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    The liquidator and the other creditors objected to this, claiming that it was unfair for the person who formed and ran the company to get paid first.

    However, the House of Lords held that the company was a different legal person from the shareholders, and thus Mr Salomon, as a shareholder and creditor, was totally separate in law from the company A Salomon & Co Ltd.

    The company carried the business of felling and milling timber. Macaura had earlier insured the timber against loss of by fire in his own name. He subsequently sold the plantation to a company of which he was the only shareholder, through the purchase money remained owing to him.The ‘corporate veil’ surrounds the company of Murphy & Co Ltd and prevents outsiders challenging the operation of the company.However, although the principle of separation is central to company law, there are a number of situations when the company and its members can be identified together and treated as the same.He had not transferred the insurance policy to the company. After the sale, Macaura continued to insure the plantation in his own name. When Macaura attempted to claim on the policy, the company refused to pay.The issue was whether Macaura had an insurable interest at the time of the loss.

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