Masterson v. Diocese of Northwest Texas
422 S.W.3d 594
Tex.2013Background
- The Episcopal Church of the Good Shepherd (Good Shepherd) is a Texas nonprofit corporation formed in 1974 as a condition of parish status in the Episcopal Diocese of Northwest Texas; deeds to the church property are in the corporation’s name and the deeds contain no express trust language.
- Good Shepherd’s articles and bylaws incorporated TEC’s and the Diocese’s Constitutions and Canons and set member qualifications and procedures to elect the vestry and amend bylaws.
- In Nov. 2006 a majority of parishioners voted to amend the corporate documents, withdraw from TEC/Diocese, and revoke any trusts; the withdrawing faction (Anglican Leaders) retained possession of the property.
- The Diocese and the faction loyal to TEC (Episcopal Leaders) sued, asserting the Diocese/Bishop had recognized the loyal faction as the continuing parish and that TEC/Diocesan canons (including the "Dennis Canon") and hierarchy created a trust in their favor.
- Trial court granted summary judgment for Episcopal Leaders applying a deference/identity approach; the court of appeals affirmed. The Texas Supreme Court reversed and remanded, holding Texas courts must apply the neutral-principles methodology (not deference) to decide non-ecclesiastical property and corporate disputes.
Issues
| Issue | Plaintiff's Argument (Episcopal Leaders) | Defendant's Argument (Anglican Leaders) | Held |
|---|---|---|---|
| Proper legal methodology for church-property disputes | Deference/identity: courts must defer to highest ecclesiastical authority (the Bishop/TEC) to identify the continuing parish and thus property ownership | Neutral principles: secular corporate and property law governs ownership; courts should decide non-ecclesiastical issues using neutral principles | Texas courts must use only neutral principles of law for secular issues; deference is not the sole permissible method |
| Effect of Bishop’s recognition of loyal faction on corporate control and title | Bishop’s ecclesiastical determination identifies the continuing parish and controls property (so loyal faction owns/controls property) | Bishop has no authority under corporate documents to determine corporation membership, vestry, or to amend corporate governing documents; majority vote of qualified members controls under Texas law | Bishop’s ecclesiastical determinations on membership/vestry are entitled to deference as ecclesiastical matters, but they do not automatically decide secular questions (validity of corporate amendments or title) under neutral-principles review |
| Whether TEC’s Canons (Dennis Canon) or Good Shepherd’s bylaws created an irrevocable trust in favor of TEC/Diocese | Dennis Canon and Good Shepherd’s adoption of TEC canons created an express, irrevocable trust preventing disaffiliation from carrying property with majority | No express trust language appears in the deeds or corporate charter; creation/irrevocability of any trust is a question of state trust/property law and was not established for summary judgment | Whether a trust exists and is irrevocable must be resolved under neutral principles of Texas property/trust law on remand; summary judgment for Episcopal Leaders was improper because they litigated only deference grounds |
| Summary judgment procedural sufficiency | Episcopal Leaders: summary judgment proper because TEC is hierarchical and Bishop recognized loyal faction (sole necessary showing) | Anglican Leaders: summary judgment improper because Episcopal Leaders did not prove entitlement under neutral principles and relied only on deference theory | Grant of summary judgment reversed — Episcopal Leaders failed to establish entitlement under neutral-principles (the only method Texas courts will apply) |
Key Cases Cited
- Jones v. Wolf, 443 U.S. 595 (constitutional approval of neutral-principles approach for church property disputes)
- Serbian E. Orthodox Diocese v. Milivojevich, 426 U.S. 696 (courts must defer to highest ecclesiastical tribunals on ecclesiastical questions)
- Hosanna-Tabor Evangelical Lutheran Church & School v. Equal Employment Opportunity Comm’n, 132 S. Ct. 694 (First Amendment bars courts from deciding certain church-governance matters)
- Presbyterian Church v. Hull Church, 393 U.S. 440 (limitations on civil-court involvement in theological/disciplinary matters)
- Brown v. Clark, 116 S.W. 360 (Tex. 1909) (Texas application of principles distinguishing ecclesiastical questions from secular property questions)