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Texas Court strikes down the Methodist Trust Clause

Written by Daniel P. Dalton on April 11, 2021 Category: Business Law & Transactions, Church Property Disputes/Denominational Splits

In a landmark decision, a Dallas Texas County Court invalidated the enforcement of the United Methodist Trust Clause in favor of  Southern Methodist University thereby freeing it from property ownership claims of the South-Central Jurisdictional Conference of the United Methodist Church. The Court entered an order dismissing the Conference’s lawsuit it its entirety upon concluding that there is no enforceable express or implied trust as a matter of law.

Background

In n November 6, 2019, the trustees of Southern Methodist University (SMU), voted to amend its articles of incorporation to comply with Texas law and protect the University from potential hostile actions taken by the Conference. No authorization or approval by the Conference or the United Methodist Church was sought or obtained. The Conference sued claiming that the deed for the land included an express trust clause whereby the University property was held “in trust” for the denomination and the Conference. The Conference also argued that through the Methodist Book of Discipline, the property was held by means of an implied trust.

Trust Code

Arguing basic concepts of trust law, SMU argued that the property of the University was held for the benefit of the University, only, even with an express Methodist Trust Clause in the deed. In a thorough analysis of the Texas Trust Code, SMU argued that the alleged express trust clause was unenforceable. The University also argued that there is no implied trust based on the Book of Discipline.

The Court agreed with the arguments presented by Southern Methodist University. In doing so, the Court found that  SMU’s asserts were not held in trust – either expressly or impliedly – for the benefit of the Conference or the denomination. Therefore, the Conference’s claims were dismissed in their entirety.

Next steps

Not surprisingly, the Conference has filed a claim of appeal. The University has the means to defend the decision on appeal through the Texas Supreme Court, who, recently invalidated a similar trust clause claimed by the Episcopal Church. It appears that as a result of this case,  the Methodist trust clause has fallen in Texas. There is no doubt that other states will soon follow.

Do you want to learn more?

If your local Methodist Church is considering leaving the denomination, visit our website to learn more about how was can help you. You can also watch our videos on our YouTube channel for additional information. Then reach out and contact Dan Dalton who can help guide your through the disaffiliation process.

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