Lewis

Elk Hills 36 Oil Company is a California corporation with an authorized capital of $500,-000 divided into 500,000 shares of the par value of $1. Prior to its incorporation Rose L. Burcham was the owner of certain property in Kern County and while so the owner she gave A. W. Mason the right to purchase the property for the sum of $20,000, $10,000 payable in cash, the balance on deferred payments, a deed to be placed in escrow and to be delivered when the total purchase price had been paid.

Upon the execution of the contract Mason induced the defendants Foster and Johnstone to lend financial assistance in raising the initial payment of $10,000, and through their joint efforts the first payment of $10,000 was made and the deed placed in escrow. Apparently un able to raise further money among themselves to meet the deferred payment, they decided to organize a corporation for the purpose of raising the balance of $10,000 due upon the property, and also to obtain funds to prospect the land for oil and gas.

Accordingly Mason, Johnstone and Poster, through what is commonly known as dummy directors, caused a corporation to be organized known as Elk Hills 36 Oil Company. These directors…