations, none were offered, and when asked if he could work with the names submitted, Gray responded affirmatively.

Gray's recollection of the meeting in dispute was basically the same as that of Alexander. Gray added that he had no prior knowledge that an election was planned and asked his personal attorney to attend the meeting as a "monitor" to assist him in answering questions of members who had lodged complaints. After hearing the testimony of Gray, Goodpasteur, and Alexander, the trial court denied defendants' motion for directed verdict as to the propriety of the election.

The following testimony was rendered on behalf of plaintiffs in support of their request for a preliminary injunction. While defendant Sloan stated that he collected $4,000 to $6,000 weekly from church members, Ethel Alexander testified that thousands of dollars of utility bills belonging to the church and its various properties were due and owing and had to be paid by the new board on threats that the services would be terminated. On one occasion, due to an unpaid gas bill, the gas was turned off at the church's Maggie Drummond Community Center during subzero weather when the building was occupied with children. Pat Henley, the church's newly elected financial secretary, testified to a letter from the Metropolitan Sanitary District requesting immediate payment of a church bill dating back to December 1980. Moreover, the convalescent home's certified public accountant stated he disclaimed his audit reports as a result of the information contained in the home's books and records.

Defendant Sloan, who in his capacity as secretary and self-appointed treasurer managed the church's financial affairs, testified that he received $1,500-per-month salary from the church in addition to $100 per month for rent, both amounts having been established by Reverend Cobbs prior to his death. Sloan's rent allowance was increased in January 1985 to $300 by the church's executive committee consisting of Sloan, Gladys Holcomb, and Beatrice Miller.

Sloan stated that since 1979, no financial report including the church's income, expenses, and indebtedness had been submitted to the board or church body. He also testified that prior to March 1985, the church and its various properties were uninsured, and that real estate taxes on the church's rental properties had been delinquent since 1979.

Sloan further stated that he had negotiated a contract to lease and sell the church's convalescent home without authorization of the church's board of directors. He subsequently showed the board this contract, but then executed a different one. Also without board approval, Sloan pledged ...


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