of the court. She failed to comply with the order and moved the court for a voluntary dismissal of her action. The court refused to entertain the motion for the reason that the plaintiff was at the time in contempt of court for failure to obey its order. The plaintiff thereupon sought a writ of mandate to compel the superior court to hear and grant her motion. The supreme court held that the statute of Washington conferred an absolute right upon the plaintiff in the action to dismiss her action, but that as she was in contempt, she would not be allowed to present her motion to dismiss until she cleared herself of that contempt. (State ex rel. Hunter v. Ronald, 106 Wash. 413, [180 Pac. 125].) So, in this case, the petitioner has treated the order of the court with contempt and removed herself and the minor from the jurisdiction so that it cannot be enforced. She should not be allowed to make application for final decree of divorce until she has submitted to the lawful order of the superior court in relation to the custody of the child of the partics to the action or otherwise purged herself of the contempt. The application for the writ is denied.

Wilbur, J., Richards, J., pro tem., Lennon, J., Shurtleff, J., Sloane, J., and Shaw, C. J., concurred.

Rehearing denied.

All the Justices concurred.

[S. F. No. 9836. In Bank.-December 22, 1921.] J. I. MORE, Respondent, v. KATE K. HUTCHINSON, as Executrix, etc., Appellant.

[1] CONTRACT-BENEFIT OF THIRD PERSON-ACCEPTANCE.-While it is true that suit may be brought by the third person upon a contract entered into for its benefit immediately upon the execution of the contract, the rule arises from the fact that the suit itself is deemed an acceptance of the contract, but the true rule is that until such acceptance, there is no liability on the part of the person making the contract, but such contract, as far as the third person is concerned, amounts to a mere offer.

ASSUMPTION OF INDEBTEDNESS

[2] CORPORATIONS STOCKHOLDER'S LIABILITY-STATUTE OF LIMITATIONS.-Where one corporation takes over the assets of another corporation with an agreement to assume the liabilities of the latter, the obligation of the stockholders of the former to the latter corporation is barred in three years from the date of the agreement.

[3] ID.-LIABILITY TO CREDITOR-IGNORANCE OF ASSUMPTION-TIME OF ACCRUAL.-Where a corporation took over the assets of another corporation with an agreement to assume the liabilities of the latter, among which was a promissory note, and several months thereafter the former corporation executed a new note to the creditor, who had no previous knowledge or information of the assumption of such liability and never assented thereto, the liability of the stockholders of the assuming corporation on the note accrued at the time of the execution of the note and not at the time of the assumption of the liability.

[4] ID.-RENEWAL OF NOTE

- NONEXTENSION OF STOCKHOLDERS' LIABILITY-INAPPLICABILITY OF RULE.-While it is true that where a note is given by a corporation in renewal of an existing indebtedness of its own the liability of stockholders cannot be extended by such renewal, such rule is inapplicable to a note given by the corporation in renewal of the note of another corporation whose payment it assumed.

APPEAL from a judgment of the Superior Court of the City and County of San Francisco. Jas. M. Troutt, Judge. Affirmed.

The facts are stated in the opinion of the court.

J. S. Hutchinson and Walter Slack for Appellant.

Robert B. Gaylord for Respondent.

WILBUR, J.-This is an action to recover on a stockholder's statutory liability. The defense is that the cause of action is barred by the provisions of section 359 of the Code of Civil Procedure. Defendant is a stockholder in a corporation which assumed and agreed to pay an outstanding obligation of the Morris Real Estate Company. The question involved is as to whether or not the liability of the stockholders of the Palo Alto Investment Company, in which the defendant was a stockholder, accrued at the time of the assumption of this outstanding indebtedness or at the time of

the execution of the note given by the latter company to the creditor.

The district court of appeal, first district, division one, held that the liability accrued at the time of the execution of the note sued on and not at the time of the assumption of the liability. In the petition for transfer to this court it was claimed that the decision was directly contrary to the estab lished law in this state. The transfer was made in order that this point might receive further consideration. After such consideration we are satisfied with the opinion of the district court, written by Mr. Justice Kerrigan, and adopt it as our own. [1] It is true that our authorities uniformly hold that suit may be brought by the third person upon a contract entered into for its benefit immediately upon the execution of the contract, but this rule arises from the fact that the suit itself is deemed an acceptance of the contract. The true rule is that until such acceptance by the third person there is no liability on the part of the person who assumes the indebtedness, but, as stated in the opinion of Mr. Justice Kerrigan, such contract, as far as the third person is concerned, amounts to a mere offer.

In addition to the authorities cited by the district court of appeal the following authorities support this view: Blake v. Atlantic Nat. Bank, 33 R. I. 464, [39 L. R. A. (N. S.) 874, note, 82 Atl. 225]; Tweeddale v. Tweeddale, 116 Wis. 517, [96 Am. St. Rep. 1003, 61 L. R. A. 509, 93 N. W. 440]; Zwietusch v. Becker, 153 Wis. 213, [140 N. W. 1056]; see cases cited in Decennial Digest, Contracts, sec. 187, subd. 5.

Appellant insists that the case of Morgan v. Overman S. M. Co., 37 Cal. 534, 537, sustains his position. In that case suit was brought by a third party and the bringing of the suit constituted an acceptance. Appellant quotes from Washer v. Independent Min. etc. Co., 142 Cal. 702, 708, [76 Pac. 654], as holding that the obligation accrued at once in favor of the third person without an acceptance. The quotation in appellant's petition is taken from that opinion, but is in turn a quotation from Brewer v. Dyer, 61 Mass. (7 Cush.) 337. Turning to that decision we find it stated: "It seems to us that the case at bar falls clearly within them, and that the agreement in question, having been made for the benefit of Brewer on a sufficient consideration, and having been accepted and adopted by him, he can well maintain his

187 Cal. 40

action of assumpsit against the defendant." (Italics ours.) Neither this Massachusetts case nor our own case are authority for the proposition that an acceptance is unnecessary.

The decision of the district court of appeal hereby adopted is as follows:

"This is an action to enforce a stockholder's liability. The proceeding was instituted by respondent as the holder of a promissory note of the Palo Alto Investment Company, a corporation, to enforce the liability of the appellant's testator as a stockholder of that company. Judgment was rendered in favor of plaintiff for the sum of $1,371.83, and defendant as executor has appealed.

"The defense urged at the trial was that the action was barred by the statute of limitations, and this is the sole question presented on this appeal.

"The facts are undisputed and were established by stipulation at the trial. They may be briefly summarized as follows: The history of the transaction dates back to the year 1906. At that time one J. J. Morris and Marshall Black borrowed seven thousand five hundred dollars from the Crocker National Bank, giving their note therefor. In 1908 this note was taken up by the individual note of Morris. In 1912 the Morris Real Estate Company assumed payment thereof. There was then due and unpaid thereon the sum of $5,545. In March of the same year the Palo Alto Investment Company was organized for the purpose of taking over the assets and liabilities of the Morris Company, and this arrangement was consummated at that time; and later, on April 29, 1912, the Palo Alto Investment Company executed an instrument acknowledging receipt of a conveyance from the Morris Company of its assets, and in consideration of this transfer it thereupon agreed to assume the liabilities of that company, among which was the note in question. About seven months thereafter and on December 4, 1912, the board of directors of the Palo Alto Company adopted a resolution to renew this promissory note by executing a new note for $5,545, payable to the Crocker Bank. The note was accordingly executed by the Palo Alto Company, drawn to its own order, indorsed by it in blank and delivered to and accepted by the Crocker National Bank, which in turn subsequently transferred the note to plaintiff, who thereafter on November 29, 1915, commenced this action. This was the last day

of the three-year period established by section 359 of the Code of Civil Procedure, when computing the time from the date of the note.

"It is appellant's contention that decedent's liability as a stockholder of the Palo Alto Investment Company to the Crocker Bank was created by the consummation of the agreement between the Morris Company, by which the former conveyed its assets to the latter, which in turn assumed the liabilities of the former, and that the stockholders' liability began to run from the date of this agreement. Respondent, on the other hand, insists that the indebtedness was incurred at the time the note was executed and not before. There is no showing in the record that the bank ever knew of the existence of the obligation of the Palo Alto Company to assume the liabilities of the Morris Company, or that it ever assented to it in any way, or accepted its benefits or its burdens prior to the time that it might be charged with such knowledge by its acceptance of the note in suit.

"The contention of the appellant is based upon the doctrine laid down in Hunt v. Ward, 99 Cal. 612, [37 Am. St. Rep. 87, 34 Pac. 335], and subsequent cases, to the effect that actions based upon a stockholder's liability must be brought within three years after the liability is created. If the doctrine invoked can be made to apply to this case so as to successfully avail appellant, then a situation is presented of a person being made a party to a contract and foreclosed of certain rights thereunder based upon facts of the existence of which he has absolutely no information or knowledge whatsoever and to which he has never assented. We are cited to no authority supporting such a principle.

[2] "There is no question that it is the settled law of this state that the statute of limitations begins to run in favor of the stockholder of a corporation at the time the debt against the corporation is created; and that under this principle the obligation of the Palo Alto Investment Company's stockholders to the Morris Company, being incurred when the agreement of April 12, 1912, was executed, was barred as against the Morris Company in three years from that date. [3] Quite different, however, is the situation of the bank in its transaction with the Palo Alto Company. It never knew of and, consequently, never assented to the agree ment transferring its claim until the new note was executed