Fact
Salomon had incorporated his boot and shoe repair business. He transferred the business to a company own by him. He took all the shares of the company except six which were held by his wife, daughter and four sons. Part of the payment for the transfer of the business was made in the form of debentures ( a secured loan) issued by the company to Salomon. Salomon transferred the debentures to Broderib in exchange for a loan. Salomon defaulted on payment of interest on the loan and Broderib sought to enforce the security against the company. Unsecured creditors try to put the company into liquidation.
Summary
The company had been properly incorporated and therefore the security was valid and could be enforced. A company and its members are separate persons. This principle is known as the veil of incorporation.
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