In Salomon V

In Salomon v. Salomon & Co., Mr. Salomon incorporated a business to which he loaned money, secured by a mortgage on the business assets. When the business failed, the creditors turned to Mr. Salomon, arguing that he should not be able to claim priority as a secured creditor and, in fact, should be responsible for the company's debts. What did the Court find?

A) Mr. Salomon, as the incorporator, should be responsible for paying the creditors of his business, on the grounds of unjust enrichment.
B) Mr. Salomon could not claim priority as a secured creditor, because this would amount to a conflict of interest.
C) The company was a legal entity separate from Mr. Salomon, so Mr. Salomon could have priority as a secured creditor and bore no responsibility for the company's debts.
D) The company was a legal entity separate from Mr. Salomon, but it would not be fair to allow him to claim his money ahead of arm's length parties.
E) Mr. Salomon, by creating a fictionalized legal entity, had committed a fraud on the business' creditors, and so should bear total responsibility for the creditors' claims.