Snukal v. Flightways Manufacturing, Inc.

Robert Snukal (plaintiff) sued Flightways Manufacturing, Inc. (Flightways) (defendant) for breaching a lease. Snukal owned a Malibu home that Flightways’ president, chief financial officer, and secretary, Kirt Lyle, planned to occupy. Lyle signed a two-year lease on Flightways’ behalf as president without listing his additional titles. Within months the rent fell behind, and Snukal sent a notice to pay or quit the premises. Lyle moved out about halfway through the lease. Snukal sued to recover rent owed and for the remaining term. Flightways denied authorizing Lyle to enter the lease. Snukal never met Lyle, as real estate brokers had handled the entire transaction without knowing Lyle’s position held with Flightways. Lyle had paid some rent using personal checks but mostly used checks issued on Flightways’ business account. A Flightways director testified that Flightways never authorized Lyle to enter the lease and was actually attempting to reduce expenses at the time. However, Lyle had prepared the financial statements that the board reviewed and gave to auditors, who found nothing unusual. Finally, Lyle had told board members he was housesitting a girlfriend’s house in Malibu. The trial court found the lease agreement nonetheless bound Flightways and entered judgment for Snukal. The trial court’s appellate department affirmed, finding the California Corporations Code required only the signature of someone both president and either secretary or chief financial officer to bind the corporation. However, the appellate court reversed, finding the California statute applied only if two separate officers had signed the lease. Snukal appealed to the California Supreme Court.