Hutterville Hutterian Brethren, Inc. v. Waldner, No. 25553.

• Court: Supreme Court of South Dakota
• Writing for the Court: ZINTER
• Citation: 2010 S.D. 86,791 N.W.2d 169
• Docket Number: No. 25553.
• Decision Date: 17 November 2010
• Parties: HUTTERVILLE HUTTERIAN BRETHREN, INC., a South Dakota non-profit Corporation, Plaintiffs, and Johnny Wipf, Alvin Hofer, and Jake Hofer, Sr., Individually, as voting members and as directors and/or officers of Hutterville Hutterian Brethren, Inc., Plaintiffs and Appellants, v. John G. WALDNER, George Waldner, Sr., Tom Waldner and Kennith Waldner, as voting members of Hutterville Hutterian Brethren, Inc., Defendants and Appellees.

791 N.W.2d 169
2010 S.D. 86

HUTTERVILLE HUTTERIAN BRETHREN, INC., a South Dakota non-profit Corporation, Plaintiffs,
and
Johnny Wipf, Alvin Hofer, and Jake Hofer, Sr., Individually, as voting members and as directors and/or officers of Hutterville Hutterian Brethren, Inc., Plaintiffs and Appellants,
v.
John G. WALDNER, George Waldner, Sr., Tom Waldner and Kennith Waldner, as voting members of Hutterville Hutterian Brethren, Inc., Defendants and Appellees.

No. 25553.

Supreme Court of South Dakota.

Argued Oct. 5, 2010.
Decided Nov. 17, 2010.

791 N.W.2d 170

James E. McMahon, Rochelle R. Cundy of Murphy, Goldammer & Prendergast, LLP, Sioux Falls, South Dakota, Attorneys for appellants.

Jody Odegaard Smith, Don E. Petersen of Morgan Theeler LLP, Mitchell, South Dakota, Attorneys for appellees.

ZINTER, Justice.

[¶ 1.] In this case we must determine whether a dispute regarding governance of a religious corporation involves issues over which courts have subject matter jurisdiction. We conclude that underlying religious controversies over church leadership and the validity of member excommunications so pervade the governance issue that it is beyond the jurisdiction of secular courts.

Background and Procedural History

[¶ 2.] Hutterville Hutterian Brethren, Inc. (Hutterville) is a nonprofit religious corporation organized under the laws of South Dakota. As set forth in its articles of incorporation, the purpose of the corporation is to promote the Hutterian religious faith and the Hutterian Church.

[¶ 3.] Hutterian Church members live an agrarian, communal life based on the Bible's New Testament. Hutterville operates a farming enterprise, which is also communal. All real and personal property is owned by the Hutterville Colony, and all

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individual labor and services are for the sole benefit of the Colony and the Hutterian Church. For a more detailed description and history of the Hutterite colonies and their religion, see Decker ex rel. Decker v. Tschetter Hutterian Brethren, Inc., 1999 SD 62, ¶¶ 3-5, 594 N.W.2d 357, 359.

[¶ 4.] In 1992 there was a schism within the Canadian-United States Hutterian Church. Ninety-five of the 173 ministers of the local colonies repudiated Rev. Jacob Kleinsasser's leadership as Senior Elder. Senior Elder is a powerful position because the Senior Elder acts as the final arbiter of issues affecting members of the Hutterian Church and the colonies. Those colonies that repudiated Rev. Kleinsasser's leadership opted to follow Rev. Joseph Wipf.

[¶ 5.] Although all parties claimed membership in the Hutterian Church, the leadership followed and the resultant church affiliation at Hutterville Colony are disputed issues in this case. The parties claimed church membership in one of three ways. Appellees claimed membership through Hutterville Colony's affiliation with the Hutterian Brethren Church Group I, Schmieden-Leut Conference Inc., which followed Rev. Kleinsasser. Appellants claimed membership through Hutterville Colony's affiliation with the Hutterian Brethren Church, Schmiedeleut Conference Inc., which followed Rev. Wipf. But at times, both parties merely referred to membership in "the Hutterian Church." For ease of reference we use the latter, most general description of the Church at Hutterville Colony except when necessary to address a party's specific contention.

[¶ 6.] Following the 1992 schism, most of the colonies adopted a new constitution and reaffirmed their faith in the Hutterian Church as led by Rev. Wipf. But Appellee George Waldner, Sr., the minister of the Hutterville Colony, remained loyal to the leadership of Rev. Kleinsasser. Therefore, Hutterville Colony was one of five South Dakota colonies that remained loyal to Rev. Kleinsasser and did not reaffirm its faith under Rev. Wipf. Nevertheless, individuals following Rev. Wipf were permitted to live in Hutterville Colony. This litigation arose out of the two factions' subsequent attempts to obtain control of the corporate governance of Hutterville.

[¶ 7.] The governance dispute had two phases. The first occurred through the time the circuit court made a preliminary determination of Hutterville's officers and directors. The second occurred following the court's ruling and a purported excommunication of the court-determined officers and directors. The first phase started in 2008, when Hutterville was controlled by Appellee officers and directors who followed Rev. Kleinsasser. Appellee George Waldner, Sr., Appellee John G. Waldner, and Appellant Johnny Wipf were directors and officers. George Waldner, Sr. was president, John G. Waldner was secretary-treasurer, and Johnny Wipf was vice president.

[¶ 8.] In 2008 and 2009, Appellant Johnny Wipf and other members of Hutterville began attempts to replace the Appellee officers and directors. Appellants wanted to obtain control of Hutterville in order to repudiate Rev. Kleinsasser and follow Rev. Joseph Wipf. In August 2008, in an attempt to prevent this attempted change of governance, Appellee George Waldner, Sr. called a special meeting of Hutterville. The members at this meeting removed Appellant Johnny Wipf (as a director and vice president) and Appellee John G. Waldner (as a director). Appellee Tom Waldner was elected secretary-treasurer and vice president (replacing Johnny Wipf), and Appellee Kennith Waldner was elected as a director.

791 N.W.2d 172

[¶ 9.] Additional meetings and elections, however, resulted in further officer/director replacements giving Appellants control. Nevertheless, Appellees refused to recognize the new officers and directors. Appellees also refused to relinquish control of the business and property of Hutterville's farming enterprise. As a result, in August 2009, Appellants commenced this action seeking a declaration that the individually-named Appellants-Johnny Wipf, Jake Hofer, Sr., and Alvin Hofer-were the properly elected directors of Hutterville. Appellants also applied for a temporary restraining order to prevent Appellees-George Waldner, Sr., Tom Waldner, and John G. Waldner-from acting as directors. Appellees responded by applying for a temporary restraining order seeking to restrain Appellants from acting as directors of Hutterville.

[¶ 10.] After hearing, the circuit court denied Appellees relief and granted Appellants' application for a temporary restraining order (also treated as a preliminary injunction by stipulation of the parties). In reaching its decision, the circuit court analyzed Hutterville's articles of incorporation and bylaws regarding meeting requirements. Based on those provisions, the court concluded that the then-existing officers of Hutterville were: Appellant Johnny Wipf-president and secretary-treasurer; and, Appellant Jake Hofer, Sr.-vice president. Hutterville's directors were determined to be Appellants Johnny Wipf, Jake Hofer, Sr., and Alvin Hofer, along with Appellee Kennith Waldner. The court ordered that Appellees George Waldner, Sr., John G. Waldner, and Tom Waldner were precluded from acting as officers or directors of Hutterville unless they were properly elected.

[¶ 11.] The second phase of the governance dispute developed after the circuit court's decision. Although the individual Appellants had obtained control of Hutterville, George Waldner, Sr. remained the minister of the Church. And, on August 18, 2009, Appellee George Waldner, Sr. and two other Church elders issued a Church resolution purportedly excommunicating the Appellants. Entitled, "Resolution of Action Taken By Hutterian Church Group I," the resolution provided:

The undersigned, being duly authorized by Hutterian Church Group I to act on its behalf, hereby declare that Johnny Wipf, Alvin Hofer and Jake Hofer Sr., residents of Hutterville Hutterian Colony, are hereby excommunicated/removed as Members of the Hutterian Church, effective as of August 19, 2009. As a result of such excommunication, the said Johnny Wipf, Alvin Hofer and Jake Hofer Sr. shall no longer be considered Members of Hutterian Church Group I, nor shall they be entitled to attend services or participate in Church activities.

(Emphasis added.) Three other voting members in the Johnny Wipf/Rev. Joseph Wipf faction were excommunicated in a similar manner.

[¶ 12.] On October 18, 2009, following the excommunications, a special meeting of Hutterville was held. The corporate minutes identify the fifteen voting ¹ members who were present and the five voting members who were absent. The minutes do not mention the presence or absence of the six people who were "excommunicated." The stated purpose of the meeting was to fill director and officer "vacancies"

791 N.W.2d 173

previously held by Appellants. The minutes indicate that the vacancies existed because Appellants had been excommunicated and "one who is not a member of the Hutterian Brethren Church Group I, Schmieden-Leut Conference Inc." cannot be a member of Hutterville. The minutes reflect that, by unanimous vote, Appellee George Waldner, Sr. was elected director and president, and Appellee Tom Waldner was elected director, vice president, and secretary-treasurer.

[¶ 13.] In response to the October 18 election, Appellants moved to amend their temporary restraining order and preliminary injunction to reflect that they had not vacated their positions as officers and directors. To support this request, Appellants disputed their excommunications. They submitted affidavits of Mike Tschetter and Johnny Wipf. Tschetter's affidavit alleged that Appellants Johnny Wipf, Jake Hofer, Sr., and Alvin Hofer remained "members of the Hutterian Brethren Church." Johnny Wipf's affidavit similarly alleged that he, Jake Hofer, Sr., and Alvin Hofer remained "members of the Hutterite Church."

[¶ 14.] Appellee George Waldner, Sr. submitted an affidavit disputing Mike Tschetter's and Johnny Wipf's affidavits. Waldner, Sr. asserted that the Appellants "had been excommunicated/removed as members of the Hutterian Brethren Church Group I, Schmieden-Leut...