Clearly, Wesley is in agreement with various moral government theologians, that the phrase “imputed righteousness” means pardon and acceptance from God when we put our faith in Christ, that our faith is imputed as righteousness and we are henceforth treated as righteous because of that faith (by which faith we will live righteousness and produce good works), and not that Christ’s personal obedience to the Torah being transferred to our account. And that the phrase “righteousness of God” refers to God’s method of justifying sinners, not the obedience that the Son rendered to the law during his earthly life.
John Wesley said:
“No, the doctrine which I believe has done immense hurt, is that of the imputed righteousness of Christ in the Antinomian sense. The doctrine which I have constantly held and preached is, that faith is imputed for righteousness.” The Miscellaneous Works of the Rev. John Wesley, Volume 2, published by J. & J. Harper, 1828,
The word “imputed” in the Greek does not mean “transferred” but “reckoned” or considered” as it is translated elsewhere in many places in the Bible. And the Bible teaches that faith, not Christ’s obedience to the Torah, is imputed to believers as righteousness. That is, it is our faith that God reckons or considers as righteousness.
“And he believed in the LORD; and he counted it [believing the Lord] to him for righteousness.” Gen. 15:6
“And therefore it [faith] was imputed to him for righteousness.” Rom. 4:22
“Even as Abraham believed God, and it [believing God] was accounted to him for righteousness.” Gal. 3:6
“And the scripture was fulfilled which saith, Abraham believed God, and it [believing God] was imputed unto him for righteousness: and he was called the Friend of God.” James 2:23
Abraham was justified by His faith in God and His promises, not by obedience to the Torah, as the Torah had not yet been given through Moses. So Paul argued that Gentile believers, who are uncircumcised and do not observe the Torah, are also justified by their faith. It is their faith in Christ which God imputes, reckons, or considers as righteousness.
The Antinomian doctrine that Christ’s works of the law are transferred to the account of the believer, so that they are justified by perfect works of the law, and they do not need to repent of their sins and live holy lives, and that they are righteous in God’s eyes even while they are sinning, has done great damage and hurt to Church.
“The theological doctrine of ‘imputed righteousness’ has been grossly distorted in our day. We are told that God looks at us through the blood of Christ and see’s us as righteous, regardless of our actual state… Let’s stop kidding ourselves. God sees us exactly the way we are. If we are living in obedience, He sees it. If we are living selfish, unholy lives, we can be sure he sees that too.” George Otis Jr. (The God They Never Knew, Published by Mott Media, p. 40)
Backsliders in Israel were saying “The Lord seeth us not” (Eze. 8:12), and backsliders in the Church are saying the same thing today. I have heard many people say, “When God looks at me, He doesn’t see my sin. He sees the righteousness of Christ instead.” This type of talk, which ought to be shocking to our ears, is common place within the Church. This type of theological nonsense, which is a blatant denial of God’s omniscience, is refuted all throughout the Bible (Ps. 33:13-15; Prov. 15:3; Eze. 8:12; 9:9; Jer. 32:19; Job 34:21; Mal. 2:17; Heb. 4:13; Rev 2:2, 2:9; 2:13; 2:19; 3:1; 3:8; 3:15). “The Lord looketh from heaven; he beholdeth all the sons of men. From the place of his habitation he looketh upon all the inhabitants of the earth. He fashioneth their hearts alike; he considereth all their works” (Ps. 33:13-15). “For the eyes of the Lord are in every place, beholding the evil and the good” (Prov. 15:3). “For the eyes of the Lord are upon the ways of man, and he seeth all his goings” (Job 34:21). “Neither is there any creature that is not manifest in his sight: but all things are naked and open unto the eyes of him with whom we have to do” (Heb. 4:13).
God repeatedly said in Revelation, “I know thy works” and “be zealous therefore and repent” (Rev. 2:2; 2:9; 2:13; 2:9; 3:1; 2:8; 2:15). When he looked at the churches He didn’t say, “I see the righteousness of Christ.” Therefore, nobody should try to comfort themselves in impenitence by appealing to imputed righteousness. The solution is to simply repent. People use the imputed righteousness of Christ as a replacement for repentance unto holiness.
Calvinists often ask the question, “Are you saved by the imputed righteousness of Christ or by your own righteousness?”
This is how John Wesley answered that question:
“Do we read it [this question] in the Bible? Either in the Old Testament or the New? I doubt; it is an unscriptural, awkward phrase, which has no determinate meaning. If you mean by that odd, uncouth question: ‘In whose righteousness are you to stand at the last day,’- for whose sake, or by whose merit do you expect to enter into the glory of God? I answer, without the least hesitation, for the sake of Jesus Christ, the righteous. It is through his merits alone that all believers are saved; that is, justified, saved from the guilt, sanctified, saved from the nature of sin, and glorified, taken into heaven… It may be worth our while, to spend a few more words on this important point. Is it possible to devise a more unintelligible expression than this: “In what righteousness are we to stand before God at the last day?” Why do you not speak plainly, and say, “For whose sake do you look to be saved?” Any plain peasant would then readily answer, “For the sake of Jesus Christ.” But all those dark, ambiguous phrases, tend only to puzzle the cause, and open a way for unwary hearers to slide into Antinomianism.” “The Works of the Rev. John Wesley”, Volume 7, published by J. & J. Harper, 1826, Page 281'
source: Jesse Morrell, “Did John Wesley teach or deny the Imputed Righteousness of Christ?” (biblicaltruthresources).