Bauer v. Harn, No. 791213

• Docket Nº: No. 791213
• Citation: 286 S.E.2d 192, 223 Va. 31
• Case Date: January 22, 1982
• Court: Supreme Court of Virginia

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286 S.E.2d 192 223 Va. 31 Richard A. BAUER, et al.
v.
Edwin HARN, President, etc., et al. Record No. 791213. Supreme Court of Virginia. Jan. 22, 1982.

[223 Va. 33] Homer S. Carpenter, Arlington (S. Page Higginbotham, Orange, Rice, Carpenter & Carraway, Arlington, Higginbotham & Higginbotham, Orange, on briefs), for appellants.

Atwell W. Somerville, Orange (Somerville, Moore & Joyner, Ltd., Orange, on brief), for appellees.

Before [223 Va. 31] CARRICO, C. J., COCHRAN, POFF, COMPTON, THOMPSON and STEPHENSON, JJ., and HARRISON, Retired Justice.

[223 Va. 33] COCHRAN, Justice.

In this appeal, we decide whether the Board of Directors of a nonstock corporation operating a private, residential community exceeded its authority by granting to persons having no legal or equitable title to

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real estate in the community the right to enter and use the recreational facilities and amenities upon payment of annual fees. The facts have been stipulated.

Lake of the Woods, a subdivision comprising more than 2,600 acres, is a "planned residential community" approved by the Board of Supervisors of Orange County pursuant to the County Zoning Ordinance. The community includes residential lots, streets, parks, recreational facilities, and "other amenities," [223 Va. 34] all privately owned. With the exception of the residential lots, the property within the subdivision is owned by Lake of the Woods Association, Inc. (the Association), a nonstock Virginia corporation.

Security personnel employed by the Association control access to the community at its entrance gate. Only residential lot owners, tenants, employees of the Association, and "guests and invitees" of lot owners and the Association may enter the subdivision.

The recorded Declaration of Restrictions applicable to lots in the community sets forth the composition, purpose, and powers of the Association and states that approval for membership in the Association is required before a purchaser may acquire title to a lot. A Board of Directors elected by the members manages the affairs of the Association. The Association is the assignee of the subdivider which recorded the Declaration of Restrictions, and the parties agree that the restrictive covenants set forth in the Declaration are valid and enforceable.

On December 9, 1978, the Board, after conducting hearings, adopted a new program for the community entitled "Annual Guest Privilege Program." Under this program, available only to residents of the counties of Orange, Culpeper, Spotsylvania, Stafford, and Fauquier, and the cities and towns within their geographical boundaries, a committee of the Association reviews and approves applications for guest privileges submitted by persons who own no property in the subdivision. An applicant approved for the program acquires the right, upon payment of a fee, to use specified facilities of the community for twelve months. Participants in the program may apply for annual membership in one or more of the golf, swimming, or tennis activities. They may also bring a limited number of guests with them to use the facilities. The Board limited the program to 250 applicants, construed a participant's right to use the facilities as a revocable license, and provided that failure to abide by the rules and regulations of the Association would result in revocation of guest privileges. The Board published newspaper advertisements offering the program to the public in the specified area.

Richard A. Bauer and three other Lake of the Woods property owners, ¹ filed a bill for declaratory judgment in the trial court [223 Va. 35] against the members of the Board ² seeking to have the guest program invalidated. The complainants maintained that the Board had no authority under the restrictive covenants and the Articles of Incorporation of the Association to sell to nonproperty owners the right of entry and access to community facilities.

The parties filed a pretrial written stipulation ³ that the only issue in the case was whether the Board had authority to establish

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the guest program, and that resolution of the issue turned upon the meaning of the word "invitees" as used in Section 11 ⁴ of the [223 Va. 36] restrictive covenants. Without specifically addressing this issue, the trial court ruled that the Board had authority under Section 11 to establish and maintain the program. By final order entered May 29, 1979, the court dismissed the complainants' bill of complaint.

The parties agree that the relationship between the Association and its members is contractual in nature. The Board members argue that the Association's Articles of Incorporation ⁵ conferred upon them the authority to establish the guest program. We reject this argument. The Association may exercise the broad powers conferred upon it by its Articles of Incorporation subject, however, to the contractual obligations embodied in the restrictive covenants. In the Articles of Incorporation, the first of the general objects and purposes set forth in Article II is to promote the community welfare and the interests of the property owners and "to exercise the powers granted to it in, or pursuant to," the restrictive covenants. Moreover, Article XI provides that the Articles of Incorporation may not be altered or amended to conflict with the restrictive covenants. Therefore, the contractual relationship established between the Association and its members may not be impaired by the exercise of corporate powers in derogation of the covenants.

Absent a challenge to the authority of an attorney to make them, stipulations are definitive of issues. McLaughlin v. Gholson, 210 Va. 498, 500, 171 S.E.2d 816, 818 (1970). See also Henderson & Russell v. Warwick, 217 Va. 486, 488, 229 S.E.2d 878, 880 (1976). In the present case, the parties by stipulation carefully and clearly framed not only the dispositive issue but also the means by which the issue was to be resolved. Accordingly, we will follow the terms of the stipulation by construing the word "invitees" as used...