5/8/2011 Salomon v Salomon Co Ltd Questions: After the House of Lords decision is it possible to question the real existence of a company or to hold its shareholders liable for a company's debts? Will the answer be different if the creditors who lost money were not business creditors but individuals who had been seriously injured by the serious life-threatening illness caused by the chemicals used in the boost- production? Do you agree with Lord Halsbury's assertion that the Court of Appeal went beyond the ambit of their role as judges by'inserting into [an]Act of Parliament limitations which are not to be found there'? Do you agree with Lord Halsbury when he says that 'the learned judges appear to me not to have been absolutely certain in their own minds whether to treat the company as a real thing or not'? 13 Macaura v Northern Assurance Co [1925]AC 619 (House of Lords) M owned a timber estate and sold it to Irish Canadian Sawmills Ltd in consideration of the allotment to him of 42,000 fully paid f1 shares. M was also an unsecured creditor of the sawmill co for an amount of ￡19,000. M insured timber on the land in his own name after the sale,covering the timber against fire. Forest on the land burned. M claimed insurance proceeds. Court held:M not entitled to claim. ·Why not? ·Lord Sumner: 14 >5/8/2011 7 Salomon v Salomon & Co Ltd Questions:  After the House of Lords decision is it possible to question the real existence of a company or to hold its shareholders liable for a company’s debts?  Will the answer be different if the creditors who lost money were not business creditors but individuals who had been seriously injured by the serious life-threatening illness caused by the chemicals used in the boost￾production?  Do you agree with Lord Halsbury’s assertion that the Court of Appeal went beyond the ambit of their role as judges by ‘inserting into [an] Act of Parliament limitations which are not to be found there’?  Do you agree with Lord Halsbury when he says that ‘the learned judges appear to me not to have been absolutely certain in their own minds whether to treat the company as a real thing or not’? 13 Macaura v Northern Assurance Co [1925] AC 619 (House of Lords) • M owned a timber estate and sold it to Irish Canadian Sawmills Ltd in consideration of the allotment to him of 42,000 fully paid £1 shares. • M was also an unsecured creditor of the sawmill co for an amount of £19,000. • M insured timber on the land in his own name after the sale, covering the timber against fire. • Forest on the land burned. • M claimed insurance proceeds. • Court held: M not entitled to claim. • Why not? • Lord Sumner: 14