Salamon v. Salamon and co. ltd., 1897 A.C. 22

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(based on corporate personality)

A person Salamon carried on a business as a leather merchant and a boot manufacturer, for some years and than form a limited co. consisting of himself, his wife , his daughter and his four sons as shareholders, all of whom subscribed to one shareeach so actual cash paid capital was 7 pound.

sale of Co. to the Co. formed by salamon.


Sold for the sum of 38782 pound whose nominal capital was 40000 pound in 1 pound shares..

       10000 pound-secured debenture issued to salamon

        20000 pound-fully paid share to salamon

         3782 pound-to salamon in cash


salamon was the M.D.and his two sons were the other Directors.



liquidation of company 

Total asset-6050 pound
liabilities-10000 pound (secured debenture to salamon)
               -8000 pound (unsecured trade creditors)


Creditors claimed assets on the ground that salamon was the owner of the company but when the matter went to the court, the decision came was that the co. and the salamon both are distinct person.

So, acc. to companies act, the first liability is to pay the secured debenture which was issued tosalamon notto the creditors.

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