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RFK, Jr. Wants To Ban Big Pharma Ads
Part Two: Unpacking The Doctrine Of Legal Personhood
Beyond the immediate issues I see with RFK's proposal, it is worth noting that his ideas have sparked some interesting discussions here on Substack, raising some points that deserve further exploration.
Margaret Anna Alice further expounded on the idea by asserting two intriguing supporting propositions: a rejection of the idea of legal personhood for corporations and a rejection of a principle attributed to the Citizens UnitedSupreme Court case: that expenditures of money are expressions of free speech.
Without commenting on the merits and demerits of her proposition legal personhood, it is nevertheless important to understand that the modern doctrine of legal personhood did not arise ex nihilo within any one Supreme Court case, but is a doctrine whose evolution reaches back even before the founding of the United States. Understanding where US law stands currently on legal personhood and how it evolved to that point provides a much needed backdrop for weighing what reforms are both appropriate and Constitutional when contemplating what to do with Big Pharma corruption.
Borrowing from Chief Justice John Marshall’s historic phrasing in Marbury v Madison, “It is emphatically the duty of the Judicial Department to say what the law is”, my goal here is neither to prove nor disprove her propositions, but simply to explore where the law stands on them, and how those stands have come to be—to provide the detail, as it were, on what the law in these matters is. Understanding what the law is today, I submit, is essential if we are to wisely decide what the law should be tomorrow.
Fair warning: This is not a small subject, and this article addresses only the first of the two propositions. Assessing the status of “money as speech” will come in a subsequent article.
A few years after Marshall’s historic Marbury decision, he would again visit the limitations of the what the law is in ruling on a lawsuit involving the Bank of the United States—the central bank of its day. Thus Bank of the United States v. Deveauxarticulated a key legal facet of the corporate structure in early 19th century America—corporations were not counted as “citizens”.
The jurisdiction of this Court being limited, so far as respects the character of the parties in this particular case, "to controversies between citizens of different states," both parties must be citizens to come within the description.
That invisible, intangible, and artificial being, that mere legal entity, a corporation aggregate, is certainly not a citizen, and consequently cannot sue or be sued in the courts of the United States unless the rights of the members in this respect can be exercised in their corporate name. If the corporation be considered as a mere faculty, and not as a company of individuals who, in transacting their joint concerns, may use a legal name, they must be excluded from the courts of the union.
This early reasoning by the courts to my layman’s eye appears to reconcile rather well to Margaret Anna Alice’ stated positions—a corporation is not a citizen, and can only be apprehended as a citizen to the extent its members are themselves citizens.
However, even in this early decision, Marshall acknowledged that the treatment of corporations often approached that of actual persons, and pointed out this had been the understanding of the English common law from which much American common law has been derived.
In the case of King v. Gardner, reported by Cowper, a corporation was decided, by the Court of King's bench, to come within the description of "occupiers or inhabitants." In that case, the poor rates, to which the lands of the corporation were declared to be liable, were not assessed to the actual occupant, for there was none, but to the corporation. And the principle established by the case appears to be that the poor rates on vacant ground belonging to a corporation may be assessed to the corporation as being inhabitants or occupiers of that ground. In this case Lord Mansfield notices and overrules an inconsiderate dictum of Justice Yates that a corporation could not be an inhabitant or occupier.
These opinions are not precisely in point, but they serve to show that for the general purposes and objects of a law, this invisible, incorporeal creature of the law may be considered as having corporeal qualities.
It is true that as far as these cases go, they serve to show that the corporation itself, in its incorporeal character, may be considered as an inhabitant or an occupier, and the argument from them would be more strong in favor of considering the corporation itself as endowed for this special purpose with the character of a citizen, then to consider the character of the individuals who compose it as a subject which the court can inspect, when they use the name of the corporation for the purpose of asserting their corporate rights. Still the cases show that this technical definition of a corporation does not uniformly circumscribe its capacities, but that courts for legitimate purposes will contemplate it more substantially.
Thus even in this early US Supreme Court decision, while corporations were not regarded as full citizens themselves, they nevertheless could be legally apprehended as having the citizenship qualities of their members, thus creating a form of quasi-citizenship.
That a corporate entity could have rights intrinsic to the entity and not derived from any of its members would be one of the principles upon which a subsequent case, Trustees of Dartmouth College v. Woodward, was decided.
A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it either expressly or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created. Among the most important are immortality, and, if the expression may be allowed, individuality -- properties by which a perpetual succession of many persons are considered as the same, and may act as a single individual. They enable a corporation to manage its own affairs and to hold property without the perplexing intricacies, the hazardous and endless necessity, of perpetual conveyances for the purpose of transmitting it from hand to hand. It is chiefly for the purpose of clothing bodies of men, in succession, with these qualities and capacities that corporations were invented, and are in use. By these means, a perpetual succession of individuals are capable of acting for the promotion of the particular object like one immortal being.
While legal personhood was not a specific aspect of the Dartmouth case, that corporate entities could have legal rights—specifically, corporate autonomy and the right to operate free from government interference—was firmly established by Dartmouth, and so the case becomes a stepping stone on the longer path towards contemporary apprehensions of legal personhood.
The corporate autonomy established in Dartmouth would be used specifically to ground an articulation of legal personhood in the 1839 case Bank of Augusta v. Earle(emphasis mine),
It is very true that a corporation can have no legal existence out of the boundaries of the sovereignty by which it is created. It exists only in contemplation of law and by force of the law, and where that law ceases to operate and is no longer obligatory, the corporation can have no existence. It must dwell in the place of its creation, and cannot migrate to another sovereignty. But although it must live and have its being in that state only, yet it does not by any means follow that its existence there will not be recognized in other places, and its residence in one state creates no insuperable objection to its power of contracting in another. It is indeed a mere artificial being, invisible and intangible; yet it is a person for certain purposes in contemplation of law, and has been recognized as such by the decisions of this Court.
The doctrine of corporate autonomy articulated in Dartmouth would also become a key element of Louisville, Cincinnati & Charleston R. Co. v. Letson, which would also seek to clarify and to some degree retreat from the blanket presumption of Bank v Deaveaux that corporations could not be regarded as citizens.
It is that a corporation created by and doing business in a particular state is to be deemed to all intents and purposes as a person, although an artificial person, an inhabitant of the same state, for the purposes of its incorporation, capable of being treated as a citizen of that state as much as a natural person. Like a citizen, it makes contracts, and though in regard to what it may do in some particulars it differs from a natural person, and in this especially, the manner in which it can sue and be sued, it is substantially, within the meaning of the law, a citizen of the state which created it and where its business is done, for all the purposes of suing and being sued. And in coming to this conclusion as to the character of a corporation, we only make a natural inference from the language of this Court upon another occasion, and assert no new principle.
The language from which the Supreme Court in 1844 drew that inference was the language from Dartmouth quoted above.
Thus by 1844, the laws of the United States had already evolved to an apprehension that a form of legal personhood did extend to corporations, and that corporations could and indeed should be treated in the same manner as natural persons when appropriate within contemplation of the law. In Louisville, the treatment in question included the liability to being sued in federal district court by a citizen of a state different from its state of incorporation, thus fulfilling a Constitutional predicate for federal court jurisdiction per Article 3, Section 2 of the US Constitution (emphasis mine):
The judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority;--to all Cases affecting Ambassadors, other public Ministers and Consuls;--to all Cases of admiralty and maritime Jurisdiction;--to Controversies to which the United States shall be a Party;--to Controversies between two or more States;--between a State and Citizens of another State;--between Citizens of different States;--between Citizens of the same State claiming Lands under Grants of different States, and between a State, or the Citizens thereof, and foreign States, Citizens or Subjects.
This was the explicit conclusion of the Louisville v Letson case:
In Bank v. Deveaux, the case relied upon most for the doctrines contended for by the plaintiff in error, it is said of a corporation, "This ideal existence is considered as an inhabitant, when the general spirit and purposes of the law requires it." If it be so for the purposes of taxation, why is it not so for the purposes of a suit in the circuit court of the United States, when the plaintiff has the proper residence? Certainly the spirit and purposes of the law require it. We confess our inability to reconcile these qualities of a corporation -- residence, habitancy, and individuality -- with the doctrine that a corporation aggregate cannot be a citizen for the purposes of a suit in the courts of the United States unless in consequence of a residence of all the corporators being of the state in which the suit is brought. When the corporation exercises its powers in the state which chartered it, that is its residence, and such an averment is sufficient to give the circuit courts jurisdiction.
That a corporation established effectual citizenship within the state in which it was chartered was explicitly confirmed nine years later in Marshall v. Baltimore & Ohio Railroad Company, with specific reference to Louisville v Letson.
In Marshall v Baltimore, the judicial principle of stare decisis, the general legal presumption that courts will hew to established precedents, was part of the judicial logic that, inasmuch as the corporate citizenship principles articulated in Louisville v Letson had framed numerous subsequent cases without challenge before Marshall v Baltimore, cases and issues which might need to be relitigated were Louisville v Letson to be overturned, it would be inappropriate to overturn them in Marshall v Baltimore.
The published report of that case (whatever the fact may have been) exhibits no dissent to the opinion of the Court by any member of it. It has for the space of ten years been received by the bar as a final settlement of the questions which have so frequently arisen under this clause of the Constitution, and the practice and forms of pleading in the courts of the United States have been conformed to it. Confiding in its stability, numerous controversies involving property and interests to a large amount have been heard and decided by the circuit courts, and by this Court, and many are still pending here, where the jurisdiction has been assumed on the faith of the sufficiency of such an averment. If we should now declare these judgments to have been entered without jurisdiction or authority, we should inflict a great and irreparable evil on the community. There are no cases where an adherence to the maxim of stare decisis is so absolutely necessary to the peace of society as those which affect retroactively the jurisdiction of courts. For this reason alone, even if the Court were now of opinion that the principles affirmed in the case just mentioned and that of Bank v. Deveaux were not founded on right reason, we should not be justified in overruling them. The practice founded on these decisions, to say the least, injures or wrongs no man while their reversal could not fail to work wrong and injury to many.
Thus by 1853 the state of American law firmly established a basic premise of legal personhood for corporate entities.
Curiously enough, the doctrine of legal personhood articulated in Marshall v Baltimore, just as in Louisville v Letson, arose to establish not merely legal right but also legal liability—legal personhood for corporations meant that parties to a litigation could not use the corporate structure as a means of excluding the litigation from the courts.
"A corporation, it is said, is an artificial person, a mere legal entity, invisible and intangible."
This is no doubt metaphysically true in a certain sense. The inference also that such an artificial entity "cannot be a citizen" is a logical conclusion from the premises which cannot be denied.
But a citizen who has made a contract and has a "controversy" with a corporation may also say with equal truth that he did not deal with a mere metaphysical abstraction, but with natural persons; that his writ has not been served on an imaginary entity, but on men and citizens; and that his contract was made with them as the legal representatives of numerous unknown associates or secret and dormant partners.
The necessities and conveniences of trade and business require that such numerous associates and stockholders should act by representation, and have the faculty of contracting, suing, and being sued in a factitious or collective name. But these important faculties, conferred on them by state legislation, for their own convenience, cannot be wielded to deprive others of acknowledged rights. It is not reasonable that those who deal with such persons should be deprived of a valuable privilege by a syllogism, or rather sophism, which deals subtly with words and names without regard to the things or persons they are used to represent.
Appreciating this mid-century view of legal personhood for corporations is essential for placing the case many sources cite as the origin of modern notions of legal personhood, the 1886 Santa Clara County v. Southern Pacific Railroad Co.case, in its proper context.
Santa Clara County is very much an odd duck in the pantheon of cases addressing an evolving notion of legal personhood, for the ruling itself did not substantively address either legal personhood or the application of the Fourteenth Amendment to corporations. Rather, a premise expanding legal personhood to include corporations under the Fourteenth Amendment’s guarantee of “equal protection of the laws”, was peremptorily declared by Chief Justice Morrison Waite prior to oral argument.
One of the points made and discussed at length in the brief of counsel for defendants in error was that "corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States." Before argument, MR. CHIEF JUSTICE WAITE said:
"The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution which forbids a state to deny to any person within its jurisdiction the equal protection of the laws applies to these corporations. We are all of opinion that it does. "
This declaration by the Chief Justice would subsequently be accepted as part of the ruling in Santa Clara County and cited accordingly, such as in the 1898 case Smyth v Ames.
By the Fourteenth Amendment, it is provided that no state shall deprive any person of property without due process of law, nor deny to any person within its jurisdiction the equal protection of the laws. That corporations are persons within the meaning of this amendment is now settled. Santa Clara County v. Southern Pacific Railroad, 118 U. S. 394, 118 U. S. 396
Because of the extraordinary (and arguably improper) declaration by the Chief Justice and subsequent reliance upon it as binding precedent, some legal commentators and historians criticize the validity of the precedent.
But it wasn’t until the 1886 case Santa Clara County v. Southern Pacific Rail Road that the Court appeared to grant a corporation the same rights as an individual under the 14th Amendment. The case is remembered less for the decision itself—the state had improperly assessed taxes to the railroad company—than for a headnote added to it by the court reporter at the time, which quoted Chief Justice Morrison Waite as saying: “The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution which forbids a state to deny to any person within its jurisdiction the equal protection of the laws applies to these corporations. We are all of opinion that it does.”
Indeed, UCLA law professor Adam Winkler would argue in an essay appearing in The Atlantic in 2018 that the modern notion of legal personhood is built upon a “19th century lie”.
Prior to the Santa Clara County case, Southern Pacific Rail Road had a similar case, San Mateo County v. Southern Pacific R. Cocome before the Supreme Court, argued by legal and political heavyweight Roscoe Conkling—who had been on the Congressional committee which had drafted the Fourteenth Amendment’s text. In his oral argument, Conkling made the claim to the Court that the Fourteenth Amendment’s use of the word “person” rather than “citizen” had been done expressly to encompass corporate persons as well as natural persons in its intent.
As he spoke before the Court on Southern Pacific’s behalf, Conkling recounted an astonishing tale. In the 1860s, when he was a young congressman, Conkling had served on the drafting committee that was responsible for writing the Fourteenth Amendment. Then the last member of the committee still living, Conkling told the justices that the drafters had changed the wording of the amendment, replacing “citizens” with “persons” in order to cover corporations too. Laws referring to “persons,” he said, have “by long and constant acceptance … been held to embrace artificial persons as well as natural persons.” Conkling buttressed his account with a surprising piece of evidence: a musty old journal he claimed was a previously unpublished record of the deliberations of the drafting committee.
Subsequent inspection of Conkling’s journal suggests that Conkling simply lied. Certainly there is no external historical support for his claim that the use of the word “persons” in the Fourteenth Amendment was specifically used to include corporate “artificial” persons.
The San Mateo County case is noteworthy because, even though oral arguments were heard on the case, the Court held the case until 1885, at which point the parties to the case had settled the matter and the Court simply dismissed the case. For reasons never formally stated, the Court avoided actually ruling on the case, and when substantially the same issues came before the Court in Santa Clara County, Chief Justice Waite short-circuited the judicial proceedings by declaring ex cathedra that the issue of extending Fourteenth Amendment guarantees of equal protection of the laws to corporations was settled. Professor Winkler suspects the Court realized Conkling had misled them and chose to bury the San Mateo County case rather than face an inevitable scandal; such is not an unreasonable interpretation of events, although there is no precise evidence at hand to prove the allegation.
Yet Conkling’s claims in San Mateo County are erroneous in another regard as well—as we can see just in the cases cited above, the articulations of corporate personhood revolved largely around questions of whether or not a corporation was a citizen of a particular state, and whether it can sue and be sued in the manner of a citizen of a particular state. “Person” was hardly necessary language within the Fourteenth Amendment in order to advantage corporations.
Canadian legal writer Benjy Radcliffe, in 2009, would ponder this very question.
After that moment, everything changed. In effect, the U.S. Supreme Court had granted the attribute of personhood to the corporation; as a result, corporations enjoy the same rights as ordinary people. Yet corporations do not behave as persons, and lack many defining characteristics of biological persons. Indeed, as Lord Chancellor Thurlow put it, corporations have, “no soul to damn, no body to kick”. What then inspired the great need for the corporation to be conceived as persons? In particular, what additional impetous caused the U.S. Supreme Court to stray from the line of reasoning it adopted a scant 20 years ago in Paul v. Virginia (1869), 75 U.S. (7 Wall.) 168, where it held corporations were not citizens?
Arguably, Radcliffe is overgeneralizing the logic expressed in Paul v Virginia.
Paul does express the principle that corporations are not notionally citizens of a state.
But in no case which has come under our observation, either in the State or Federal courts, has a corporation been considered a citizen within the meaning of that provision of the Constitution which declares that the citizens of each State shall be entitled to all the privileges and immunities of citizens of the several States.
However, this principle is not at all in conflict with the half-century of Supreme Court reasoning summarized herein. Paul in fact restates the logic in Bank of Augusta, which, as shown above, concluded that corporations become persons “for certain purposes in contemplation of law”.
Paul also makes an important observation regarding the “privileges and immunities” clause in the Constitution:
But the privileges and immunities secured to citizens of each State in the several States by the provision in question are those privileges and immunities which are common to the citizens in the latter States under their constitution and laws by virtue of their being citizens. Special privileges enjoyed by citizens in their own States are not secured in other States by this provision. It was not intended by the provision to give to the laws of one State any operation in other States. They can have no such operation, except by the permission, express or implied, of those States. The special privileges which they confer must, therefore, be enjoyed at home, unless the assent of other States to their enjoyment therein be given.
A citizen of the state of New York, for example, cannot exercise his particular rights as a New York citizen while within the jurisdiction of the state of New Jersey, but he does enjoy all the rights possessed by citizens of New Jersey while in that state.
Additionally, Paul makes another important observation about the nature of corporations: they exist as one of those “privileges and immunities” guaranteed by the Constitution.
Now a grant of corporate existence is a grant of special privileges to the corporators, enabling them to act for certain designated purposes as a single individual, and exempting them (unless otherwise specially provided) from individual liability. The corporation being the mere creation of local law, can have no legal existence beyond the limits of the sovereignty where created.
With regards to state citizenship, this sets up a conundrum. While on the one hand a corporation is not held to be a citizen of a state, yet its corporators are citizens of at least one state. If the character and state citizenship of the corporators were the only determinant on how courts should apprehend corporations for matters such as jurisdiction and rights and privileges pertaining to contracts, then the moment such a corporation enters into contract in a state other than where it is incorporated, its corporators potentially receive additional benefits not available to the citizens of that other state—the very thing the Constitution forbids, albeit in reverse.
If, on the other hand, the provision of the Constitution could be construed to secure to citizens of each State in other States the peculiar privileges conferred by their laws, an extraterritorial operation would be given to local legislation utterly destructive of the independence and the harmony of the States. At the present day, corporations are multiplied to an almost indefinite extent. There is scarcely a business pursued requiring the expenditure of large capital, or the union of large numbers, that is not carried on by corporations. It is not too much to say that the wealth and business of the country are to a great extent controlled by them. And if, when composed of citizens of one State, their corporate powers and franchises could be exercised in other States without restriction, it is easy to see that, with the advantages thus possessed, the most important business of those States would soon pass into their hands. The principal business of every State would, in fact, be controlled by corporations created by other States.
It was upon this logic that the Court concluded in Paul that states had the power and authority to particularly regulate the activities of foreign corporations.
It is important to note that this is still the legal state of affairs today. A corporation chartered in one state still has to qualify to conduct intrastate business in another state. Neither Santa Clara County nor any subsequent decision by the Court has altered this. The application of the Fourteenth Amendment does not and has not precluded this.
Neither did extending the Fourteenth Amendment’s guarantee of equal protection of the laws prevent the Court from ruling in Hale v. Henkelthat corporations could not be persons for the purpose of asserting a Fifth Amendment right against self-incrimination.
The right of a person under the Fifth Amendment to refuse to incriminate himself is purely a personal privilege of the witness. It was never intended to permit him to plead the fact that some third person might be incriminated by his testimony, even though he were the agent of such person. A privilege so extensive might be used to put a stop to the examination of every witness who was called upon to testify before the grand jury with regard to the doings or business of his principal, whether such principal were an individual or a corporation. The question whether a corporation is a "person" within the meaning of this amendment really does not arise except, perhaps, where a corporation is called upon to answer a bill of discovery, since it can only be heard by oral evidence in the person of some one of its agents or employees.
As corporations can only give testimony via its agents or employees, it cannot therefore incriminate itself. Therefore, it cannot presume a Fifth Amendment right, as the right is reserved exclusively for the one giving testimony—i.e., the agent or employee.
However, as was affirmed in Russian Volunteer Fleet v United States, corporations do enjoy the benefit of the Fifth Amendment’s “takings” clause:
As the facts alleged in the petition were admitted by the motion to dismiss, the allegation that the petitioner is a corporation duly organized under the laws of Russia stands unchallenged on the record. There was no legislation which prevented it from acquiring and holding the property in question. The petitioner was an alien friend, and, as such, was entitled to the protection of the Fifth Amendment of the federal Constitution.
While the Fourteenth Amendment has been deemed to extend equal protection of the laws to corporations, it does so only in those areas of the law where corporations enjoy consideration as “persons”—which consideration is neither universal nor presumed.
The answer to Beny Radcliffe’s question of “what changed?” is simply the ratification of the Fourteenth Amendment itself. Paul as a case arose while the Amendment was being ratified, and so the legal arguments constructed were done so on the basis of the “privileges and immunities” clause of the Constitution.
The Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States.
This Constitutional declaration is fundamentally transformed by Section 1 of the Fourteenth Amendment (emphasis mine):
All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.
As Paul notes, the Constitutional provision extending the “privileges and immunities” of the several states includes equal protection of the laws. What the Fourteenth Amendment did was establish that such protection extended to everyone, citizen or otherwise. As corporations are not citizens but are artificial persons, to the extent that corporations may and should be legally treated as persons, after Santa Clara County they enjoy equal protection of the laws.
Given the well established precedent that corporations are artificial “persons” with rights and responsibilities attaching thereto, the conclusion that the Fourteenth Amendment guarantees to corporations as well the equal protection of the laws is perhaps not so radical a statement as some commentators suggest. Following the evolving theory of legal personhood expressed in the cases cited herein, applying the Fourteenth Amendment to corporations merely means the courts regard them equally with natural persons within the scope of legal matters brought before them—that if a corporation is, within contemplation of law, to be regarded as if it were a person, it necessarily enjoys the same equal protection of the laws as a natural person. A corporation is not disadvantaged before the courts merely by being a corporation.
As existing limitations imposed on foreign corporations and the preclusion of Fifth Amendment rights against self incrimination demonstrate, such equal protection does not make corporations fully equivalent to natural persons—indeed, following the logic of Paul, such equivalence would be contrary to the standard of equal protection of the laws. Santa Clara County did not change that operative logic.
An important point made in Smyth regarding the Fourteenth Amendment’s application to corporations via Santa Clara County was that what constituted “equal protection” was a matter to be adjudicated.
What amounts to deprivation of property without due process of law, or what is a denial of the equal protection of the laws, is often difficult to determine, especially where the question relates to the property of a quasi-public corporation, and the extent to which it may be subjected to public control. But this Court, speaking by Chief Justice Waite, has said that while the state has power to fix the charges by railroad companies for the transportation of persons and property within its own jurisdiction, unless restrained by valid contract, or unless what is done amounts to a regulation of foreign or interstate commerce, such power is not without limit, and that under pretense of regulating fares and freights, the state cannot require a railroad corporation to carry persons or property without reward, neither can it do that which in law amounts to the taking of private property for public use without just compensation, or without due process of law."
While from Santa Clara County onward corporations have been presumed to enjoy the equal protection of the law, how that protection is put into practice is inherently a matter for courts to determine.
If you’ve hung with me so far, well done!
If you’ve hung with me so far, you probably are wondering “what is the point?”
The most immediate point is to present the background by which the courts come to apply principles of personhood to corporations. While it is intuitively obvious that corporations are not and can never be “natural” persons, they are able to perform many of the legal functions routinely transacted by natural persons: they buy and sell goods and services, they enter into contracts, they acquire and dispose of property of all types.
When a corporation engages in any of these activities, should the courts apprehend them differently than natural persons, or the same? If differently, by what legal standards should corporate transactions be assessed?
These questions arise directly when we consider ideas such as RFK, Jr.’s proposed ban on pharmaceutical advertising. It accomplishes little to enact such a ban if it is not done in keeping with the proper legal standard applicable to Big Pharma corporations; either the ban will not survive court challenge or it will open the door to an even greater corruption.
If one applies doctrines of legal personhood, the answer to these questions is largely that the courts should apprehend corporations in the same manner as natural persons where it is fitting. If one rejects those doctrines then the appropriate different legal standard must be defined.
Yet there is an additional point to consider, which Margaret Anna Alice elucidates elsewhere in that same discussion thread.
Corporations cannot be incarcerated. When they are convicted of crimes, the worst they tend to get is fines, which they factor into the cost of doing business. Instead of being dissolved, they just rebrand themselves under a different name. CEOs and individual perpetrators are rarely held to account. So basically, we are dealing with amoral entities that are virtually untouchable.
Accepting this at face value for the purposes of this article, when we consider the evolution of legal personhood for corporations in light of such assertions we must ask ourselves a simple and direct question: “How did this get so badly screwed up?”
Recall the wording of Louisville v Letson:
Jurisdiction, in one sense, in cases of corporations, exists in virtue of the character of members, and must be maintained in the courts of the United States unless citizens can exempt themselves from their constitutional liability to be sued in those courts by a citizen of another state by the fact that the subject of controversy between them has arisen upon a contract to which the former are parties, in their corporate and not in their personal character.
Constitutional rights and liabilities cannot be so taken away or be so avoided. If they could be, the provision which we are here considering could not comprehend citizens universally, in all the relations of trade, but only those citizens in such relations of business as may arise from their individual or partnership transactions.
The very premise behind considerations of legal personhood, as stated in Louisville v Letson as in other cases, was in large measure to prevent such loopholes by which liability could be avoided. It was in furtherance of this explicit objective that the Supreme Court explicitly likened corporations to citizens for the purposes of establishing jurisdiction.
…it is substantially, within the meaning of the law, a citizen of the state which created it and where its business is done, for all the purposes of suing and being sued.
If, as Margaret Anna Alice asserts (and let me reiterate, I am not disputing her assertion here), corporations have become unaccountable behemoths of illegality and corruption, then something has gone radically wrong. In charting the evolving understanding of the nature of corporate entities within the law, the courts have consistently sought not merely to ensure that all proper rights are respected, but that all just liabilities are honored as well. The history of legal personhood shows that it is not meant as an evasion of liability nor a pathway of unaccountability, but rather a balance of both rights and responsibilities.
Whether legal personhood is fair and just juridical doctrine is, ultimately, a question I will leave to the reader. Regardless of that answer, an ongoing debate about how best to ensure proper liability and accountability by corporate entities and those executives who helm them is one that must be had. If we are to bend the arc of history towards justice at last such debates must never be avoided or ignored.
Hopefully, this somewhat overlong essay helps to further that debate.
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Editors of The Encyclopaedia Britannica. “Roscoe Conkling.” Encyclopaedia Britannica, 2023, https://www.britannica.com/biography/Roscoe-Conkling.
Findlaw Editorial Team. Conducting Business as a Corporation or an LLC Out of State. 23 Sept. 2022, https://www.findlaw.com/smallbusiness/incorporation-and-legal-structures/conducting-business-as-a-corporation-or-an-llc-out-of-state.html.