livered to be executed, the notes cannot be held to be legal obligations of the defendant.

The evidence shows-indeed, it is admitted—that, at the time the transaction constituting the basis of this litigation took place, Skow and Morris were, practically, the defendant —that is, the corporation itself. They owned all the stock but one single share, which, as is often so with so-called "close corporations," was put in the name of attorney Walthall undoubtedly for the sole working purposes of the corporation. There can be absolutely no doubt that, when making the contract and the notes in question, Skow was not acting for himself individually, except in so far as he was interested in the defendant as a stockholder, but was acting as agent of the defendant in his capacity as its president and manager. The sole purpose of the contract was, obviously, to build up or increase the volume of the business of the defendant and not to benefit a business in which he was interested other than as a stockholder in the defendant corporation. As a matter of fact, and to all practical intents and purposes, Skow and Morris were partners in the business of the defendant, although in legal contemplation they were, under the name of the defendant, a corporation. And the situation, in its legal aspect, was in no way changed by the act of Morris in purchasing the stock of Skow, except in the fact that Morris thus himself practically became the corporation. The corporation was a mere instrumentality adopted originally by Skow and Morris, and perpetuated by the latter when he became the sole owner of all the stock therein, through which they could the more conveniently transact their business. The defendant, as we have shown, received the benefits, whatever they were, flowing from the agreement in consideration of which the notes were given, and Morris was informed by Skow of the making of the agreement and of the terms thereof, according to his own testimony, the day following that upon which the agreement was made. He made no protest or objection against the agreement or the making thereof by Skow, and thus he approved and ratified the act of Skow, the president and manager of the defendant, in making the agreement. Here, then, we have a case where a party, serving in the dual capacity of president and manager of what well may be termed a "one-man" corporation, has made an agreement for and in behalf and in the name of the corporation, undoubtedly believing in good faith that in so

doing he was acting as the agent of said corporation, duly authorized to make such an agreement, and where said agreement or the act of making it has been tacitly, or by quiescence, acquiesced in by a party who, with said president and manager, owns practically all the stock of the corporation, after he has been put in possession by said manager of knowledge of the making of the agreement and of its terms and object, and where the corporation has received certain of the benefits flowing from said agreement. The question may be asked: May a corporation, whose capital stock is entirely owned, practically, by two persons, one of whom, being in the active management of the business of such corporation, has made an agreement for the benefit of the corporation and the other of whom has virtually indorsed or by conduct ratified it, refuse performance of its obligations under the agreement? Having received the benefits, or some of them, of an agreement obviously made for it and for its benefit (and ostensibly by it), with the consent and concurrence of the owners of substantially all its capital stock, will a corporation be permitted to dodge or escape liability for obligations arising upon such agreement by the plea that the contract was made without observance of the formal requisites or prerequisites prescribed by its charter or by-laws with respect to the making of contracts? The answer to these questions may be found in the principles of equity and justice applicable to such a case as we have here. Indeed, it would be deemed a hard rule or one of more than mere unsubstantial technical texture if the courts could not consistently break through it and so hold that a corporation is bound by a contract made under such circumstances as characterized the making of the contract in the present case. [1] But the books are replete with cases holding that where it appears that a corporation is but the instrumentality through which an individual for convenience transacts a particular kind of business, "not only equity, looking through form to substance, but the law itself, would hold such a corporation bound (where contracts are made under its name under circumstances similar to those here) as the owner of the corporation might be bound, or, conversely, hold the owner bound by acts which bound his corporation." (Llewellyn Iron Works v. Abbott Kinney Co., 172 Cal. 210, 214, [155 Pac. 986], and the many cases cited therein.) It is hardly necessary to do more herein than to

refer to the Llewellyn-Abbott case and the many cases cited therein as supporting that proposition. [2] It will suffice to say that in those cases it is held that where an obligation is created by the duly authorized agent of a corporation for such corporation, where most if not all of its capital stock is held and owned by one person, and the obligation is one the making of which is within the corporate powers of the corporation, and the act of making it is, therefore, not ultra vires, the corporation will be held bound to and liable for the proper execution of the terms of the obligation, notwithstanding that it may be shown that the act of making the agreement was not in strict accord with the adopted rules or the by-laws of the corporation with respect to such matters. But there is another rule, applicable to all corporations and which we think has application to the present case, which is stated in Stevens v. Selma Fruit Co., Inc., 18 Cal. App. 242, 250, [123 Pac. 212, 215], as follows:

"There is in the record before us no evidence from which it appears that any particular officer of the defendant was specifically authorized by the board of directors to execute promissory notes for and on its behalf. The very nature of commercial corporations, of which the defendant is a type, requires that the authority to transact their usual or ordinary business affairs shall be vested in some one or more persons. [3] A corporation is an artificial person, and where it is organized for commercial purposes its president or general manager or whoever may be given immediate direction or control of its affairs is its agent, empowered, unless expressly restricted to the performance of certain specified acts, to do anything which naturally and ordinarily has to be done to carry out its paramount purposes; and where authority to do some particular act, which is included in the ordinary affairs of such a corporation, is not specifically given to any particular officer, and the performance of which is not specifically inhibited to the person authorized to manage its affairs generally, the intention of the board of directors to confer upon the person or officer in whom is vested the immediate direction or control or management of the affairs of such corporation authority to perform such particular act will be inferred from the general authority so given. [4] And where, as was clearly the case here, an officer of a corporation is held out by such corporation to be possessed of power to per

form all acts involved in its ordinary or usual business, the law will not permit third parties to suffer from such acts of such officer by the plea of the corporation that the ostensible authority of such officer was not in fact conferred upon him. (McKiernan v. Lenzen, 56 Cal. 61; Phillips v. Campbell, 43 N. Y. 271; Seeley v. San Jose Independent Mill & Lumber Co., 59 Cal. 22, 24; Bank of Healdsburg v. Bailhache, 65 Cal. 327, 332, [4 Pac. 106]; Jennings v. Bank of California, 79 Cal. 323, 328, [12 Am. St. Rep. 145, 5 L. R. A. 233, 21 Pac. 852]; Greig v. Riordan, 99 Cal. 316, 323, [33 Pac. 913]; Bates v. Coronado Beach Co., 109 Cal. 160, 162, [41 Pac. 855]; Wells, Fargo & Co. v. Enright, 127 Cal. 669, 672, [49 L. R. A. 647, 60 Pac. 439]; Siebe v. Hendy Machine Works, 86 Cal. 390, 392, [25 Pac. 14].)"

In Brown v. Crown Gold Milling Co., 150 Cal. 376, 387, [89 Pac. 87], it is said: "The majority of the board having knowledge of the facts, it was not necessary, to conclude the company defendant in favor of plaintiff, that his employment should be ratified at a regular meeting of the board. It was sufficient that the majority of the board individually were advised of the terms of the employment of plaintiff by Mr. Doe, and took no measures to disaffirm as directors that employment. (Pixley v. Western Pacific R. R. Co., 33 Cal. 184, 186, [91 Am. Dec. 623]; Crowley v. Genesee Mining Co., 55 Cal. 273, 275; Gribble v. Columbus Brewing Co., 100 Cal. 69, 72, 73, [34 Pac. 527]; Scott v. Superior Sunset Oil Co., 144 Cal. 140, [103 Am. St. Rep. 72, 77 Pac. 817].)" (See, also, Cyclops I. Works v. Chico Ice etc. Co., 34 Cal. App. 10, 14 et seq., [166 Pac. 821].)

In Doerr v. Fandango Lumber Co., 31 Cal. App. 318, 325, [160 Pac. 406, 409], this court said: "Indeed, the proposition that ratification of a contract, the making of which is unauthorized by one of the principals, may be effectuated by a recognition, however informally, of the agreement and the obligations arising by virtue thereof, is elementary. A familiar and common application of this doctrine is to be found in those cases where an agent, in making a contract for his principal, transcends the scope of his authority as such, and the principal, after the contract has been made, although not at that time legally bound by its terms, does some act recognizing the validity of the agreement-as, for instance, accepting some of the benefits or assuming some of the burdens

thereof. In such cases, quite obviously, the principal will be deemed from his acquiescence in the contract to have ratified the unauthorized act of his agent, and will be held to its terms and conditions, notwithstanding that he has not in express language or in a formal manner ratified the contract. The case here comes within the principle thus referred to. The giving of the mortgage was not an ultra vires act, and there is no claim that it was. If the act involved the making of an invalid contract, it was, as shown, merely because of the manner in which it was attempted to perform the act or make the contract, and, like any other contract, it is capable of being ratified by conduct or a recognition in some manner of the obligation."

Morris himself testified, as seen, that Skow was the president of the corporation and the manager of it and its business; that he (Morris) knew nothing of the drug business or of the profession of pharmacist, and that the entire management of the concern in all its aspects was in the hands of Skow, although he (Morris) was about the establishment much of the time and acted with Skow in an advisory capacity. Thus it is clear that the corporation was not only under the immediate control and management of Skow but that he was held out as such to the public, with authority to transact for the corporation all the usual and ordinary business matters coming within its purposes and objects. Certainly, it will not be denied that Skow possessed general authority to transact and carry out such business matters of the defendant as in his judgment would tend to increase the volume of the business of the corporation and thereby augment its income and profits.

[5] It is not material to inquire whether the acceptance of benefits arising from an obligation, the making of which was in excess of the authority of the party receiving and accepting such benefits, amounts to a ratification or has the effect merely of creating an estoppel whereby the acceptor will be precluded from setting up the plea of want of authority to make the obligation to relieve himself of the burden imposed upon him by the obligation. The legal effect of either ratification or estoppel in such a case is precisely the same. Our Civil Code, section 1589, declares in effect that in such case there is a ratification. But, be that as it may, if we were to be driven from the position in this case to which