Masterson v. Diocese Texas, 11–0332.

CourtSupreme Court of Texas
Citation56 Tex. Sup. Ct. J. 1048,422 S.W.3d 594
Docket NumberNo. 11–0332.,11–0332.
PartiesRobert MASTERSON, Mark Brown, George Butler, Charles Westbrook, Richey Oliver, Craig Porter, Sharon Weber, June Smith, Rita Baker, Stephanie Peddy, Billie Ruth Hodges, Dallas Christian, and the Episcopal Church of the Good Shepherd, Petitioners, v. The DIOCESE OF NORTHWEST TEXAS, The Rev. Celia Ellery, Don Griffis, and Michael Ryan, Respondents.
Decision Date21 March 2014

422 S.W.3d 594
56 Tex.
Sup. Ct. J. 1048

Robert MASTERSON, Mark Brown, George Butler, Charles Westbrook, Richey Oliver, Craig Porter, Sharon Weber, June Smith, Rita Baker, Stephanie Peddy, Billie Ruth Hodges, Dallas Christian, and the Episcopal Church of the Good Shepherd, Petitioners,
The DIOCESE OF NORTHWEST TEXAS, The Rev. Celia Ellery, Don Griffis, and Michael Ryan, Respondents.

No. 11–0332.

Supreme Court of Texas.

Argued Oct. 16, 2012.
Delivered Aug. 30, 2013.

Rehearing Denied March 21, 2014.

[422 S.W.3d 595]

Douglas Laycock, University of Virginia Law School, Charlottesville, VA,

[422 S.W.3d 596]

Thomas S. Leatherbury, Vinson & Elkins LLP, Dallas, TX, for Amicus Curiae General Council on Finance and Administration.

Sandra Cockran Liser, Naman Howell Smith & Lee PLLC, Fort Worth, TX, for Amicus Curiae The Episcopal Church.

Scott A. Brister, Andrews Kurth LLP, Austin, TX, for Amicus Curiae The Episcopal Diocese of Forth Worth.

David B. West, Cox Smith Matthews Incorporated, San Antonio, TX, Lloyd J. Lunceford, Taylor Porter Brooks & Phillips, L.L.P., Baton Rouge, LA, for Amicus Curiae The Presbyterian Lay Committee.

April L. Farris, Reagan W. Simpson, Yetter Coleman LLP, Austin, TX, George S. Finley, Smith Rose Finley PC, San Angelo, TX, for Robert Masterson.

Jim Hund, Linda Ruth St. Clair Russell, Hund Krier Wilkerson & Wright, P.C., Lubbock, TX, Guy D. Choate, Webb Stokes & Sparks, LLP, San Angelo, TX, for The Diocese of Northwest Texas.

Justice JOHNSON delivered the opinion of the Court, in which Justice HECHT, Justice GREEN, Justice GUZMAN, and Justice DEVINE joined, and in parts I, II, III–A, and V of which Justice WILLETT and Justice BOYD joined.

The question before us is what happens to the property when a majority of the membership of a local church votes to withdraw from the larger religious body of which it has been a part. In this case, title to property of the local church is held by a Texas non-profit corporation originally named The Episcopal Church of the Good Shepherd (corporation or Good Shepherd). The corporation was formed as a condition of Good Shepherd's congregation being accepted into union with the Episcopal Diocese of Northwest Texas (Diocese). When members of the congregation became divided over doctrinal positions adopted by The Episcopal Church of the United States (TEC), a majority of the parishioners voted to amend Good Shepherd's articles of incorporation and bylaws to withdraw Good Shepherd from communion with TEC and the Diocese and revoke any trusts on the corporation's property in favor of those entities. The corporation and the withdrawing faction of parishioners maintained possession of the property.

The Diocese and leaders of the faction of parishioners loyal to the Diocese and TEC filed suit seeking title to and possession of the property. The trial court eventually granted summary judgment in favor of the loyal faction. The court of appeals affirmed.

The first issue we confront is the legal methodology to be applied. At least two are permissible under the First Amendment to the United States Constitution: “deference” and “neutral principles of law” (neutral principles). The court of appeals held that Texas courts may use either. We conclude that greater predictability in this area of the law will result if Texas courts apply only one methodology. We also conclude that the neutral principles methodology should be applied because it better conforms to Texas courts' constitutional duty to decide disputes within their jurisdiction while still respecting limitations the First Amendment places on that jurisdiction. Under the neutral principles methodology, courts decide non-ecclesiastical issues such as property ownership based on the same neutral principles of law applicable to other entities, Jones v. Wolf, 443 U.S. 595, 603–04, 99 S.Ct. 3020, 61 L.Ed.2d 775 (1979), while deferring to religious entities' decisions on ecclesiastical and church polity questions. See Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696, 708, 96 S.Ct. 2372, 49 L.Ed.2d 151 (1976).

Applying neutral principles of law to the record before us, we conclude that the trial court erred by granting summary judgment

[422 S.W.3d 597]

and the court of appeals erred by affirming. We reverse the judgment of the court of appeals and remand the case to the trial court for further proceedings.

I. Background
A. Episcopal Good Shepherd

In 1961 individuals purchased a tract of land in San Angelo (1961 tract) and donated it to the Northwest Texas Episcopal Board of Trustees (Trustees). The donation was for the purpose of establishing a mission church. In 1965 a group of worshipers filed an application with the Diocese to organize a mission to be named “The Episcopal Church of the Good Shepherd” (the Church). The Diocese eventually approved the application and TEC made loans and grants to the Church to assist its growth. The bishop of the Diocese ultimately approved plans for a building, presided over the groundbreaking ceremony, then formally dedicated the building. In 1969 individuals purchased another tract of land (1969 tract) that was adjacent to the 1961 tract and donated it to the Trustees.

In March 1974 the Church applied to the Diocese for parish status. It was formally accepted into union with the Diocese at the Diocese's annual convention in April 1974. That same year, in conformance with canons of the Diocese which required parishes to be corporations, the Church incorporated under the Texas Non–Profit Corporations Act. SeeTex.Rev.Civ. Stat. art. 1396. The corporation's bylaws provided that the corporation would be managed by a Vestry elected by members of the parish.1 The bylaws prescribed qualifications for voting at parish meetings 2 and specified that amendments to the bylaws would be by majority vote.3

In 1982 the Trustees conveyed the 1961 and 1969 tracts to the corporation by warranty deed. In 2005 two individuals sold a tract of land (the 2005 tract) to Good Shepherd. The tract was conveyed to the corporation by warranty deed with a vendors lien to secure a purchase-money note executed by the corporation. Neither the 1982 deed from the Trustees nor the 2005 deed provided for or referenced a trust in favor of TEC or the Diocese.

B. Schism

Due to doctrinal differences with TEC, some members of the parish proposed disassociating from TEC and organizing as an independent church under the name “Anglican

[422 S.W.3d 598]

Church of the Good Shepherd” (withdrawing faction). The parish held a called meeting on November 12, 2006, during which four resolutions were presented. The resolutions were to (1) amend the corporate bylaws to, among other changes, remove all references to TEC and the Diocese; (2) withdraw the local congregation's membership in and dissolve its union with TEC and the Diocese; (3) revoke any trusts that may have been imposed on any of its property by TEC, the Diocese, or the Trustees; and (4) form a new church named Anglican Church of the Good Shepherd and change the name of the corporation to that name. The resolutions passed by a vote of 53 to 30. The stated effective date of the vote was January 5, 2007. Amended articles of incorporation changing the corporate name to Anglican Church of the Good Shepherd were then filed. SeeTex. Bus. Orgs. CodeE §§ 3.052–.053, 22.106 (providing procedures for amending certificate of formation of a non-profit corporation).

After the parish vote, but before the effective date, the Diocese's Bishop, Rev. Wallis Ohl, took the position that Good Shepherd could not unilaterally disassociate from the Diocese and that the vote did not have any effect on Good Shepherd's relationship with the Diocese or TEC. He held a meeting with the faction of the parish loyal to TEC and the Diocese and appointed Rev. Celia Ellery as Priest–in–Charge of the Parish. Under the leadership of Rev. Ellery, the loyal faction elected a vestry and was recognized by Bishop Ohl as the “continuing Episcopal Parish operating Good Shepherd.”

The withdrawing faction continued to use the parish property, so two vestry members of the loyal faction together with Rev. Ellery and the Diocese (collectively, Episcopal Leaders) filed suit against leaders of the withdrawing faction and the Good Shepherd corporation (collectively, Anglican Leaders). The Episcopal Leaders sought a declaratory judgment that (1) Good Shepherd's property could not be alienated or used by the Anglican Leaders for any purpose other than the mission of TEC; (2) the continuing Parish of the Good Shepherd was represented by those persons recognized by the Bishop as the loyal faction; (3) the actions of the Anglican Leaders in seeking to sever ties between Good Shepherd, the Diocese, and TEC were void; and (4) all the parish property was held in trust for TEC and the Diocese and the Episcopal Leaders were entitled to possess and control it.4 In their pleadings the Episcopal Leaders based their claim to the property on the allegation that: “According deference to the Bishop, Plaintiffs assert that they are entitled to title, possession and use of all real and personal property belonging to the GOOD SHEPHERD, including the CHURCH PREMISES.”

The Anglican Leaders answered and filed a counterclaim seeking judgment quieting title to the property in the Anglican Church of the Good Shepherd, a Texas non-profit corporation, and removing any cloud to the title created by the Episcopal Leaders' claims. The Anglican Leaders asserted that under Texas law the non-profit corporation held unencumbered title to the property; the individual Anglican Leaders had been elected as the corporation's vestry in accordance with the corporate Articles of Incorporation and bylaws; the Episcopal Leaders had no right or authority to act on behalf of the corporation; and the Episcopal Leaders' claims were barred by statutes of frauds. See

[422 S.W.3d 599]

Tex. Bus. & Com.Code § 26.01; Tex. Prop.Code § 112.004.

The Episcopal Leaders moved for summary...

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