What is Corporation Sole?

By Glen Stoll, Director and General Counsel of Remedies at LawSeptember 4, 1998

The first known Corporation Sole was established by the Church of England in the year 1448. At thatpoint in history the Church of England had not broken its ties with the Church of Rome. The King ofEngland had not yet been dubbed "the Defender of the Faith," and Martin Luther had not posted his 95Theses on the door of the Castle church at Wittenberg.

More than 200 years earlier King John granted that great charter, the Magna Charta, containingprinciples upon which the English judicial system is based. It established the rule of English commonlaw which provided due process for any "freeman. . . by the lawful judgment of his peers, or by the law ofthe land." Equal protection was acknowledged by stating, "We will sell to no man, we will not deny toany man, either justice or right."

But as the state assumed the authority of the church, force was used to compel matters of religiousconscience. Without the support of the state, the church was left to depend upon the power of reasonand belief. Ecclesiastical Law was referred to as the "Canons of the Church" in order to avoid the use ofthe word "law." The ownership of real property was eventually held by the church, apart from the controlof the state, through the establishment of a Corporation Sole.

An unincorporated church ministry, such as a local mission or family assembly, is the only authoritythat may grant a charter for the creation of a Corporation Sole. The Articles of Incorporation and Chartermust be registered with the church before notice of its existence can be given. A filing with theSecretary of State or county recorder provides notice to the public at large and to the state in generalthat a given Corporation Sole is the exclusive overseer of the unincorporated ministry that created it.

Just as there is only one office, there can be only one office holder at any given point in time. Thus, theword "sole" meaning singular. That single office is incorporated into the body of Christ to serve theunincorporated ministry. The Corporation Sole is historically Christian in its function and structure and isexempt from federal, state or local license or tax by its very nature.

THE CORPORATION SOLE THE OVERSEER THE MINISTRY

The King of England The King England

The Bishop of the Church ofRome

The Bishop The Church of Rome

The Office of the President of theChurch of Jesus Christ of Later-day Saints

The Office of the PresidentThe Church of Jesus Christ ofLatter-day Saints

The following are definitions from Black's Law Dictionary (6th Edition):

The Church is the religious society founded and established by Jesus Christ, to receive, preserve, and

propagate His doctrines and ordinances. A Church is a body or community of Christians, united underone form of government by the profession of the same faith and the observance of the same ritual andceremonies. A Mission is an establishment of churches, schools and relief depots through which aretaught the principles of Christianity, the afflicted cared for, and the needy supplied.

Corporation Sole

An Introduction

To understand the Corporation Sole, one must understand how a"church", as an entity, is protected by the Constitution for the UnitedStates and the U.S. code.

In Title 26 of the United States Code (USC) and Income Tax Regulation5 - June 26, 1977, edition published by Commerce Clearing House,Section 1.513-2(ii) vol. 1, page 33, 471-42, and in The Law of TaxExempt Organizations by Bruce Hopkins, published by Lerner Law BookCo., 1977 (page 107), it states the following:

The term "church" includes a religious order to a religious organizationif such order or organization is:

(a) an integral part of a church;

(b) is engaged in carrying out the functions of a church. whether as acivil law corporation or otherwise. (note "or otherwise", you do not haveto incorporate and thus become a creature of the state.)

However, the option does remain for the church to incorporate if itdesires. There are both advantages and disadvantages to both sides ofthis question. One item of interest is the position taken by the State onthe rights on incorporated entities. Official IRS Audit Guide, Section242.31, addressing corporation books and records it states:

The privilege against self incrimination under the Fifth Amendment doesnot apply to corporations.

The theory for this is that the State, having created the corporation,has reserved the power to inquire into its activities. Now, if we trulysubscribe to the doctrine of "separation of church and state", we shouldgive this matter our full attention. If we incorporate, we give up theRight and become controlled, at least to a degree, by the State. If weremain Unincorporated (as one who is not a 14th Amendment citizen),we retain all of our Rights under the Bill of Rights, (i.e., the first tenamendments to the Constitution for the united States of America). Weelect to remain unincorporated.

In summary, under the previous stated regulation (1.511-2(ii)), a"church is an organization the 'duties' of which include the ministrationor sacerdotal, (i.e. priestly) functions and the practices of a particularreligious body. A Church may also include a religious order or otherorganizations which is an 'integral part' of a church and is engaged incarrying out functions of a church."

The 8th US District Court said in a decision in 1974:

"Neither this Court, nor any branch of this Government, will considerthe merits of fallacies of religion, nor will the Court compare thebeliefs, dogmas, and practices of a newly organized religion with thoseof an older, more established religion, nor will the Court praise orcondemn a religion, however excellent or fanatical or preposterous itmay seem. Were the Court to do so, it would impinge upon guaranteesof the First Amendment" [See "Law of tax and Exempt Organizations: byBruce Hopkins, published by Learner Book Co. 1977, pg. 110, in yourlocal law library] The Universal Life Church vs. United States, 372F.Supp. 770,776 (E.D. Cal 1974)

From the above, we can at least say this.

"Under the Constitution for the United States of America, we as citizensenjoy the right of freedom from religion, that is, state defined religion."Abington School District vs. Schempp 374 U.S. 203 1963

From these decisions we may conclude that any claim to church statuscannot be subjected to evaluative criteria or government standards, assuch action would tend to prescribe the form and content of religiousbeliefs and practices. Also, whatsoever rights, privileges andexemptions or immunities are granted to any church, and/or religion,are also and must on the same basis and to the same extent, begranted to all churches and/or religions

Religious Freedom - A NaturalRight

The first Amendment of the united States Constitution reads as follows;

"Congress shall make no law respecting an establishment of religion, orprohibiting the free exercise thereof; or abridging the freedom ofspeech, or of the press; or the right of the people peaceably to

assemble, and to petition the government for a redress of grievance."

The Fourteenth Amendment, Section 1 of the United StatesConstitution, reads as follows:

"All persons born or naturalized in the United States, and subject to thejurisdiction thereof, are citizens of the United States and of the statewherein they reside. No state shall make or enforce an law which shallabridge the privileges or immunities of citizens of the United States;nor shall any state deprive any person of life, liberty or property,without due process of law; nor deny to any person within itsjurisdiction the equal protections of the laws."

We have, as stated before, the natural right to freedom "from" religion.No law for, against or otherwise can ever be made with regard to thechurch, as it exists under the Supreme Law of the land, within a legalnull. There is no law at all respecting an establishment of religion orthe free exercise thereof.

The rights spoken of here in the First Amendment and the followingNine Amendments, the Bill of Rights, are personal Rights fought andpaid for the sacrifice of human life by our forefathers. These law-rightsas well as the entire Constitution for the united States are, in fact, theSupreme Law of the land. The Supreme Court of the United States(contrasted by writing it more correctly - the supreme Court of theunited States) has addressed itself to this fact, and holds the followingopinions:

"Any law opposed to the Constitution of the United States is as it wereNO LAW AT ALL!"

This doctrine is so important that we have reprinted the fullness of thetext which states the following;

The general rule is .... that an unconstitutional statute, though havingthe form and name of law is in reality NO LAW, but is wholly void, andineffective [f]or any purpose, since unconstitutionality dates from thetime of its enactment and not merely from the date of the decision sobranding it an unconstitutional law, in legal contemplation, is asinoperative as if it had never been passed. Since an unconstitutionallaw is void, the general principles follow that it imposes no duties,confers no rights, creates no office, bestows no power or authority onanyone, affords no protection, and justifies no acts performed under it.A contract which rests on an unconstitutional statute creates noobligation to be impaired by subsequent legislation. A void act cannotbe legally inconsistent with a valid one. And an unconstitutional lawcannot operate to supersede any existing valid law. Indeed, insofar asa statute runs counter to the fundamental law of the land, it issuperseded thereby. Since an unconstitutional statute cannot repeal orin any way effect an existing one, if a repealing statute is

unconstitutional, the statute which it attempts to repeal remains in fullforce and effect. The general principles stated above apply to theconstitutions as well as the laws of the several states insofar as theyare repugnant to the Constitution and the Laws of the United States.Moreover, a constitution will nullify it as effectually as if it had, inexpress terms been enacted in conflict therein." I6 AM. Jr. 2nd, Page177

From this it is established by the Supreme Law of the land, that NOLAW for, because of, against, or otherwise is possible regardingreligion. No law is no law at all! The church exists in a legal null underthe Supreme Law of the land, the Constitution for the United States ofAmerica.

RETURNS by EXEMPTORGANIZANIONS

So far we have established under the NO LAW concept of the FirstAmendment that: The Church is exempt by right and does not have topetition any government agency for recognition of exempt status. Infact, as stated in the code cited previously (1.508-1(a)(4)) the church isexempt whether it files notice or not.

Let us say we have established a church and operated it for one year.The question comes to mind when every organization and privateperson is required to file an annual return - does the church also haveto file?

§ 6033 (a) exempts religious organizations from the need for filingreturns of any kind.

§ 6033 (a)(2)(A) Mandatory exceptions - Paragraph (2) shall not apply to -(i) churches.

§ 6033 (a)(2)(A)(i) provides for mandatory exceptions to filing requirementsfor religious organizations and states that filing requirements shall notapply to "churches", their integrated auxiliaries, and conventions orassociations of churches.

§ 6033 (a)(2)(A)(iii) exempts as well "the exclusive religious activities ofany religious order"

Explanation: Under Title 26 § 6033, your church or religious order hascomplete immunity to disclosure. It is not necessary for you to maintainrecords of any kind except for your own purpose and reasons.

Can you believe it? The Congress remained true to the Supreme Law ofthe land again. The First Amendment says: "Congress shall make no lawrespecting an establishment of religion,"... and they have NO LAWwhatsoever. We are sure that you can now see how you can establishyour church and operate your organization without any liability to anyagency (as far as establishment of recognition of exempt status isconcerned) as well as how you are also legally exempted from filing anyreturn with any government agency for any reason. NO LAW IS NOLAW.

DISSOLUTION/TERMINATION

People are not more than the sum total of what they think, say and do,Let us say because of whom we are and where we are emotionally,spiritually, academically, financially and personally, we can no longerlive with or otherwise support our involvement in the Church and/orministry. Is there any requirement for the person or persons whoestablish, and operate a church to notify ANY government agency of adissolution, termination or substantial contraction of their church?

26 USC § 6033(b)(1) No return shall be required under this subsection fromchurches, their integrated auxiliaries, conventions or associations ofchurches REG. 1.6043-3 - Returns regarding liquidation, termination orsubstantial contraction or organization exempt from taxation under501(a), (Vol. 3, pg. 40, 325)

Reg. 1.6043-3(b) - Exceptions. The following organizations are notrequired to file the return described in paragraph (a) of this Section.

REG. 1.6043-3(b)(1) - Churches, their auxiliaries, or conventions orassociation of churches

In terminating the church existence, there is a form published just forthat action. The number for that form is 966-E and it addresses 26 USC6043(b) of the Code and your responsibility thereunder. The Title of thisForm is: Liquidation, dissolution. Termination, or substantial contractionof organizations exempt or formerly exempt under Section 501(a). TheChurch is in 501(c)(3), and every organization in (c) is also in (a) Youwill find in the instructions at the bottom of the page that the Church,the integrated auxiliaries and/or associations of churches are exemptfrom filing this Form.

What's A Church?

"Religion is not confined to a sect or a ritual. The symbols of a religionto one are anathema to another. What one may regard as charity,another may scorn as foolish waste. And even education is today notfree from divergence of view as to its validity." Unity School ofChristianity, 4 B.T.A. 61, 70 (1925)

"Neither this court nor any branch of this government will consider themerits or fallacies of a religion. Nor will the court compare the beliefs,dogmas, and practices of a newly organized religion with those of anolder, more established one. Nor will the court praise or condemn areligion, however, excellent or fanatical or preposterous it may seem.Were the court to do so, it would impinge upon the guarantees of theFirst Amendment." Judge Brattin for the Eastern District of California;Universal Life Church, Inc. vs United States, 372, F. Supp. 770, 776(E.D. Cal (1974))

In United States vs Seeger, 380 U.S. 163 (Supreme Court 1965), we findthe Court addressing the concept of יתןת and religion and holding thatthe test of belief in יתןת (they put in supreme being) is whether a givenbelief that is sincere and meaningful occupies place in the life of itspossessor, [parallel] to that filled by the orthodox belief in יתןת of onewho is clearly religious. Assuming the holding of the Court is valid inthe above cases, it then necessarily follows that any lawful means offormally observing the tenets of faith of any religious body is worshipwithin the meaning of the tax-emption provisions.

In another case the court held that.

'The terms "religion" or "religions" in tax exemption laws should notinclude any reference to whether the beliefs involved are theistic ornon-theistic. Religion simply includes: (1) a belief, not necessarilyreferring to supernatural powers; (2) a cult, involving a gregariousassociation openly expressing the belief; (3) a system of moral practicedirectly resulting from an adherence to the belief; and (4) anorganization with the cult designed to observe the tenets of belief Thecontent of the belief is of no moment.' Fellowship of Humanity vsAlameda County (57)(1) 153 Cal A. 2nd 673, 315 P. 2nd 394

CONCLUSION

This completes our initial consideration of the establishment, operation

and termination of a church.

We believe the fact is established by the above information that theChurch can do three things:

1. Originate

2. Operate, and

3. Terminate

...without any responsibility to any agency, civil government orotherwise; to gain their approval, sanction, or any other blessings, withregard to recognition of exempt status (which is your inherent right),since a church is mandatorily excepted from filing for recognition ofexempt status.

The Church is mandatorily excepted from filing any return with anygovernment agency. You can terminate the Church without telling anygovernment agency anything. The Church in fact exists within a legalnull. There is NO LAW.

REMEMBER!

There are two things that a Church does not do: file tax returns (see26 USC 6033 (a)(2)(A)(l); and think for itself. SO we see that we havecreated a legal person with no brains!

THE COURT OF "ORDINATION"

It may be of benefit here to pursue a few more case histories in orderto establish just what the ordination is from established case law.[When making reference to the church it includes local congregations.]

(a) Kibbe vs. Antram 4 Conn, 134, 139, we see that to "ordain" is tovest with authority ministerial function of sacerdotal power. Also, fromthe above case it is established that "the ordination" of a clergymanremains even after his separation from a church of which he once hadcharge, and his spiritual authority continues, although he is not settledover a particular congregation.

(b) "Generally a duly 'ordained minister' is one who has followed aprescribed course of study of religious principles, has been consecratedto the service of living and teaching that religion through an ordinationceremony under the auspices of an established church, has been

commissioned by that church as its minister in the service of יתןת andgenerally is subject to control or discipline by a council of the church."Buttocall vs U.S.C.C.A Tex., 130F, 2nd 172, 174

(c) "The minister may be installed over some particular society, eitherincorporated or unincorporated." Ruggies vs Kimball, 12 Mass. 337,338

THE MAKING OF A MINISTER

First of all, we need a minister, Duly Ordained, or who may be licensedand/or Commissioned by the Church. From a Christian perspective, thisindividual is usually the product of the following evolution:

CONVERSION

Conversion is an experience that an individual experiences, the end ofwhich establishes a deep seated personal conviction with respect toand that individual's responsibility thereunder. More literally ,יתןתtranslated from the Greek and Hebrew Scriptures, Conversion is aturning either towards or away from יתןת and His Law and Word (in thiscase we are considering the turn toward יתןת and a final Life, longcommitment thereto) This final commitment may come as a suddencri5is or as the result of a prolonged sequence at experience andevents.

MOTIVATION

The Conversion of the individual comes about by becoming aware of thetruth. The truth being established in the heart of the convert causeshim to want to share the truth with others around him. If a real changehas taken place in the life of a convert, he or she will want, with deepdesire, to communicate the truth to others, sharing knowledge anddesiring to bring all unto Christ.

NOTE: We are certain that there are other perspectives relative tochurches and the free exercise of religion which are not necessarilyChristian in nature. However, we cannot speak to these perspectivessince our perspective is one that is particularly Christian.

WHAT IS RELIGION

It would appear from the above that what "religious" or "religion" is

depends upon a person's personal belief and not upon any organized orofficial stand. One's concept of the supreme Being cannot be subjectedto evaluative criteria, as long as it is sincere, meaningful, and occupiesa place in your life equal to that concept of יתןת which a person of anorthodox persuasion might hold. Now, before you perform brain surgery,it would be well for you to:

"Study to show yourself approved to יתןת, a workman that needeth notbe ashamed."(II Timothy 2:15)

"The moment an attempt is made to limit or restrict ordination to somespecial form of ceremony, we begin to discriminate between the diversemodes and forms of ordination practiced by the various religioussocieties. The laws of Ohio make no discrimination in any respectbetween Catholic, Gentile, Jewish or any other religious societies ordenominations; much less do they attempt to prescribe any mode ofministerial ordination, which is defined in the Standard Dictionary as:

the act or rite of admitting and setting apart to the Christian ministry orthe holy orders, especially in the Roman Catholic, Anglican, and GreekChurch’s consecration to the ministry by the laying on of hands of abishop or bishops; in other churches, consecration by a presbytery, orcouncil members." It has been the practice of this court, therefore, togrant the license to authorize the solemnization of marriages to dulycommissioned officers to the Salvation Army who were engaged undersuch priest, Jewish Rabbis, teachers and ministers of spiritualisticphilosophy, and in fact all persons who can prove to the satisfaction ofthe court that they have been duly appointed or recognized in themanner required by the regulations of their respective denomination,and are devoting themselves generally to the work of officiating andministering in the religion interest and affairs of such societies orbodies."Re Reinhert, 9 Ohio S& C P. Dec. 441,442

The information presented above that: an ordination is only arecognition by some religious society (your congregation), publiclyproclaiming that said individual is vested with spiritual authority; aright which that individual had prior to public proclamation. If, afteronce having been ordained, a minister leaves his church andcongregation, his ministerial authority does NOT cease even though heis no longer physically tied to that initial religious (church) body.Generally, most ministers have studied and are under the authority ofsame governing body. Whether the church is incorporated orunincorporated, the state has no authority whatsoever in the internalaffairs of the church. And finally, the form of the ordination and theceremony means little when we like into consideration all the otherreligious organizations in the united States - the rites of one religiousbody are considered just as credible as any other religious body.

OTHER TAX CONSIDERATIONS

The law requires every taxpayer to maintain records that will enable himto complete an accurate and complete return (see IRS publications 334,552 and 583) However, the church is a mandatorily tax exceptedorganization by right and is not considered to be a taxpayer eventhough it operates as a separate legal entity which can buy, sell, rent,own real property and do any kinds of business as well as sue and besued just like a natural born person.

RELATED CHURCH BUSINESS

The Church operates generally on a tax exempt basis: That is, exemptfrom property tax, although some states have a qualifying procedure, soyou must check with your local county tax assessor; exempt from statesales tax and state income tax. In most cases, again, you should checkwith your individual state taxing authority, as this also varies fromstate to state; exempt from Federal Withholding., FICA and FUTA taxesfor its ministers. See IRS publication 15 Circular E; exempt from RetailFederal Excise Tax and finally, exempt from Federal Income Tax on itsexempt purposes (see IRS publications 598 and 1018) Generally once aLetter of determination is issued from the IRS Service Center andpresented to the appropriate State agency, tax exceptions arerecognized quite easily.

Specific Exceptions to Unrelated Church Business

Department of Treasury, IRS Pub. 1018(1-77) Certain Income producingactivities are excepted from tax even though they may be from an ongoing, unrelated business, These exceptions are;

(a) Activities in which substantially all the work is performed for thechurch by unpaid volunteers;

(b) Activities carried on by the church primarily for the convenience ofits members, students and employees;

(c) Selling merchandise, substantially all of which has been received bythe church as gifts or Contributions;

(d) Generally, dividends, interest, annuities, royalties, and capital gainsand losses;

(e) Generally, rents from real property. Examples of Exceptions;

1) A church holds a monthly bingo game. If substantially all the work isdone by unpaid volunteers, the income is not taxed. Similarly, it achurch regularly holds fund-raising dinners, open to the public, theincome is not taxed it substantially all the work is done by unpaidvolunteers. The specific exceptions of dividends, interest, annuities,royalties and capital gains and losses are aimed at excluding passiveincome from the tax. and taxing income from the active business.

For example:

(a) If a church owns stock in a taxable business, dividends from thebusiness are not subject to the tax under certain circumstances,however, property acquired by a church for its use for exempt purposesin the future is not treated as "debt-financed", An example of this is achurch purchasing land by mortgage for a new church building andrenting the land while collection funds through a building fund. As longas the exempt use of the property begins within 15 years, any rentalincome from the real property falls within the exemption within theexemption and is riot taxable

REURNS BY EXMPT CHURCHES

26 USC 6033(a)(2)(A)(l) generally, the "church" is mandatory excepted fromfiling an annual Federal Tax return (that is Form 990-A), which all other501(c)(3) organizations are required to file. This does not apply to theunrelated trade or business or a church however. This is brought to lightin the Regulation, Section l.6033-1(i)(1), which states: "Certainorganizations (i.e. churches) otherwise exempt tax under section 501(a)and described in 501-C (3) are required to file returns on Form 990T, onunrelated trade or business."

THE IRS CODE

WHERE ARE WE?

(a) That churches may or may not keep permanent books and records;

(b) These may include, records, and inventories sufficient to showspecifically the items of;

(c) Gross Income:; or,

(d) Receipt (contributions, gifts, etc.):

(e) Disbursements (expenses).

If said church is involved in unrelated trade and business, it must keeppermanent books and records relating specifically to the unrelated tradeand business.

1. Section 6033(a)...

Exempts religious organizations from the need for filing returns of anykind. § 6033(a)(2)(i) provides for mandatory exceptions to filingrequirements for religious organizations and states that filingrequirements shall not apply to "churches, their related auxiliaries, andconventions or associations of churches: § 6033 (a)(2)(A)(iii) exempts aswell "the exclusively religious activities of any religious order".

Explanation

Under § 6033, your church or religious order has complete immunity todisclosure. It is not necessary for you to maintain records of any kindexcept for your own purposes and reasons.

2. Section 107....

In case of a minister of the gospel, gross income does not include: (1)the rental value of a home furnished to him as part of hiscompensation; or, (2) the rental allowance paid to him as part of hiscompensation, to the extent used by him to rent or provide a home.

Explanation

In order to qualify for the exclusion, the home or rental allowance mustbe provided as remuneration for services that are ordinarily the dutiesof a minister of the gospel. The rental allowances may be used for therental of a home, the purchase of a home, and for expenses directly toproviding a home. Expenses for food and servants are not considered forthis purpose to be directly related to providing a home.

3. SECTION 3401 (A)(9)

Provides that the definition of the term "wages" for tax withholdingpurposes does not include remuneration paid "for services performed bya duly ordained commissioned or licensed minister of a church in theexercise of duties required by such order; etc."

Explanation

Internal Revenue Service regulations provide guidelines for IRSemployees to help them understand the Internal Revenue Code. IRSregulation 31.3401 (a)(9) - 1 states; "Service performed by a member ofa religious order in the exercise of duties required by such orderincludes all duties required of the member by the order. The nature orextent of such service is IMMATERIAL, so long as it is a service that the

minister is directed or required to perform by ecclesiastical superiors.

For Example

If Father Mclaughlin is directed by his order to work for the federalgovernment in the Office of the President, then his employer (in thiscase the federal government) is not under any compulsion whatsoeverto withhold either federal income taxes or social security taxes. Amember of a religious order may be required by his order to be anAdvisor to the President, a pilot, or a bank loan officer. The regulationstates that the nature or extent of such service is

IMMATERIAL

4. SECTION 170

Provides that up to 50% of an individual’s Adjusted Gross Income (AGI)is deductible for contributions to religious and charitable organizations.The "General Rule" allows tax-deductible status for contributions to "achurch or a convention or association of churches, etc."

Explanation

A person with an adjusted Gross Income of $30,000 may contribute upto $15,000 and claim such a deduction. Other subsections of Section170 provide for donations of income-producing assets and also for theUnlimited Charitable Deduction sometimes known as the "Nun’s Rule".

5. SECTION 1402 (c)(4) provides that:

"the performance of service by a duly ordained, commissioned, orlicensed minister of a church in the exercise of his ministry or by amember of a religious order in the exercise of duties required by suchorder" Is not considered a "trade or business" when used with referenceto self-employment.

Explanation

An auto mechanic, gardener, or medical doctor may be self-employed. Ifthe religious order of which one is a member directs one to undertakeduties in one’s field of training or experience, as a self-employedperson, then any income received Is not taxable as Income from a"trade or business".

IRS PUBLICATION 15, 1978 Circular E. Employer’s Tax Guide isdistributed free of charge by the IRS. On page 11, you will find that"Members of religious orders who have taken a vow of povertyperforming duties required by the order "are exempt from income taxwithholding" and from "social security".

Section 1402 (e) exempts "a member of a religious order who has taken avow of poverty as a member of such order" from taxes under the FederalInsurance Contributions (sic) Act, i.e. FICA or social security. There isno requirement that you file for this exemption from social security tax.The exemption is automatic when you are a member of a religiousorder, who has taken a vow of poverty as a member of your order.

Under fundamental law, rights and privileges granted any church orreligious order must on the same basis and to the same extent to begranted to all. If members of your church or religious order are beingdiscriminated against or are being denied their rights under the U.S.Constitution then they have cause for prosecution.

Any person, including any government official, within the jurisdiction ofthe U.S. Constitution who acts to prefer one religion to any other in anofficial capacity, is acting in the violation of the Constitution. At thevery least a government employee may be dismissed for violating hisoath of office to uphold the Constitution and he or she may be subjectto civil and criminal penalties, with fines up to $10,000 or imprisonmentup to five years, or both.

Corporation Sole - A Definition

Black’s Law Dictionary6th Edition (1891-1991)

Corporation Sole: Unusual type of Corporation consisting of only oneperson whose successor becomes the corporation on his death orresignation; See Aggregate and Sole;

Aggregate and Sole; It is a religious non-profit sole consisting of oneperson only, and his successors in some particular station, who areincorporated by law in order to give them some legal capacities andadvantages, particularly that of perpetuity, which in their naturalpersons they could not have had. In this sense, the sovereign inEngland is a sole corporation; so is the bishop; so are some of thedeans distinct from their several chapters, and so is every parson andvicar.

Advantages of "Corporation

Advantages of "CorporationSole"

The following is a report of a discussion of Corporation Sole for thefinancial services and asset protection Professionals

Recently, there has been a lot of information and misinformationpassed around among estate planners and investment consultantsregarding the Corporation Sole. Corporations Sole have been around forover 450 years, so they are not a "new kid on the block". CorporationsSole are used primarily for holding and passing the title for propertybelonging to a church, religious society, or charitable organization. Twoexamples of well-known Corporations Sole are the Brothers Winery andthe Sierra Club. Because you will be asked about Corporations Sole, ifyou haven’t already been asked, I’ll share a little backgroundinformation on Corporations Sole and you may be able to decide if orhow they fit in with the estate planning strategies that you provide forclients. This discussion is the result of five years of studyingCorporations Sole, and writing Corporations Sole for dozens of clients.In this learning curve, I have studied the documents written by most ofthe current Corporations Sole gurus. In various ways and to varyingdegrees, I find that there is a general lack of understanding of thehistoric usage of Corporation Sole, even among the so-called "gurus".There is also a lack of understanding of the statutes regardingCorporation Sole that results in most cases in giving away of thepotential benefits gained by this unique form of corporation.

People use corporations when they need a means of limiting liability.Normal Corporations are a creation of the state, and begin theirexistence on the date that the state incorporates them. Normalcorporations owe their existence and allegiance to the government.Corporations "live" forever unless limited by their own Articles ofIncorporations. Normal corporations require several officers, they haveboards of directors, stockholders, annual fees, annual reports, andoperate under many statutory regulations.

People use trusts when they need a means of protecting assets. Trustsare used when one person entrusts another person with some valuableasset or a right. The asset or right must be sufficiently identified fortitle to pass to the trustee and title must actually pass to the trustee.The asset or right, therefore, belongs to the Trustee and is not returnedinto the ownership of the original owner [trustor] or a designatedbeneficiary until the trust terminates on a stipulated date. The reasonwhy assets placed in trust are not liable for claims against the trustoror for taxes of the trustor is because the property really does notbelong to someone else. Trusts are not perpetual and they are limitedby statute to a certain number of years [20, 30, 99 years, etc.]. Thereare laws against perpetual trusts in virtually most, if not actually all,jurisdictions.

Wouldn’t it be nice if we could have an organization that has theadvantages of limited liability of a corporation, without the regulation,without the multiplicity of offices of a corporation, for an organizationthat the government does not create (therefore the organization doesnot have its allegiance to the state), and also allows the organizationto function as a perpetual trust in order to protect and convey assetsfor many generations? Carefully reading and comparing the UtahCorporation Sole statutes, a good Corporation Sole instrument, and the"Apostille" [not: "Creation" issued by the Governor's office of the Stateof Utah, show that the Corporation Sole can be everything that is listedabove. Are all Corporation Sole documents equally serviceable? Manydocuments that do meet the State’s requirements are so poorly writtenthat they give away all of the advantages recognized in the firstamendment’s "free exercise [of religion]" clause. Some Corporation Soledocuments even attempt to form a contract with "the ALLEGED state of[State]." Under UCC 1-203, Good Faith is a requirement in all contracts.Because it is not possible, in our opinion, to operate in good faith whenone is alleging that the other party may or may not exist, then thatkind of Corporation Sole instrument is inherently flawed and the courtswill eventually walk right through them and seize all of the assets thatthe corporation accumulates. Some folks who have (in the past)organized a church under Corporation Sole and then promptly applied forthe IRS 501(c)(3) status. Applying for permission for exemption under501(c)(3) voids the natural immunity against regulation found in theFirst Amendment to the Constitution as well as the Internal RevenueService Code, section 508. In spite of some sad examples of poorplanning, there are also some very solid Corporation Sole instrumentsthat do hold up in the courts.

Being a "Corporation," the Corporation sole is by nature a form oflimiting liability within the assets of the corporation. The statutes onCorporation Sole in some States stipulate that the property is held "intrust" for the membership of the organization. This makes this kind ofcorporation function as a trust! In fact, the Oklahoma statutesdescribing Corporation Sole are found in that state’s trust successorprovisions, with a waiver of the "rule against perpetuities".

One feature of religious societies is that they can accept vows ofpoverty by their members [Re; monks, nuns, priests and Overseers].The IRS recognizes these vows of poverty. For a small part of the IRSinformation on Vows of Poverty, look at pages 2 and 5 in IRS Publication517. When one is under vow of poverty, the physical objects in theirpossession are not their own, although it may be their job to look afterand use those objects. Thus, when you see a Catholic Bishop beingmoved between a cathedral and a golf course, he may be carried instretch limousine, but he is still under a vow of poverty that isrecognized by the IRS and he is not questioned or bothered by the IRS.Virtually, all Catholic dioceses are organized as Corporations Sole.

One guaranteed way to fail in an attempt to avoid taxation is to workfor W-2 wages and donate 100% of your income to a Corporation Soleof which you are the overseer. In cases like this, there is a contractualobligation not to exceed a certain percentage of one’s income incharitable donations. Also, the IRS justifiably claims that theCorporation Sole is an "alter ego" of the W-2 wage earner, and liens,levies, and seizes all of the assets of the Corporation Sole. The bestway to avoid this scenario is to never work for W-2 wages, but if youdo, stay within the guidelines of the IRS when making donations to thesole. You may use other tax strategies for lowering the tax bite if youwish but please recommend that your clients protect their family assetsby staying within the law (your contractual obligations). When the clienteventually realizes that there is no way to safely reside within the taxsystem, they may want to get out of it completely with a CorporationSole.

The religious society’s property that is in the custody of the Overseercannot be taken by a court for satisfaction of personal claims againstthe Overseer, because the property is held ONLY in the Overseer’sfiduciary capacity. At one point in American History, the Patriarch ofevery household was legally considered as being the Overseer of acommon-law Corporation Sole. In looking at this pattern, it appears thatthe U.S. Constitution’s prohibition against "corruption of blood" is oneof the legal foundations and supports for this concept. When no law canrestrict the right, by blood relationship, for your children to inherit thefruits of the parent’s labor, this is identical in precept to no law beingable to take away the right of future members of your congregation orreligious order [family religious unit] to use and enjoy the property ofprevious generations. Quite obviously, the founding fathers of Americathought of the family as the basic religious unit of society. We aretherefore acting as a fiduciary for our grandchildren and the familyproperty is not ours alone but belongs to the family. Taxation is theonly means for governments to work corruption of blood. Because nolaw may impair obligation of contracts and when one places theirfamily’s property under contract (mortgage or otherwise), that propertyis no longer protected by the "corruption of blood" provisions. Theprimary contract that compromises our right of owning property is theSocial Security Number.

One of the most difficult contracts that one must deal with is the UCC’s"holder in due course" issue regarding the Federal Reserve Notes(FRN’s). The Corporation Sole Vow of Poverty deals with this issuebetter than any other method that I have seen. By not owning anything,we can be carrying pockets full of FRN’s, be in charge of massiveinvestment accounts, and still have no personal liability for thebankruptcy nature of the Federal Reserve Notes [United StatesBankruptcy debt instruments].

During the "transition phase" out of a life that is completely undergovernment regulation and control and into a life of liberty and privacy,

it would appear that Corporation Sole could be a valid and valuable toolfor many traditional family units, both as a limit on liability and forprotection of family assets.

The Modern Corporation Sole

Article published in the Dickinson "Law Review" Volume - 93 No.1 Fall1988

James B. O’Hara

In 1894, Sir Frederick Pollock asked his American friend Oliver WendellHolmes. "Have you such a thing as a corporation sole still about you?"The future Justice replied, "I don’t know of any corporation sole."

I. Introduction

Blackstone begins his treatment of corporations with the followingclassification:

The first division of corporations is into aggregate and sole

…Corporations sole consist of one person only and his successors, insome particular station, who are incorporated by law, in order to givethem some legal capacities and advantages, particularly that ofperpetuity, which in their natural persons they could not have had.

He then proposes two conspicuous examples of corporations sole, onecivil ("the king is a sole corporation") the other, ecclesiastical ("so is abishop...and so is every parson and vicar").

In the period prior to the rise of the modern business corporation andthe legal evolution and development that accompanied it, thecorporation sole was a fixture in every tier of English society. Thecorporation sole was as distant from the ordinary peasant andtradesman as the Crown, but as near as the parish clergy.

A modern Holmes attempting a reply to a modern Pollock might initiallybe perplexed, since the usual sources of ready reference suggest twocontradictory conclusions. On the one hand, the sources indicate thecorporation sole is "not common," "almost obsolete," or "obsolescent."’The standard casebooks and hornbooks of corporation and property lawdo not usually treat the topic. Cases cited in legal literature are oftenvery old, and the only full-length journal article devoted exclusively tothe subject is from the turn of the century.’ At least one author equates

it with the modern "one person" corporation,’ although the two havecompletely distinct origins.

On the other hand, further research reveals functioning corporationssole in at least one-half of the states, with explicit statutory provisionsfor corporations sole in about a third. In many jurisdictions, this is themanner of incorporating Roman Catholic dioceses, or more accurately,the bishops of those dioceses. From this perspective, the corporationsole is a useful, even commonplace, legal reality.

The apparent discrepancy is not real. The old common law corporationsole, which was transported to American shores in colonial days, isindeed almost dead. However, a modern version, which bears the samename, has evolved and is widely used today. The transformation fromthe old to the new is a fascinating story, well worth the telling.

The present study proposes: 1) to define the classic common lawcorporation sole; 2) to trace its development in America; and 3) todescribe the present status of the corporation sole in the United Stateswith analysis of its modern forms. The emphasis will be fundamentallyAmerican, with English sources serving as points of reference andprologue. Moreover, the English side of the story has already beentold."

II. The "Old" Common Law Corporation Sole

"Legal nomenclature is for once its own interpreter. A member of acorporation sole is one of a series of single persons succeeding oneanother in some official position." The crux of this description is no:that the corporation sole is composed of a single person. Rather, it isreally composed of a number of persons who, one after another, holdthe same office. The really crucial element of this definition is theseries itself and the seriatim succession.

For example, Queen Elizabeth II, as a corporation sole, is identical toVictoria; the present Archbishop of Canterbury in his corporate form isone with his predecessors, Laud, Benson or Lang. The corporation sole,unlike its business counterpart, is only vertical in time.

"There are very few points of corporation law applicable to acorporation sole, according to Kent." There are, however, four legalcharacteristics unique to it:

1. All corporations sole are "either public officers or dignitaries of theestablished church." In short, the corporation sole is the incorporationof an office.

2. At common law, the corporation sole can claim title to real propertyonly.

3. Property and powers of a corporation sole are transferred on thedeath of an incumbent to successors in the office, "not to heirs orthrough executors."

4. The corporation sole lacks the usual trappings of a corporation. Itdoes not have a board of directors, officers, stock, bylaws, officialminutes, or corporate name. The older corporations sole are also devoidof a royal charter or other formal authorization, "characteristics that arerequired in later corporations."

Historically, both the king and a variety of clergy qualified ascorporations in their official capacities. However, the ecclesiasticalform is older, dating to the mid-fifteenth century. Initially, thecorporation sole grew out of the efforts of judges to solve titleproblems that arose from the passage of real property to a church.Although the early common law of property was elaborate and intricate,it sometimes lacked the sophistication to deal with these problems. Atthat time, legal forms did not exist that allowed the devise of realproperty to a church in fee simple absolute.

The law struggled with this problem in amusing ways. For example,property was sometimes devised to the saint after whom a parish wasnamed, or to the four walls of a church building. Under thesecircumstances, the local bishop or priest was the agent oradministrator. Therefore, it was only a short leap in logic to incorporatethe agent."

The hierarchical polity of the English church was well suited to thistype of corporate structure. However, it was still another one hundredfifty years before a civil corporation sole appeared when Lord Cokeascribed corporateness to the crown. "Blackstone confidently called thisdevelopment uniquely English." In one sense, he is correct, but modernscholarship also finds a powerful Roman Catholic Canon Law influenceon the process.

For all its singularity, the sole corporation had many detractors. In fact,Maitland and Pollock particularly thought it was an anomaly, a "strangeconceit," a "juristic abortion," an "unhappy freak of English law,"" and a"useless figment of shreds and patches."

Some of the criticism came from theorists who objected to thephilosophical underpinnings of the fictitious personality of thecorporation sole. But practical problems were also evident. The courtsaccepted some officers as corporations, yet resisted the corporateclaims of others similarly situated. This inconsistency may explain whythe corporation sole was not widely extended to other civil officers.

Other practical questions were also raised. What claims on corporateproperty might arise from the heirs of a deceased incumbent? Whatlimits on fraudulent transfer by a dishonest incumbent? Is a separate

accounting required for the incumbent as a corporation and as a privateperson? Is there a quasi-fiduciary relationship between the corporationsole and his successors?

Added to these questions are several other crucial problems:

What happens to the corporation during the illness or absence of theincumbent; and who manages the property, and with what legal force,during an interregnum? These practical considerations were moredifficult than the theoretical questions. Yet for all the inconsistency ofapplication and the eccentricity of the concept, the corporation solehas endured in some form for more than five centuries.

III. Transition from "Old" to "New"

"At a very early period the religious establishment of England seems tohave been adopted in the colony of Virginia, and, of course, thecommon law upon that subject, so far as it was applicable to thecircumstances of that colony." Justice Story went on to count thecorporation sole as among the "general rights" of the Episcopal Church"growing out of the common law. After the revolution, "the EpiscopalChurch no longer retained its character as an exclusive religiousestablishment," but the Supreme Court still recognized the rights of theparson as a corporation sole to continue in full force.

After the Declaration of Independence, early case law indicated thatthe corporation sole lived on. "However, sometimes it was found in itspure common law form, other times in a variant form." In New England,title to the real property of territorial parishes was occasionally vestedin the resident clergyman. In the South, the Episcopal glebe wasusually held by the minister-in-charge (whatever his title), just as inEngland. "The most numerous group of private corporations in thecolonies comprises those which were concerned with religious worship."

The corporation sole, however, applied only to the clergy of thechurches that were or had been legally and formally established. Inanother early opinion written by Justice Story, the Supreme Courtvoided a royal grant of land to the Episcopal Church in New Hampshire.The decision was based on the grounds that no one was legallycompetent to accept title, since that state had never had anestablished church, even in colonial days."

The link with church establishment sealed the fate of the common lawcorporation sole in America. The first amendment technically did notrequire states to disestablish a church. By implication, however,establishment was doomed by the Bill of Rights and without religiousestablishment; the rights of establishment were moot.

The civil form of the corporation sole never really took hold in theUnited States. The king was the most obvious civil corporation sole in

colonial days. After the Revolution, however, only a few minor officersin some states were accorded a corporate identity probate judges andtown supervisors."

The governor of a state was regarded as a corporation only inTennessee. For the most part, the powers and duties of public officerswere adequately defined by statute. Incorporation was not necessaryto guarantee bonds or contracts, or to continue lawsuits. Beginning inthe first half of the nineteenth century, however, new social andreligious forces gave a revived impetus to the sole corporation. Thechief thrust came from a most unlikely source. When John Carroll waschosen as the first Roman Catholic bishop in the United States in 1789,gaining secure title to the property of his church in the various statesand territories was one of his most pressing tasks. This task was by nomeans easy.

Roman Catholicism had no legal standing in England and its position inthe new nation was awkward. Although Catholicism shared the fruits ofthe first amendment, it had a structure that many Americans judged tobe autocratic and monarchical. At that time, congregational ownershipof church property was natural to many denominations in America, butwas contrary to long-established Roman Catholic policy.

Sometimes, for want of a better method, church property was held infee simple by the local priest or by a pious layman. This system,however, led to endless difficulty. There was a constant fear thatchurch property held in a private name might be claimed by a relative ofthe holder. Worse yet, the possibility existed that some unworthyclaimant with a plausible story could make out a case for ownership. Inone lawsuit, an unfrocked priest claimed to be heir to land that adeceased predecessor had purchased to build a church.

Bishop Carroll won that suit, but for the next seventy years the RomanCatholic hierarchy struggled to find a legally sufficient and canonicallysuitable manner for its church to own property. Vesting title in a boardof elected or appointed trustees was one obvious possibility. In fact,that is the way Carroll originally incorporated in Maryland." But"trusteeism" itself became an issue when the trustees in some areasused their property ownership to pressure the bishops in doctrinal ordisciplinary disputes."

The internal problems of the Catholic Church were exacerbated andcomplicated by the rise of a national social and political phenomenoncalled the "Know-Nothing" movement In addition to their many otherobjections to Catholicism, these opponents had particular objections tocontrol of church property by the clergy, and strenuously battled thechurch on this issue." The bishops battled back, in what they saw as adefense of the doctrine and practice of their religion against bigots onthe outside and recalcitrants on the inside. Over time, the corporationsole became a major weapon."

Beginning in 1829, a series of national bishops meetings was held toaddress the problems of Catholicism in America. Invariably, propertyproblems were on the agenda. Soon after the first of these gatherings,Archbishop Whitfield of Baltimore sought a charter in the form of acorporation sole from the Maryland General Assembly. In 1832, it wasgranted."

The link between Roman Catholicism and the legal concept of acorporation sole was surprising for two reasons. "First of all, in England,this mode of incorporation was limited to the Anglican Church." In fact,the Roman Catholic hierarchy was not reinstated in England until 1850.Second, Catholic Canon Law did not envision a one-person corporation.The minimum number required to constitute a "collegiate moral person"was three." Even the Pope was not a corporation sole. Even thoughbishops of dioceses have great autonomy in church law, favorableaction by a board of consultants is still required on major propertydecisions to this day.

As Roman Catholicism spread geographically and grew in numbers inthe last decade of the nineteenth century, new dioceses were createdas new areas of the country were settled. Where they could, thebishops incorporated as a corporation sole. In some states, thisrequired a private act of special incorporation; in others, a generalincorporation statute was utilized.

The effort was not successful everywhere. On at least one occasion, alegislature defeated a bishop’s request for sole incorporation on thegrounds that Catholicism would thus acquire a legal right not held byother religious denominations. Slowly, Roman Catholics won the battlefor their church to be incorporated in a manner consistent with churchpolity. During this struggle, the old common law corporation sole wasgradually transformed. There was no longer any link with an establishedchurch. Although legislative action was often the result of activity byone church, the laws passed were usually broad enough for others.

In the courts, judges began to require specific legislative authorizationfor a corporation sole. The common law was not invoked to create solecorporations in states where the legislature had not acted. Finally, atthe beginning of this century, the Supreme Court, in an opinion byJustice Holmes, confirmed what was already an almost universaljudicial stance: Apart from statute the law does not recognize thebishop as a corporation sole.

The transformation of the corporation sole from its common law form toa legislative format, however subtle, created something altogethernew. Zollmann, writing in 1915, called it "a new form vigorouslyflourishing and American in the true sense of the word." The tide hadturned. Momentum to secure the property rights of the Roman CatholicChurch a century ago left permanent traces in modern American law.Today at least thirty states have a corporation sole in one form or

another.

IV. The Corporation Sole in Statutory Form

Seventeen states explicitly recognize the corporation sole understatutory law, often in a special section for nonprofit corporations or ina section on religious societies. At least eight other jurisdictions haveat least one corporation sole created under special or private charter,sometimes dating to a time before the passage of a generalincorporation statute.

To understand the corporation sole under both of these categories, amethod of analysis will be useful. For states that recognize thecorporation sole under general law, California’s statutes can serve as acomparative model. For the states with special or private acts ofincorporation, Maryland’s private charter for the Archbishop of Baltimoreis a useful example.

The California legislation dates to 1877 and comprises part 6 of thetitle division on nonprofit corporations. Some sections are technical,and relate to filing provisions, applicability to corporations organizedprior to the implementation of the law, and procedures for voluntarydissolution. The key sections are those dealing with who mayincorporate, the corporate powers, and the questions of vacancy andsuccession.

The California statutory system indicates that a corporation sole maybe formed by a bishop, chief priest presiding elder, or other presidingofficer of any religious denomination, society, or church. The corporatepowers specified in the California law are comprehensive.

In California, a corporation sole may:

(a) Sue and be sued, and defend, in all courts, and places, in allmatters and proceedings whatever.

(b) Contract in the same manner and to the same extent as a naturalperson, for the purposes of the trust.

(c) Borrow money, and give promissory notes thereof, and secure thepayment thereof by mortgage or other lien upon property, real orpersonal.

(d) Buy, sell, lease, mortgage, and in every way deal in real andpersonal property in the same manner that a natural person may,without the order of any court.

(e) Receive bequests and devises for its own use or upon trusts to thesame extent as natural persons may, subject, however, to the lawsregulating the transfer of property by will.

(f) Appoint attorneys in fact.

The most complex issue regarding the old corporation sole was that ofcontinuing operation during a vacancy in the office. California dealswith this issue in two ways: 1) at the time of incorporation, the mannerof filling a vacancy is to be specified," and 2) the law makes clear thatthe corporation has perpetual existence even during a vacancy."

In contrast with the common law corporation sole, the Californiastatute, like almost all its modern counterparts, is far more precise. Acomparison will be useful. The common law or "old" corporation soleapplied to some unspecified officers, and not to others of similar origin.The statutory or "new" corporation sole, in contrast, applies to thosewho are designated at the time of their incorporation. The oldcorporation sole was "in abeyance" at the time of a vacancy, whereasthe new corporation sole continues through temporary agents. The oldcorporation sole could hold title to real estate only, and alienation ofthe property was difficult and legally questionable. The new corporationsole has the same power over its property as any other corporation, andis not limited in the type of property it can own. In short, the newstatutory corporation sole removes the vagaries of the old.

Private charters have a parallel history and similar content TheMaryland legislation incorporating the Archbishop of Baltimore dates to1832. The law permits church property held by trustees to be deeded tothe Archbishop and his successors. However, such property is limited totwo acres, must be real property, and can only be used for a church,parsonage, or burial ground.

In 1868, the Maryland legislature amended the act. The acreagedesignation was enlarged to five acres, and "school house" was addedto the list of uses." Up to this point, the Maryland law did not mentionthe alienation of property. A later amendment, in 1874, granted thepower "to dispose of, lease, sell and convey from time to time to thesame extent, [as] any private person or other corporate body."

Two subsequent amendments completed the law. In 1894, therestriction to real property was removed. The Archbishop, as acorporation sole, was given the power to exercise rights over property"real, personal or mixed. Finally, in 1927, the acreage restriction wascompletely removed. This original 1832 legislation, with its fouramendments, remains the charter of the Archbishop of Baltimore as acorporation sole. No further change can now be made, because theMaryland code prohibits the General Assembly from amending thecharter of a religious corporation even if it was previously incorporatedby special act. Furthermore, the code now contains modern provisionsfor subsidiary or separate Roman Catholic corporations.

The contrast between the California and Maryland laws is veryapparent. The California legislation consists of more formal and highly

structured general statutes, whereas the Maryland private charter israther informal, the product of patchwork amendment. The Californiacode carefully establishes a process for creating or dissolving acorporation sole, whereas the Maryland law barely goes beyond thesimple statement that a corporation is deemed to exist. Clearly, thegeneral statutes represent a later stage in the evolutionary process.

Although differences exist, the corporation’s sole created under generalcorporation laws and those established by special acts or privatecharters have several common features. They both deserve to beclassified under the heading of "new" or "modern" corporations sole,because both are more than merely modes of holding title to property.Both are meant to provide a framework for the operation of a continuingconcern. They are also both meant to provide a structure for theplanning, financing, direction and management necessary for anorganization existing and working in a sophisticated businessenvironment.

The Achilles heel of the "old" corporation sole was that the corporationitself was a person holding an office. When the incumbent died, thecommon law could only hold the corporate life and activity insuspension, or "abeyance", until the office was filled again. In regard tothe "old" corporation sole, Maitland said, "Our corporation sole is a manwho dies." Carr added, "that is the difficulty. The artificial personalityof the corporation is not strong enough to compel us to ignore thenatural personality of the sole incorporator. The office has not beencompletely personified if the death of the officeholder can cause such adeadlock.

The modern corporation sole, created under legislative auspices, solvesthe succession problem quite satisfactorily in one of two ways. Either aspecified structure of continuing operation is created in statutes, as inCalifornia, or the statutes specify some external set of canons,practices or rules to deal with an interregnum, as in Maryland.

The fact that the modern American corporation sole works satisfactorilyis, perhaps, best illustrated by the relative absence of recent casescarried to the appeal level. Corporate structure is seldom at issue, butthe cases tend to run the gamut: torts, contract, civil procedure,piercing the corporate veil, workman’s compensation, taxation, eminentdomain, estates and simple fraud. Property disputes are relatively rare,perhaps because there would be first amendment implications for mostcorporations sole.

The corporation sole seems to have a settled existence. There hasbeen no rash of new legislation, nor have there been any repeals ofearlier laws.

V. Special Circumstances

Eight additional states have circumstances meriting comment. Theconstitutions of Virginia and West Virginia specify that no charter ofincorporation can be granted to any church or religious denomination.At least one commentator attributes this prohibition to the influence ofThomas Jefferson and James Madison. Although the tradition of church-state separation in Virginia may indeed be traced to the two formerpresidents, the constitutional provision in Virginia dates to 1851 longafter the deaths of both.

The West Virginia courts have acknowledged that the provision in thatstate is descended from Virginia. While these constitutional provisionspose no problems to the titles of church property in either state, theyobviously preclude a corporation sole. An article in the Kansasconstitution, which required title to property of religious corporations tobe vested in elected trustees, was repealed in l974.

Connecticut has a provision in its corporation code that gives the localarchbishop or bishop special powers in trust if a Catholic parishcorporation violates or surrenders its charter. The courts haveinterpreted this provision to mean that, if a charter is surrendered, allthe property vests in the bishop and his successors, as a corporationsole. This section provides emergency powers that are not normallyrequired.

Oklahoma allows for trust succession in the name of an ecclesiasticaloffice. Vermont, in contrast, specifically forbids any such succession.

Finally, case law in Arkansas and Florida also deserves attention. TheSupreme Court of Arkansas, in dicta, has recognized the Roman CatholicBishop of Little Rock as a corporation sole without any special act ofthe legislature. The Florida situation is even more unique. The SupremeCourt of Florida has repeatedly held that the common law corporationsole is in full force in Florida. The court relies on the fact that thecommon law has been adopted in Florida and remains in force unlessexpressly or impliedly repealed by organic or statutory law. This uniqueposition initially attracted journal comment, perhaps because it seemedcontrary to the earlier United States Supreme Court position.

VI. A Federal Corporation Sole

Only rarely has there been mention of a federal charter for a religious orquasi-religious organization. When Congress voted, in 1811, toincorporate an Episcopal church in the District of Columbia, PresidentMadison vetoed it in his veto message, the President implied that acharter of incorporation was in some sense an approval of a religion, inviolation of the Constitution.

More than a century later when incorporation was so common, theCongress and the President took another view. In 1948, the Vaticancompletely severed the Archdiocese of Washington from the

Archdiocese of Baltimore. The new Archbishop of Washington, with thehelp of President Truman, sought to have a corporation sole establishedas a framework for the new ecclesiastical territory. Congress compliedby passing a private law that established the Archbishop of Washingtonand his successors as a corporation sole.

VII. A Yet More Modern Form?

A number of authorities warn against confusing the corporation solewith the modern "one-person corporation." In fact, courts have heldthat a stock corporation is not automatically transformed into acorporation sole, simply because one person has purchased all of thestock

It is possible, however, to structure a one-person corporation in such away that it closely resembles a corporation sole in operation. In fact,the Roman Catholic Diocese of Wilmington is so structured under thegeneral corporation laws of Delaware. The Wilmington diocese is notincorporated under the terms of the Delaware Code for ReligiousSocieties and Corporations. Rather, the diocese is incorporated underthe General Corporation Law, which already contains provisions for aboard of one, for non-stock operation, and for formation of a closecorporation. By carefully writing the by-laws, and by addressing theproblems of succession, the Roman Catholic Diocese of Wilmington hasfashioned a corporation that contains all the advantages of thecorporation sole in a state that has no regular provision for one.

Summary

From its quaint beginnings in English law, the corporation sole hasestablished a modest, yet solid, foothold in the United States. Tochurches with a hierarchical structure, and particularly to the RomanCatholic Church, it has been a secure method for both ownership ofproperty and daily operation. In a society characterized by religious andethnic pluralism, the corporation sole has provided a useful legaloption, well adapted to the needs of certain groups. The corporationsole has, arguably, made a greater contribution in the United Statesthan in its native land. The corporation sole is destined to be acontinuing part of American law for years to come.

[ Home ] [ Up ] [ Church v. ekklesia ] [ Strawman Copyright ] [ Feasts.pdf ] [ Corporation Sole ][ The Modern Corporation Sole - Reprinted from Dickinson Law Review ] [ The basics ]

[ UCC Redemption vs. JC Redemption ]