Title: Brizzolara v. Sherwood Memorial Park
Citation: N/A
Docket Number: 061496
State: Virginia
Issuer: Virginia Supreme Court
Date: June 8, 2007

Present:  Hassell, C.J., Lacy, Keenan, Koontz, Kinser, and 
Lemons, JJ., and Russell, S.J. 
 
ANDREW M. BRIZZOLARA, ET AL. 
 
     OPINION BY 
v.  Record No. 061496 
          JUSTICE LAWRENCE L. KOONTZ, JR. 
 
      June 8, 2007 
SHERWOOD MEMORIAL PARK, INC., ET AL. 
 
 
FROM THE CIRCUIT COURT OF THE CITY OF SALEM 
Kenneth E. Trabue, Judge Designate 
 
In this appeal, we consider whether the trial court 
properly granted summary judgment to one of two groups vying for 
control of a not-for-profit, nonstock corporation that owns and 
operates a cemetery in the City of Salem.  The focus of the 
dispute between the groups and the principal issue presented in 
this appeal concerns the authority of the directors of the 
corporation to retire certain debt of the corporation in the 
form of debentures unless the holders of the debentures, who 
were also members of the corporation, consented to payment of 
the debt by surrendering payment coupons attached to the 
debentures.1 
                     
1 A debenture, sometimes called a debenture bond or a 
debenture note, is a form of security issued by a corporation 
and registered as to ownership on the books of the corporation, 
which, as in this case, usually constitutes a “[l]ong-term 
unsecured debt instrument, issued pursuant to an indenture.”  A 
debenture is “backed by the general credit and earning history 
of a corporation and usually not secured by a mortgage or lien 
 
 
 
2
BACKGROUND 
In 1964, the stockholders of Sherwood Burial Park, Inc., a 
closely held corporation that owned and operated a cemetery in 
the present City of Salem, determined to convert the business to 
a not-for-profit, nonstock corporation.  The new corporation, 
Sherwood Memorial Park, Inc., executed articles of incorporation 
on November 27, 1964 for which the State Corporation Commission 
issued a corporate charter on December 21, 1964.  The articles 
of incorporation were subsequently recorded in the clerk’s 
office of the appropriate circuit court.2 
In relevant part, Sherwood Memorial Park’s articles of 
incorporation provide that management of the corporation is by a 
board of directors and name four initial directors.  The 
articles further require that after the first year the 
composition of the board is determined “by a majority vote of 
the members of the corporation at the annual meeting thereof, to 
serve for the ensuing year.”  In the event of “vacancies in 
[the] board” between annual meetings, the articles provide that 
                                                                  
on any specific property.”  Black’s Law Dictionary 401 (6th ed. 
1990). 
2 In 1964, Salem was administratively a town within Roanoke 
County.  Accordingly, the articles of incorporation were 
recorded in the Clerk’s Office of the Circuit Court of Roanoke 
 
 
 
3
the vacancies “shall be filled from time to time by the majority 
vote of the directors then in office.”  The articles make no 
express provision for the removal of directors by the membership 
or for the replacement of directors between annual meetings in 
the event that all the directors resign or otherwise vacate 
their office.  As further defined by the articles, the voting 
membership of the corporation consists of “those persons holding 
debentures issued by the corporation” and each debenture holder 
is entitled to one vote for each $500 of value in the debenture 
held.3 
The corporate by-laws of Sherwood Memorial Park provide 
that annual meetings of the board and of the corporation are to 
be held on the second Tuesday in March of each year.  At the 
annual corporate meeting “directors shall be elected [by the 
membership] to fill vacancies for the ensuing year and until 
their respective successors are elected and qualify.”  No notice 
is required for the annual meeting, and the directors are 
                                                                  
County.  When Salem became an independent city in 1968, Sherwood 
Memorial Park’s place of incorporation became Salem. 
3 The corporate by-laws adopted by Sherwood Memorial Park 
set the voting rights of debenture holders at one vote per $1000 
of value of the debenture held.  This variance between the 
articles and the by-laws is not germane to the issues presented 
in this appeal. 
 
 
 
4
empowered to “provide by resolution . . . for the holding of 
additional regular meetings of the Board without other notice 
than such resolution.”  The by-laws further provide that the 
president or a majority of the board of directors may call 
special meetings of the board by providing notice to the members 
of the board, however, the purpose of such meetings is not 
required to be stated in the notice unless “required by law or 
by these By-Laws.”  Removal of a director or officer may be 
accomplished by a majority vote of the board.4  There are no 
provisions in the by-laws for members to have the power to call 
special meetings or to remove an officer or director. 
In exchange for their shares of stock in Sherwood Burial 
Park, the stockholders received non-interest-bearing debentures 
with an aggregate face value of $1,000,000.5  Sherwood Memorial 
                     
4 The by-laws provide that the majority vote consists of 
directors “other than the directors sought to be removed.” 
5 After the debentures were issued, Sherwood Memorial Park 
applied to the Internal Revenue Service (IRS) for tax-exempt 
status.  Because the IRS viewed the transfer of ownership of 
Sherwood Burial Park to Sherwood Memorial Park to be a taxable 
event for the former stockholders, the IRS refused to grant tax-
exempt status to Sherwood Memorial Park until an agreement was 
reached determining the actual value of the stock surrendered 
and requiring the difference between the value of the stock and 
the face value of the debentures to be treated as interest by 
the debenture holders who joined in the agreement.  While the 
parties attribute significance to this agreement with regard to 
the interpretation of the terms of the debentures, we find this 
 
 
 
5
Park issued a total of thirty-six debentures in denominations 
varying from $6,000 to $50,000, depending on the value of the 
stock exchanged by each stockholder.  Each debenture included 
two hundred attached coupons valued at one-half of one percent 
of the face value of the debenture.  The terms of each debenture 
are identical and provide that “[a]ll such debentures and 
coupons are payable on or before fifty (50) years after [the] 
date” of issue, January 2, 1965.  “The amount due under [this] 
debenture shall be reduced from time to time by the payment of 
[the attached] coupons to the extent thereof.” 
The terms of the debentures further provide that: 
 
For the purpose of paying such debentures, 
SHERWOOD MEMORIAL PARK, INC. agrees to set aside in a 
sinking fund an amount equal to not less than 15% of 
the retail selling price of each lot and space in its 
mausoleum sold by it hereafter. 
 
. . . . 
 
 
SHERWOOD MEMORIAL PARK, INC. agrees that the 
sinking fund provided for retirement of these 
debentures shall be applied from time to time as 
determined by the Board of Directors, but at least 
within sixty (60) days after $5,000.00 shall be 
accumulated therein.  The amount applied to the 
payment or redemption of said debentures shall be 
applied pro-rata among the outstanding debentures 
according to the face value thereof.  As payments are 
made on [the] debenture[s], corresponding coupons 
                                                                  
agreement to be wholly collateral to the pertinent facts and 
issues raised in this appeal.   
 
 
6
shall be detached, cancelled and delivered to SHERWOOD 
MEMORIAL PARK, INC. 
 
The debentures further provide for a confession of judgment 
against the corporation by a debenture holder in the event a 
debenture is not paid in accordance with these terms. 
Each coupon contains the following language: 
SHERWOOD MEMORIAL PARK, INC. will pay the amount 
specified herein, as and when declared due by the 
Board of Directors of said Company out of the sinking 
fund accumulated for that purpose, according to the 
terms of the debenture to which this coupon is 
attached, upon the surrender thereof. 
 
Sherwood Memorial Park made payments on the debentures in 
accordance with their terms until June 1, 1994, at which time 
the aggregate value of the outstanding debentures was $25,000.  
After June 1, 1994, no further payments were made on the 
debentures.  Although it is undisputed that the sinking fund 
continued to accumulate funds from the sale of lots and 
mausoleum space and that by the time of the events that 
precipitated this litigation the fund was adequate to retire the 
remaining debentures, for more than ten years no debenture 
holder made a demand for payment and no effort was made by the 
board or the debenture holders to enforce the terms of the 
debentures requiring payments to be made when the balance of 
sinking fund reached $5,000. 
 
 
7
In September 2005, Randolph C. Gleason was president of 
Sherwood Memorial Park and chairman of its board of directors.  
Andrew M. Brizzolara, John A. Cross, Jr., David D. Walker, and 
Thomas D. Weaver were also directors of the corporation.  In 
addition to the five directors, who were all debenture holders, 
there were seven other persons who held debentures from Sherwood 
Memorial Park.6 
Although it is self-evident that a dispute arose among 
certain debenture holders and certain directors, the specifics 
of it are not recounted in the record.  Whatever the nature of 
that dispute, the matter came to a head beginning on September 
17, 2005 when three debenture holders, J. Robert Goodwin, III, 
F. Staley Hester, Jr., and Jean G. Taylor signed and delivered 
to Gleason a letter in which, “[p]ursuant to Code of Virginia 
Section 13.1-839,” they demanded that Gleason “call a special 
meeting of the members (bondholders) of Sherwood Memorial Park.”  
The letter further stated that the purpose of the special 
meeting was “[t]o consider the removal of all members of the 
board of directors except Randolph C. Gleason,” and “[t]o 
recommend to the board of directors the following persons to 
fill the unexpired terms of removed directors:  Andrew M. 
                     
6 Another debenture was held by an estate. 
 
 
8
Brizzolara, Thomas D[.] Weaver, Jean G. Taylor, and Gail J. 
Zimmerman.” 
On September 19, 2005, Gleason, acting in his capacity as 
president of the corporation, sent a notice to the debenture 
holders of a special meeting of the corporation to be held 
October 6, 2005 at 1 P.M.7  The notice stated as the purpose of 
the meeting the two actions detailed in the September 17, 2005 
letter to Gleason from the three debenture holders. 
On September 20, 2005, Gleason, by a handwritten note, 
advised the other directors that a special meeting of the board 
would be held on September 23, 2005.  On that same day, 
Brizzolara, Cross, and Walker provided the directors with a 
draft of amended by-laws. 
                     
7 Code § 13.1-839(A) provides that “[i]n the absence of a 
provision in the articles of incorporation or bylaws stating who 
may call a special meeting of members, a special meeting of 
members may be called by members having one-twentieth of the 
votes entitled to be cast at such meeting.”  Because the by-laws 
of Sherwood Memorial Park have provisions for the calling of 
special meetings by the president or a majority of the 
directors, Gleason was not obligated to honor the demand made by 
Goodwin, Hester, and Taylor.  However, because Gleason was 
empowered as president of the corporation to call a special 
meeting, the notice of the meeting sent by him to the debenture 
holders was authorized in this respect, even though it was 
purportedly being issued under the authority of the statute.  In 
fact, the three debenture holders did not assert that they were 
calling the meeting but, rather, demanded that Gleason do so.  
 
 
 
9
At the meeting of the board of directors held on September 
23, 2005, a majority of the directors, with Gleason in 
opposition, voted to approve the new by-laws.  One amendment to 
the by-laws provided that if the outstanding debentures were 
fully paid, thus eliminating the only membership class of the 
corporation, the directors in office at the time would become 
the members in a new class.8  At this meeting, a majority of the 
directors, again with only Gleason opposed, then voted “to pay 
off all outstanding bond holders” as of the date of the meeting.  
The directors also discussed “Gleason’s recent action attempting 
to usurp the authority of the Board.”  The four other directors 
voted to suspend Gleason, with pay, from his duties as president 
of Sherwood Memorial Park.  Finally, a further special meeting 
of the board was called for September 28, 2005 “for the purpose 
of discussing and voting on the removal of Randy Gleason as a 
                                                                  
This resolves one of the issues raised in appellants’ third 
assignment of error. 
8It is now conceded by the appellants that this amendment to 
the by-laws was improper, as class membership in a nonstock 
corporation can only be defined in the articles of incorporation 
unless a provision therein permits membership to be defined in 
the by-laws.  Code § 13.1-837.  Sherwood Memorial Park’s 
articles of incorporation contain no such provision.  We note, 
however, that the Virginia Nonstock Corporation Act provides 
that “[i]f a corporation has no members or its members have no 
right to vote, the directors shall have the sole voting power.”  
Code § 13.1-846(D). 
 
 
10
Director of Sherwood Memorial Park, Inc., and to discuss and 
vote on amending the by[-]laws of Sherwood Memorial Park, Inc. 
to decrease the number of Directors from five to four.” 
Immediately following the September 23, 2005 meeting of the 
board of directors, Cross, who had been named acting president, 
sent cashier’s checks funded by money from the corporation’s 
sinking fund to each of the remaining debenture holders along 
with a notice that the checks were “payment in full for the 
Sherwood bondholders debentures.”  Although all these checks 
were received, Gleason, Taylor, Goodwin, and Hester, among 
others, refused to accept the checks.  Through an attorney, 
Taylor and Hester expressly advised the board that “[t]hey 
absolutely do not want their bonds redeemed.”  None of the 
debenture holders surrendered the remaining coupons on their 
debentures. 
Gleason did not attend the September 28, 2005 meeting of 
the board of directors.  The four remaining directors voted to 
remove Gleason as a director.  They also voted to amend the by-
laws so as to reduce the number of directors from five to four. 
On October 6, 2005, Gleason and the other dissenting 
debenture holders conducted a meeting at which they voted to 
remove Brizzolara, Cross, Walker, and Weaver as directors.  A 
vote was also taken “to recommend that Gleason, as the only 
 
 
11
remaining director, elect Taylor and Zimmerman [as directors], 
or in the alternative – should Gleason’s removal [on September 
28, 2005] have been valid – to elect all three to the board.” 
On October 18, 2005, after some ineffective negotiation 
between the two groups contesting control of the corporation, 
Brizzolara, Cross, Walker, and Weaver (hereinafter, “the 
Brizzolara group”) filed a bill of complaint for declaratory and 
injunctive relief in the Circuit Court of the City of Salem 
against Gleason, Taylor, and Zimmerman (hereinafter, “the 
Gleason group”) seeking a judgment confirming the actions taken 
by the Brizzolara group at the September 23, 2005 and September 
28, 2005 meetings and nullifying the action of the dissenting 
debenture holders at the October 6, 2005 meeting.9  Thereafter, 
the Gleason group filed an answer and cross-bill seeking a 
judgment confirming the actions taken at the October 6, 2005 
meeting. 
The Brizzolara group filed an answer to the cross-bill in 
which, among other responses, it expressly denied the allegation 
                     
9 The corporation was also named as a defendant in the 
original bill of complaint and all pleadings were subsequently 
served on counsel for the corporation.  However, the corporation 
did not respond to the bill of complaint and took no significant 
role in the subsequent proceedings. 
 
 
 
12
that a quorum had been present at the October 6, 2005 meeting.  
Ultimately, the parties filed cross-motions for summary judgment 
with supporting briefs and exhibits. 
The principal point of contention between the parties was 
whether the Brizzolara group, acting in its capacity as a 
majority of the board of directors, had the authority to direct 
the retirement of the corporation’s debt evidenced by the 
debentures by issuing payments in full to the debenture holders.  
The Brizzolara group contended that the board had such authority 
and, as a result, the tender of payment of the entire balance 
due on the debentures terminated the debenture holders’ 
membership in the corporation effective September 23, 2005.  The 
Brizzolara group maintained that under this circumstance the 
debenture holders could not refuse the tender of payment and 
were required to surrender the attached coupons to the 
corporation, even if the debenture holders declined to negotiate 
the payment checks.  Thus, the Brizzolara group asserted that on 
October 6, 2005, there were no “members” within the class of 
debenture holders to conduct the special meeting of the 
corporation. 
In a footnote in the Brizzolara group’s memorandum in 
support of its motion for summary judgment, the group stated 
that:  
 
 
13
 
In addition to the reasons discussed below, 
Plaintiffs have previously argued that the actions 
taken at the October 6, 2005 meeting were void because 
there was not a quorum present and because those who 
voted were not original debenture holders.  Because 
these issues may involve disputed questions of fact, 
they are not included in this motion for summary 
judgment.  All arguments previously made by Plaintiffs 
are preserved. 
 
The Gleason group responded to the Brizzolara group’s 
motion for summary judgment by asserting that the board of 
directors could not unilaterally retire the debt of the 
corporation because the debenture holders were also members of 
the corporation, not merely creditors, by virtue of their 
ownership of the debentures.  Thus, the Gleason group contended 
that the action by the board of directors on September 23, 2005 
constituted at best an offer to redeem the remaining coupons on 
the debentures, which the holders were free to accept or reject.  
The Gleason group further contended that even if the board could 
retire the debt, the record date of the notice of the October 6, 
2005 meeting was September 18, 2005 and the debenture holders as 
of the record date were entitled to vote as members of the 
corporation at the October 6, 2005 meeting.  The Gleason group 
did not directly respond to the assertion of the Brizzolara 
group that there were disputed issues of material fact as to 
whether only original holders of the debentures were entitled to 
 
 
14
vote and whether there was a quorum present at the October 6, 
2005 meeting. 
Following oral argument by the parties, the trial court 
issued an opinion and final order dated May 8, 2006.  In that 
opinion and order, the trial court first addressed the issue of 
whether the Brizzolara group, acting in its capacity as a 
majority of the board of directors on September 23, 2005, had 
the authority to retire the entire debt of the corporation 
represented by the debentures.  The trial court first concluded 
that “the agreement made between the shareholders of Sherwood 
Burial [Park, Inc.] and the incorporators of Sherwood [Memorial 
Park, Inc.] in exchanging their shares . . . for the $1 million 
in debentures is fully integrated in the articles of 
incorporation, debenture certificates, and the attached 
coupons.”  Accordingly, the trial court determined that “there 
can be no terms outside of those contained in these documents.”  
Finding that no language in these documents expressly authorized 
“prepayment” of the debt, and considering the language providing 
for payment “upon the surrender” of a coupon and “most 
importantly” that debenture holders were granted voting rights 
in the corporation, the trial court concluded that the board of 
directors on September 23, 2005 “did not have the authority to 
 
 
15
retire all the debentures in one fell swoop” because the 
debenture holders had not tendered their coupons for payment. 
Having concluded that the action at the September 23, 2005 
meeting of the board of directors to retire the debt of the 
corporation by payment in full of the outstanding debentures was 
invalid, the trial court then concluded that the actions of the 
Gleason group and other members at the October 6, 2005 meeting 
was valid presumptively because those attending the meeting had 
retained their debentures and, thus, remained members of the 
corporation.  Citing Scott County Tobacco Warehouses, Inc. v. 
Harris, 214 Va. 508, 513-14, 201 S.E.2d 780, 784 (1974), the 
trial court reasoned that the membership of the corporation 
could remove all directors and replace them with new directors 
at the same meeting.  The trial court further observed in a 
footnote that even if it had found that the retirement of the 
debt had been proper, it would have nonetheless agreed with the 
Gleason group that under Code § 13.1-842(D) the record date of 
the October 6, 2005 meeting was September 18, 2005 and, thus, 
the debenture holders of record on that date would have been 
entitled to vote at the October 6, 2005 meeting. 
The trial court did not directly address the assertion by 
the Brizzolara group that there was a material dispute as to 
whether only original debenture holders were entitled to 
 
 
16
membership and, if so, whether there was a quorum at the October 
6, 2005 meeting.  However, the trial court implicitly rejected 
this argument by finding that all those attending the October 6, 
2005 meeting were members and that they constituted “68.8%” of 
the debenture holders. 
Accordingly, the trial court denied the Brizzolara group’s 
motion for summary judgment on its bill of complaint and granted 
the Gleason group’s motion for summary judgment on its cross-
bill.  The trial court ordered that debenture holders who had 
negotiated the payment checks tendered by the corporation on 
September 23, 2005 could regain their membership in the 
corporation by repaying the amount tendered, otherwise they 
would be required to surrender the remaining coupons on their 
debentures.  Similarly, the trial court ordered that those 
debenture holders who had not negotiated the payment checks 
could retain their membership in the corporation by endorsing 
the checks for redeposit into the sinking fund or could 
surrender their debenture coupons and terminate their membership 
in the corporation.  The trial court further ruled that the 
Gleason group was the legally elected board of directors of 
Sherwood Memorial Park and directed that the Brizzolara group 
surrender the records of the corporation to the board and take 
no further action interfering with the corporation’s operation, 
 
 
17
“except to the extent of their membership interests as 
debenture[]holders.” 
We awarded the Brizzolara group an appeal from the judgment 
of the trial court with respect to the following assignments of 
error: 
1. 
The trial court erred in holding that the Debentures were 
not paid in full on September 23, 2005, and thus erred in 
denying the Brizzolara Group’s Motion for Summary Judgment. 
 
2. 
The trial court erred in holding that the actions taken at 
the October 6, 2005 “Special Meeting of Members” were valid 
and did not violate Virginia law, and thus erred in denying 
the Brizzolara Group’s Motion for Summary Judgment. 
 
3. 
The trial court erred in upholding the removal of the 
Brizzolara Group and in granting summary judgment to the 
Gleason Group because it never decided: 
 
a. 
Whether the persons who called the “Special Meeting of 
Members” were members of Sherwood entitled to call the 
meeting; 
 
b. 
Whether there was a quorum at the meeting; and 
 
c. 
Whether the persons who voted at the meeting were 
members of Sherwood and were entitled to vote. 
 
DISCUSSION 
This appeal addresses the legality of actions taken in 
corporate governance, not the wisdom or propriety of those 
actions.  Thus, while in the trial court and in the briefs filed 
in this Court the parties intimate that improper motives were at 
the root of their opponents’ actions, we will confine our review 
to whether the trial court was correct in awarding summary 
 
 
18
judgment to the Gleason group based principally on the finding 
that the Brizzolara group lacked the authority to unilaterally 
extinguish the debt of the corporation represented by the 
debentures. 
The parties do not contest that the trial court based its 
ruling on this point solely on its interpretation of the terms 
of the corporate records of Sherwood Memorial Park, including 
its articles of incorporation, by-laws, and the debentures and 
their attached coupons as contracts between the corporation and 
the debenture holders.  Where the judgment of the trial court is 
based upon its interpretation of written documents, we review 
the issue de novo because “ ‘[w]e have an equal opportunity to 
consider the words of the contract within the four corners of 
the instrument itself.’ ”  PMA Capital Ins. Co. v. US Airways, 
Inc., 271 Va. 352, 358, 626 S.E.2d 369, 274 (2006) (quoting Eure 
v. Norfolk Shipbuilding & Drydock Corp., 263 Va. 624, 631, 561 
S.E.2d 663, 667 (2002)); accord Wilson v. Holyfield, 227 Va. 
184, 188, 313 S.E.2d 396, 398 (1984).  “Where contracts are 
‘plain upon their face, they are to be construed as written, and 
the language used is to be taken in its ordinary significance 
unless it appears from the context it was not so intended.  They 
are to be construed as a whole.’ ”  Dowling v. Rowan, 270 Va. 
 
 
19
510, 516, 621 S.E.2d 397, 399 (2005) (quoting Virginian Ry. Co. 
v. Hood, 152 Va. 254, 258, 146 S.E. 284, 285 (1929)). 
The parties also do not contest that the debenture 
certificates, including the attached coupons, constitute 
contracts between Sherwood Memorial Park and the individual 
debenture holders.  Here, the debentures and their attached 
coupons are wholly integrated contracts, plain upon their face, 
which can be interpreted by application of the ordinary 
significance of the language used therein.  Moreover, nothing in 
the language of the debentures is contradicted or inconsistent 
with language of the other corporate records.10 
It is clear that the original parties to the debentures 
contemplated that Sherwood Memorial Park’s obligation to pay the 
debt could be completed before expiration of the fifty-year term 
of the debentures.  The debentures are “payable on or before 
fifty (50) years after the date” of issue, which was January 2, 
                     
10 We recognize that separate agreements that are executed 
as part of the same transaction may be construed as a single 
contract depending “on the facts of each case.”  Parr v. 
Alderwoods Group, Inc., 268 Va. 461, 468, 604 S.E.2d 431, 435 
(2004).  The debentures reflect the membership of the 
corporation and the voting rights of the debenture holders as 
established in the corporate articles and by-laws.  For this 
reason, the focus of our analysis is upon the language of the 
debentures and the attached coupons. 
 
 
 
20
1965.  (Emphasis added.)  Similarly, the debentures provide that 
“[t]he amount due . . . shall be reduced from time to time by 
the payment of [the] coupons.”  Moreover, the creation of the 
sinking fund and the requirement that pro-rata payments be made 
from that fund whenever its balance reached $5,000, the 
aggregate amount of one coupon from each of the 36 debentures, 
supports the conclusion that payment of the debentures before 
the expiration of the fifty-year term not only could, but almost 
certainly would, occur. 
The express language of the debentures requires that 
payments from the sinking fund “shall be applied from time to 
time as determined by the Board of Directors.”  (Emphasis 
added.)  The language of the coupons is equally clear that 
payment of a coupon occurs “as and when declared due by the 
Board of Directors.”  (Emphasis added.)  Although reference is 
made to payment “upon the surrender” of the coupon, nothing in 
the language of the debentures or the coupons suggests that 
payment is conditioned upon surrender of one or more coupons.  
To the contrary, the debentures expressly provide that “[a]s 
payments are made on [the] debenture[s], corresponding coupons 
shall be detached, cancelled and delivered to Sherwood Memorial 
Park, Inc.”  (Emphasis added.) 
 
 
21
While the debentures provided the holders with the legal 
recourse to force payment in the event the corporation failed to 
abide by the sinking fund provision or the fifty-year term, the 
debentures do not expressly or by implication grant the holders 
a corresponding power to decline to abide by those provisions.  
It is true that after June 1, 1994, none of the debenture 
holders exercised the right to force payments from the sinking 
fund, as they could have done.  Nonetheless, their acquiescence 
in the failure of the corporation to abide by the terms of the 
debentures cannot give rise to a power in the holders to refuse 
tender when the corporation ultimately resumed payment in accord 
with those express terms. 
In short, the debentures simply do not provide for any 
discretion on the part of the holders to refuse payment either 
before January 2, 2015 or thereafter.  Nor is it relevant that 
ownership of a debenture entitled the owner to membership rights 
in the corporation.  The consequential fact that final 
redemption of the debentures would extinguish those rights 
cannot give rise to a right to refuse to abide by the clear and 
unequivocal language of the debentures that the board of 
directors would determine when payment of the debt was to be 
made from, and in accord with, the established sinking fund. 
 
 
22
For these reasons, we hold that the decision of a majority 
of the board of directors, the Brizzolara group, on September 
23, 2005, to pay the entire balance of the debt represented by 
the remaining debenture coupons out of the surplus in the 
sinking fund was valid under the express terms of the 
debentures.  The trial court’s judgment that this action of the 
board of directors was not authorized, and its consequential 
ruling that the debenture holders could retain or reacquire 
their coupons, and thereby remain members of the corporation, 
was erroneous.  Accordingly, we will reverse that portion of the 
trial court’s judgment. 
We now turn to the Brizzolara group’s second assignment of 
error.  It contends that if the September 23, 2005 determination 
of the board of directors to tender payment of the debentures in 
full was valid, the membership rights of the debenture holders 
were terminated as of that date.  Thus, it maintains that the 
actions taken at the “special meeting of members” on October 6, 
2005 to remove the group as directors and to elect new directors 
were not valid because those in attendance were no longer 
“members” of the corporation. 
The Gleason group responds that regardless whether the 
September 23, 2005 action by the board of directors was valid, 
the October 6, 2005 meeting was proper because, as the trial 
 
 
23
court noted in an alternative ruling, the voting rights of those 
attending were determined by the date of the notice of the 
meeting under Code § 13.1-842(D).  Thus, even if the debentures 
were properly paid in full, the members of the corporation as of 
the “record date” of the meeting still possessed, what are 
sometimes called “dangling,” voting rights.  We agree with the 
Gleason group. 
In relevant part, Code § 13.1-842 provides:11 
A. 1. A corporation shall give members written notice 
of the date, time and place of each annual and special 
members’ meeting.  Such notice shall be given, either 
personally or by mail, no less than ten nor more than 
sixty days before the date of the meeting. 
 
. . . . 
 
4. Unless this chapter or the articles of 
incorporation require otherwise, the corporation is 
required to give notice only to each member entitled 
to vote at such meeting. 
 
. . . . 
 
D. If not otherwise fixed under § 13.1-840 or § 13.1-
844, the record date for determining members entitled 
to notice of and to vote at an annual or special 
                     
11 Effective July 1, 2007, the Virginia Nonstock Corporation 
Act, Code § 13.1-801 et seq., has been extensively revised.  
2007 Acts ch. 925.  In this opinion, we will apply the law as 
applicable at the time of the corporate actions challenged in 
this appeal, and we express no opinion as to what effect, if 
any, the subsequent amendments to the Act would have on the 
issues raised herein. 
 
 
24
meeting is the close of business on the day before the 
effective date of the notice to the members. 
 
Code § 13.1-840, which concerns notice of a court ordered 
corporate meeting, and Code § 13.1-844, which permits a 
corporation to fix the record date through its by-laws or 
resolution of the board of directors, do not apply to the facts 
of this case.  Similarly, nothing in the articles of 
incorporation of Sherwood Memorial Park provide for any 
permitted variance, as allowed under Code § 13.1-842(A)(4), from 
the provisions of Code § 13.1-842(D), which fix the record date 
of any special meeting of a nonstock corporation.  Thus, the 
trial court correctly ruled that, as the effective date of the 
notice to the members of the October 6, 2005 meeting was 
September 19, 2005, the record date of the meeting was September 
18, 2005, “the day before the effective date of the notice.” 
The Brizzolara group contends, however, that under the 
facts of this case Code § 13.1-842 controls only who was to 
receive notice of a meeting and not whether any person so 
entitled would be also eligible to vote at the meeting.  During 
oral argument of this appeal, counsel for the Brizzolara group 
properly conceded that, under the provisions of Code § 13.1-
658(D) as applied to a stock corporation, an owner of stock on 
the record date of a notice of a corporate meeting would be 
entitled to vote his or her shares at that meeting, even if the 
 
 
25
owner had sold the shares in the interim between the record date 
and the meeting date.  Cf. Edward R. Aranow & Herbert A. 
Einhorn, Proxy Contests for Corporate Control 385 (2d ed. 1968) 
(explaining that under statutes establishing a record date, “the 
right to vote is no longer an incident of stock ownership, but 
an incident of finding the stockholder’s name on the list of 
holders as of the record date”).  The Brizzolara group 
maintains, however, that voting rights in the case of a nonstock 
corporation are contingent upon a member retaining membership 
status at the time of the meeting. 
In this instance, the Brizzolara group relies upon language 
in Sherwood Memorial Park’s articles of incorporation providing 
for a member to exercise voting rights “for each $500.00 
debenture held by him at [the] meeting.”  (Emphasis added.)  The 
Brizzolara group contends that because all of the debentures had 
been redeemed prior to the October 6, 2005 meeting there were no 
remaining members who “held [debentures] at [the] meeting” and, 
thus, the former debenture holders attending the meeting had no 
voting rights to exercise.  We disagree. 
We are of opinion that, for all intents and purposes, Code 
§ 13.1-658(D) and Code § 13.1-842(D) are identical in meaning 
and effect.  The obvious purpose of the notice requirements in 
both statutes is to establish a record date to fix those 
 
 
26
entitled to vote in order to facilitate the orderly conduct of 
voting at annual or special meetings of a corporation.  With 
regard to stockholders of a stock corporation, the corporate 
records on the record date resolve the right to vote.  With 
regard to members of a nonstock corporation, Code § 13.1-842(D) 
has the same effect.  Otherwise, this statutory provision would 
be rendered meaningless because there would be no reason for the 
statute to mandate notice to a member of a nonstock corporation 
if that member did not otherwise have voting rights pursuant to 
the corporation’s articles of incorporation.  Because nothing in 
the Code suggests that stock corporations and nonstock 
corporations are to be treated differently with respect to the 
rights of those entitled to vote at an annual or special 
meeting, we are not persuaded by the Brizzolara group’s 
contention that a member of a nonstock corporation on the record 
date of a meeting must continue to maintain that membership 
after the record date in order to exercise his or her voting 
rights.  Under the statutes, the record date of a corporate 
meeting fixes both the right of notice and the right to vote, 
and no intervening act occurring after the record date can alter 
or diminish those rights. 
Accordingly, we hold that in terms of corporate governance 
in Virginia for both stock corporations and nonstock 
 
 
27
corporations, it is the record date of a meeting that determines 
the right of a stockholder or member to vote.  Therefore, the 
trial court did not err, based on its alternative ruling that 
Code § 13.1-842(D) established the voting rights of the 
debenture holders as of the record date of the meeting, in 
finding that debenture holders on September 18, 2005 were 
entitled to vote as members of Sherwood Memorial Park at the 
October 6, 2005 meeting. 
The Brizzolara group next contends within its second 
assignment of error that even if the record date of the meeting 
established voting rights, the trial court nonetheless erred in 
finding that it was proper for the members to elect a new board 
of directors when the notice only stated that the purpose of the 
meeting was to “recommend” the election of directors to the 
board.  Again, we disagree. 
On the date the notice of the meeting was sent by Gleason, 
he was still chairman of the board of directors and had not yet 
been suspended from his duties as president of the corporation.12  
                     
12 See Code § 13.1-839(A) (permitting a corporation to hold 
a special meeting of members on call of the chairman of the 
board of directors or the president of the corporation); see 
also Code § 13.1-860(A) (permitting members to remove one or 
more directors with or without cause in the absence of 
limitations in articles of incorporation or by-laws). 
 
 
28
The stated purpose of the meeting in the notice was “[t]o 
consider a proposal to remove all members of the board of 
directors except Randolph C. Gleason and to recommend to the 
board the election of . . . persons to fill the unexpired terms 
of [the] removed directors.”  It would require the application 
of form over substance to reach the conclusion that the notice 
of the meeting did not adequately reflect that the purpose of 
the meeting was to remove certain directors rather than merely 
to recommend that action.  The removal of those directors was 
expressly stated as the purpose of the meeting.  The 
recommendation for the election of other directors to fill the 
vacancies thus created was entirely consistent with the 
provision of the corporation’s by-laws permitting vacancies on 
the board of directors to be filled by the majority vote of the 
directors then in office rather than by the members.  It is 
self-evident that at the time the notice was sent, if the 
proposal to remove all the directors other than Gleason was 
passed, then Gleason alone would comprise “the board” to whom 
the recommendation was to be made. 
The Brizzolara group responded to the notice of this 
meeting by preemptively removing Gleason as a director, 
effectively creating the circumstance under which a vote by the 
members to remove the remaining directors at the October 6, 2005 
 
 
29
meeting would create a complete vacancy in the board.  See Code 
§ 13.1-855(A)(requiring a board of directors to consist of “one 
or more individuals”).  While that action did not alter the 
adequacy of the notice of the meeting with regard to the purpose 
of the meeting, it did remove the ability of the members to rely 
upon a recommendation to Gleason regarding the election of 
directors at the meeting.  Under that circumstance, the trial 
court correctly ruled that Scott County Tobacco Warehouses 
provided the authority for the members to elect a new board upon 
removal of the four remaining directors.13 
We now turn to the Brizzolara group’s final assignment of 
error in which the group contends that even if the trial court 
correctly ruled that the redemption of the debentures as of 
September 23, 2005 did not terminate the voting rights of the 
debenture holders, the trial court nonetheless erred in granting 
summary judgment for the Gleason group on its cross-bill because 
                     
13 The Brizzolara group’s contention that Scott County 
Tobacco Warehouses does not apply because the corporation in 
that case was a stock corporation is premised on a distinction 
without a difference.  The circumstances in Scott County Tobacco 
Warehouses and in this case are the same; that is, when those 
entitled to vote on matters at a meeting of any corporation act 
to remove all the directors of the corporation, they are 
permitted to avoid the consequential vacancy of the board by 
electing new directors at the same meeting. 
 
 
 
30
there remained material issues of fact which the Brizzolara 
group disputed and upon which the trial court lacked competent 
evidence in the record to rule in favor of the Gleason group.  
Specifically, the Brizzolara group contends that the trial court 
failed to rule on whether Sherwood Memorial Park’s articles of 
incorporation, when read in concert with Code § 13.1-837, 
limited membership in the corporation to “original” debenture 
holders, and if so whether the original debenture holders 
present, in person or by proxy, at the October 6, 2005 meeting 
constituted a quorum.14 
The issue raised by the Brizzolara group’s assertions 
concerning these disputed “facts” actually raises a mixed 
question of law and fact.  The factual issues contested by the 
Brizzolara group would be material only if its interpretation of 
Code § 13.1-837 were correct.  That statute provides, in 
relevant part, that: 
                     
14 The Brizzolara group has not assigned error to the trial 
court’s finding that, in person or by proxy, those present at 
the meeting held 68.8% of the debentures as of the record date 
of the meeting.  The corporation’s articles provide that 
“[m]embers holding 60 percent of the total votes that may be 
cast at any meeting will constitute a quorum at a meeting.”  
Accordingly, we will accept that finding, and confine our 
consideration of the quorum issue to the argument that only 
original debenture holders were eligible to vote, thus altering 
the determination of a quorum. 
 
 
31
A [nonstock] corporation may have one or more classes 
of members or may have no members.  If the corporation 
has one or more classes of members, the designation of 
such class or classes and the qualifications and 
rights of the members of each class shall be set forth 
in the articles of incorporation . . . .  Memberships 
shall not be transferable.  Members shall not have 
voting or other rights except as provided in the 
articles of incorporation. 
 
The Brizzolara group contends that because the articles of 
incorporation of Sherwood Memorial Park provide that the 
“members of the corporation shall be those persons holding 
debentures issued by the corporation” and that as Code § 13.1-
837 prohibits transfer of membership in a nonstock corporation, 
only original holders of the debentures are members of the 
corporation.  Thus, the Brizzolara group maintains that a person 
who subsequently acquired a debenture by purchase, gift, or 
inheritance would not be a member of the corporation, and any 
such debenture holder at the October 6, 2005 meeting could not 
be part of the quorum.  We disagree with the Brizzolara group’s 
interpretation of the scope of Code § 13.1-837. 
Code § 13.1-837 provides that the rights of the members of 
a nonstock corporation, such as Sherwood Memorial Park, shall be 
set forth in the articles of incorporation.  The statute further 
provides that the corporation may issue certificates evidencing 
membership and that membership shall not be transferable.  The 
statute, however, does not address the circumstances of this 
 
 
32
case where the express language of the corporation’s articles of 
incorporation and the language of the debentures make clear that 
voting rights attached to the debentures and are to be rights 
exercisable by the debenture holders.  Membership and voting 
rights are inextricable terms of the debentures issued in this 
case and, undoubtedly, at the time the corporation was 
incorporated it was anticipated that the original debenture 
holders would have the right to transfer those debentures by 
sale, gift, or bequest over the 50-year possible duration of the 
corporate debt evidenced by the debentures.  While Code § 13.1-
837 would prevent a debenture holder from transferring 
membership in Sherwood Memorial Park while retaining the 
debenture and retaining the right to receive payments on the 
attached coupons, the statute does not operate so as to restrict 
the membership of Sherwood Memorial Park to the original 
debenture holders.  In other words, Code § 13.1-837 is not 
implicated where membership is a right attached to transferable 
property. 
A fact is material to a party’s position only if it can 
affect the outcome of the case.  Because the facts the 
Brizzolara group contends are in dispute are premised on an 
incorrect legal analysis, those facts cannot be material to the 
outcome of this case.  Accordingly, we hold that the trial court 
 
 
33
did not err in determining that the Gleason group’s motion for 
summary judgment was ripe for consideration because no material 
facts remained in dispute. 
CONCLUSION 
For these reasons, we will reverse the judgment of the 
trial court with respect to its determination that the then 
board of directors lacked the authority to retire the entire 
corporate debt evidenced by the debentures at the September 23, 
2005 meeting.  We will affirm the remainder of the trial court’s 
judgment, including the determination that Gleason, Taylor, and 
Zimmerman are the properly elected directors of Sherwood 
Memorial Park.15  We will remand the case to the trial court with 
direction to enter an order requiring the debenture holders who 
have not already done so to surrender the remaining coupons on 
their debentures upon return to them of the payments previously 
made on September 23, 2005, if necessary. 
Affirmed in part, 
reversed in part, 
 
 
 
 
   and remanded. 
                     
15 Because the by-laws of the corporation presently require 
there to be a minimum of four directors, the board must either 
appoint a fourth director or amend the by-laws to reduce the 
number of directors to a minimum of three.  We reject the 
assertion of the Brizzolara group that because fewer than four 
directors were elected at the October 6, 2005 meeting, this 
somehow invalidates the election.