  The spectrum of Seyfert 1 Galaxies is very similar to that of several
Galactic Black Hole Candidates (GBHCs) in their hard state, suggestive that
both classes of objects have similar physical processes. While it appears that
an accretion disk corona (ADC) model, where the corona sandwiches the cold
accretion disk, is capable of explaining the observations of Seyfert galaxies,
recent work has shown that this model is problematic for GBHCs. To address the
differences in the spectra of Seyferts and GBHCs, we consider the structure of
the atmosphere of the accretion disk in a region near an active magnetic flare
(we refer to this region as transition layer). We show that the transition
layer is subject to a thermal instability. Due to the much higher ionizing
X-ray flux in GBHCs, the only stable solution for the upper layer of the
accretion disk is that in which it is highly ionized and is at the Compton
temperature ($kT \sim $ a few keV). Using numerical simulations for a slab
geometry ADC, we show that the presence of a transition layer can significantly
alter the spectrum of escaping radiation for modest optical depths. The
presence of the transition layer also leads to a reduction in reprocessing
features, i.e., the iron line and the X-ray reflection hump. We find that due
to the thermal instability of the surface of the accretion disk, which leads to
different endpoints for GBHCs and Seyfert galaxies, the X-ray spectra from
these two types of objects can be explained by a single unifying ADC model.
