Saloman vs Saloman & Co. (1897)
Fact of the case -
In this case, Mr. Saloman was engaged in the business of manufacturing shoes. He was running his business prosperously. He got a Co incorporated with the same name Soloman. There were total Seven shareholders - Mr. Salman comma Mrs. Salman comma dear four sons and one daughter.
All other shareholders were given one share each of £1. Mr. Salman transferred his business to Saloman and Co. pound agreed 40,000/-. He gave a proposal to Co. He acquired shares of 20,000/- each of £1 and debentures of 10,000, unfortunately, the company went into liquidation due to general depression in trade. Assets of the company were found only 6000/- Claimants were - Mr Saloman for his debenture of 10,000 and there were unsecured creditors of 7000/-
Who shall claim in priority?
Defence of unsecured creditors was that priority should be given to them, as co. can be treated equally with Mr Saloman, who was promoter, managing directors and everything for running of business.
It was held ultimately by Court that personality of Company couldn't be equated with the personality of Mr. Soloman. Company has got independent personality, independent of its members. Therefore practically Mr. Saloman has first priority over other shareholders in claiming his right.