Libhart v. Copeland

• Decision Date: 16 July 1997
• Docket Number: No. 10-96-005-CV,10-96-005-CV
• Citation: 949 S.W.2d 783
• Parties: Walter G. LIBHART, et al., Appellants, v. Claudell COPELAND, et al., Appellees.
• Court: Texas Court of Appeals

Page 783

949 S.W.2d 783

Walter G. LIBHART, et al., Appellants, v. Claudell COPELAND, et al., Appellees.

No. 10-96-005-CV.

Court of Appeals of Texas Waco.

July 16, 1997.

Cynthia A. Scheopner, Waco, for appellants.

Michael L. Scanes & Keith Cameron, Naman, Howell, Smith & Lee, P.C., Waco, for appellees.

Before DAVIS, C.J., and CUMMINGS and VANCE, JJ.

OPINION

DAVIS, Chief Justice.

Appellees Claudell Copeland, Michael Copeland, and Edna Stone (collectively "Appellees") are former members of Tabernacle Baptist Church who filed suit against Appellant Walter Libhart, the former pastor of the church, and his wife Carolyn. ¹ Their suit alleges causes of action for fraud, constructive fraud, and conversion in connection with the disposition of the church's assets after its dissolution in July 1992. A jury found in Appellees' favor on all causes of action and awarded actual damages of $126,000 against Libhart and Johnson jointly and severally. The jury assessed exemplary damages of $50,000 each against Libhart individually and Johnson individually.

The court entered judgment in accordance with the jury's verdict. The judgment imposes a constructive trust on property in Hill County bought by Libhart and Johnson with proceeds from the sale of the church sanctuary and on the church parsonage which Libhart had sold to his daughter and son-in-law. The court decreed that the proceeds from the sale of these properties be applied first to the payment of Appellees' court costs and attorney's fees and then in equal amounts to two charitable organizations named in the judgment. ² The judgment also orders that Libhart and Johnson each pay exemplary damages of $50,000 to Appellees.

Libhart and Johnson raise six points in this appeal. They allege the trial court erred by: (1) denying their plea in abatement; (2) denying their motion for summary judgment; (3) submitting defective damages questions to the jury; (4) allowing a post-verdict trial amendment; (5) submitting questions to the jury on fraud which are not supported by the evidence; and (6) submitting a question to the jury on attorney's fees which is not supported by the evidence.

I. FACTUAL BACKGROUND

The record reflects that Libhart became pastor of Tabernacle Baptist Church in 1973. Early in his pastorate, the church's membership increased to 166, but over the years membership declined to between ten and twenty members. ³ In January 1992 the church members decided to sell the sanctuary. Five months later, another church offered to buy it for $90,000.

The church met on July 12 to discuss this offer. As pastor, Libhart presided over the meeting. The Copelands did not attend this meeting. After some discussion, the members voted to accept the offer, sell the sanctuary, and dissolve the church. The congregation voted to loan Libhart the proceeds remaining after payment of the church's debts on the condition that he sell the parsonage which the church gave him in 1987. Libhart would repay the loan with the proceeds from this sale. According to Libhart, Edna Stone ("Stone") moved that the congregation give him the church van. ⁴ Those present voted unanimously in favor of this motion.

The Copelands later learned about the decisions made in the July 12 meeting. Michael Copeland ("Michael") served as chairman of deacons and as a trustee for the church. Because of his position, he solicited the opinion of an attorney about the appropriate disposition of church assets upon dissolution. According to Michael, this attorney advised him that if the church was incorporated, the proceeds would have to be distributed to other religious organizations. Because of this advice and because he was concerned that the members who voted in the July 12 meeting were misinformed, he wrote a letter to Libhart detailing his concerns. Upon receipt of the letter, Libhart scheduled another meeting for July 26.

Claudell Copeland ("Claudell") secretly taped the July 26 meeting. During this meeting, the members voted to divide the church's remaining funds after payment of debts among Reverend Marvin Weido ⁵, Arlington Baptist College, and other charitable organizations. Stone asked what would be done with the van. Libhart responded, "Whatever you want to do with it, sister." The congregation also voted to forgive the July 12 loan in exchange for Libhart's promise that he would distribute the proceeds from the sale of the parsonage to worthy causes. Libhart assured those present that he would prepare a financial statement detailing the final distribution of the church's assets by August 1.

No church funds were distributed to any of the charitable organizations mentioned in the July 26 meeting. Libhart sold the van in 1993 for $5,000. He sold the parsonage to Tracey and David Reynolds, his daughter and son-in-law, on June 2, 1994, for $10. ⁶ Libhart did not prepare the promised financial statement until April of 1993. The statement reflects that $73,233.63 in net proceeds remained after the sale of the sanctuary. Libhart disbursed the proceeds as follows:

The parties do not dispute that Libhart and Johnson used $55,000 of the $59,022.60 "gift" to pay for their new home near Penelope in Hill County.

II. PLEA IN ABATEMENT

By their first point, Libhart and Johnson assert that the court erred in denying their plea in abatement. They asked the court to abate the suit because Appellees lack the capacity to sue on behalf of the dissolved church. Appellees respond that Libhart and Johnson have not properly preserved this point for our review because a copy of the court's order denying the plea in abatement is not in the transcript. ⁸ In the alternative, Appellees assert that they can sue on behalf of the members of the dissolved church because the suit involves issues which can be decided on neutral principles of law.

A. PRESERVATION OF ERROR

As a general principle, we may not consider orders attached to briefs but not included in the record. See Davis v. Huey, 571 S.W.2d 859, 862 n. 2 (Tex.1978); Banowsky v. State Farm Mut. Auto. Ins. Co., 876 S.W.2d 509, 513 (Tex.App.--Amarillo 1994, no writ). Appellate courts have required that the court's denial of a plea in abatement appear in the record before the propriety of the denial can be considered properly preserved for appellate review. Cadle Co. v. Estate of Weaver, 897 S.W.2d 814, 816-17 (Tex.App.--Dallas 1994, writ denied); Forest Cove Property Owners Ass'n v. Lightbody, 731 S.W.2d 170, 171 (Tex.App.--Houston [1st Dist.] 1987, no writ).

However, the Supreme Court has more recently made it clear that "[j]udicial economy is not served when a case, ripe for decision, is decided on a procedural technicality of this nature. In the interests of justice and fair play, cases should be decided on the merits when deficiencies of this nature can be easily corrected." Silk v. Terrill, 898 S.W.2d 764, 766 (Tex.1995); accord Soto v. El Paso Natural Gas Co., 942 S.W.2d 644, 645 (Tex.App.--El Paso 1996, no writ).

Appellees do not contest the authenticity of the order appended to Libhart's and Johnson's brief. Appellees' brief also presents alternative arguments addressing the merits of the issues raised by the plea in abatement. Therefore, we will consider Libhart's and Johnson's first point in the interests of justice. See Silk, 898 S.W.2d at 766.

B. APPELLEES' CAPACITY TO SUE

The parties do not dispute that Appellees were all members of the church prior to its dissolution. Tabernacle Baptist Church was an unincorporated association. The church's by-laws provided:

Provisions for announcements of meetings of the TABERNACLE BAPTIST CHURCH are herein stated and such provisions are considered sufficient notice to all members of the Corporation that decisions reached by a majority of the members present shall express the will of the Corporation and shall as such, bind the Corporation to any agreements, contracts, commitments, or notes which shall be then executed for and in behalf of the Corporation.

The by-laws also provided that "[s]pecial meetings of the Corporation may be called for any purpose by the Pastor and a majority of the Trustees, by posting notice of such meeting prominently on Church premises seven (7) days prior to such meeting, stating the special business of the meeting."

Libhart and his son-in-law David Reynolds ("David") served with Michael as trustees of the church. David and Franklin Hetherington ⁹ served with Michael as church deacons.

David testified that a notice was posted for the July 12 meeting. Michael and Claudell testified that they received no notice of the meeting.

By their plea, Libhart and Johnson allege that Appellees lack the capacity to bring this action on behalf of the church because it was dissolved prior to the institution of suit. Libhart and Johnson also aver in their brief that Appellees' suit concerns matters of church policy and procedure not appropriate for the courts to decide. Because the church voted in a duly called meeting to forgive Libhart's "loan," they contend that the courts cannot intervene in the matter.

1. Unincorporated Associations

"Historically, unincorporated associations [have not been] considered separate legal entities and [have] had no existence apart from their individual members." Cox v. Thee Evergreen Church, 836 S.W.2d 167, 169 (Tex.1992) (citing Tunstall v. Wormley, 54 Tex. 476, 481 (1881)). Thus, they have been incapable of suing or being sued as a corporate body. Id.

"Unincorporated associations long have been a problem for the law. They are analogous to partnerships, and yet not partnerships; analogous to corporations, and yet not corporations; analogous to joint tenancies, and yet not joint tenancies; analogous to mutual agencies, and yet not mutual agencies." Id. at 169 n. 3.

Rule 28 of the Rules of Civil Procedure permits an unincorporated association to file a lawsuit in its own name but does not mandate this. See TEX.R. CIV. P. 28. The plain language of the rule states, "[a]...