Case law
In 1818, the United States Supreme Court heard the case Dartmouth College v. Woodward, 17 U.S. 518 (1819), making the following statement in their decision: "The opinion of the Court, after mature deliberation, is that this corporate charter is a contract, the obligation of which cannot be impaired without violating the Constitution of the United States. This opinion appears to us to be equally supported by reason, and by the former decisions of this Court." A public outcry ensued. State courts and legislatures, supported by many of their constituents, declared that state governments had an absolute right to amend or repeal a corporate charter.[10]
Seven years after the Dartmouth College opinion, the Supreme Court decided Society for the Propagation of the Gospel in Foreign Parts v. Town of Pawlet, (1823) in which an English corporation dedicated to missionary work, with land in the U.S., sought to protect its rights to that land under colonial-era grants against an effort by the state of Vermont to revoke the grants. Justice Joseph Story, writing for the court, explicitly extended the same protections to corporate-owned property as it would have to property owned by natural persons. Seven years later, Chief Justice Marshall stated that, "The great object of an incorporation is to bestow the character and properties of individuality on a collective and changing body of men."[11]
It should be understood that the term 'artificial person' was in long use, prior to the Dartmouth College decision, and was in principle distinct from any contention that corporations have the rights of natural persons. 'Artificial person' was used because there were certain resemblances, in law, between a natural person and corporations. Both could be parties in a lawsuit; both could be taxed; both could be constrained by law. In fact the corporations had been called artificial persons by courts in England as early as the 16th century because lawyers for the corporations had asserted they could not be convicted under the English laws of the time because the laws were worded "No person shall...".[citation needed]
In the 1886 case Santa Clara v. Southern Pacific, the Supreme Court ruled that the Fourteenth Amendment equal protection clause guarantees constitutional protections to corporations in addition to natural persons.[12]
Similarly, in 1877, in Munn v. Illinois (94 U.S. 113 (1876)), the Supreme Court decided that the Fourteenth Amendment (because Munn asserted his due process right to property was being violated) did not prevent the State of Illinois from regulating charges for use of a business' grain elevators. Instead, the decision focused on the question of whether or not a private company could be regulated in the public interest. The court's decision was that it could, if the private company could be seen as a utility operating in the public interest.
The primary purpose of the Amendment was originally to protect freed slaves, not corporations.[citation needed] One of the 1886 judges, Samuel F. Miller, considered the purpose of the Amendment in 1872, only six years after the Amendment had become law, when the court was "called upon for the first time to give construction to these articles." In the Slaughterhouse Cases (83 U.S. 36 (1872)), Miller delivered the majority opinion and discussed the Thirteenth Amendment and the Fifteenth Amendment as well as the Fourteenth as follows:
The most cursory glance at these articles discloses a unity of purpose, when taken in connection with the history of the times, which cannot fail to have an important bearing on any question of doubt concerning their true meaning. Nor can such doubts, when any reasonably exist, be safely and rationally solved without a reference to that history, for in it is found the occasion and the necessity for recurring again to the great source of power in this country, the people of the States, for additional guarantees of human rights, additional powers to the Federal government; additional restraints upon those of the States. Fortunately, that history is fresh within the memory of us all, and its leading features, as they bear upon the matter before us, free from doubt. We repeat, then, in the light of this recapitulation of events, almost too recent to be called history, but which are familiar to us all, and on the most casual examination of the language of these amendments, no one can fail to be impressed with the one pervading purpose found in them all, lying at the foundation of each, and without which none of them would have been even suggested; we mean the freedom of the slave race, the security and firm establishment of that freedom, and the protection of the newly made freeman and citizen from the oppressions of those who had formerly exercised unlimited dominion over him.[13]
Careful research has shown that John A. Bingham, the member of Congress who is known to have been chiefly responsible for the language of Section One when it was drafted by the Joint Committee in 1866, had, during the previous decade and as early as 1856-1859, employed not one but all three of the same clauses and concepts he later used in Section One. More important still, Bingham employed these guarantees specifically and in a context which suggested that free Negroes and mulattoes unquestionably were the persons to which he then referred. On the other hand, laws often benefit those other than the original intended beneficiary. Just as whites clearly are beneficiaries of the Fourteenth Amendment, the primary purpose of the Amendment does not conclusively determine its ultimate effect.[citation needed]
In Northwestern Nat Life Ins. Co. v. Riggs (203 U.S. 243 (1906)), having accepted that corporations are for legal purposes "persons," the court still ruled that the Fourteenth Amendment was not a bar to many state laws that effectively limited a corporation's right to contract business as it pleased. However, this was not because corporations were not protected under the Fourteenth Amendment - rather, the Court's ruling was that the Fourteenth Amendment did not prohibit the type of regulation at issue, whether of a corporation or of sole proprietorship or partnership.[citation needed]
Political contributions by corporations were first banned in the Tillman Act of 1907, even though individual contributions remained unlimited, suggesting that Congress did not perceive an equal protection problem.[citation needed]
Two Supreme Court judges, Hugo Black and William O. Douglas, later rendered opinions attacking the doctrine of corporate personhood. Quoted here is the conclusion of Justice Black's opinion:
If the people of this nation wish to deprive the states of their sovereign rights to determine what is a fair and just tax upon corporations doing a purely local business within their own state boundaries, there is a way provided by the Constitution to accomplish this purpose. That way does not lie along the course of judicial amendment to that fundamental charter. An amendment having that purpose could be submitted by Congress as provided by the Constitution. I do not believe that the Fourteenth Amendment had that purpose, nor that the people believed it had that purpose, nor that it should be construed as having that purpose.
(Hugo Black, dissenting, Connecticut General Life Insurance Company v. Johnson (303 U.S. 77, 1938).)
Justice Black was not alone in his questioning of the legitimacy of corporate personhood. Justice Douglas, dissenting in Wheeling Steel Corp. v. Glander (337 U.S. 562, 1949), gave an opinion similar to, but shorter than, the one quoted above, to which Justice Black concurred. The extent to which the rights of personhood should attach to corporations has remained a subject of controversy.[14]
Yet both Justice Black and Justice Douglas dissented from the Supreme Court's 1957 decision in United States v. United Auto Workers, 352 U.S. 567 (1957), in which the Court, on procedural grounds, overruled a lower court decision upholding the prohibition on corporate and union political expenditures:
We deal here with a problem that is fundamental to the electoral process and to the operation of our democratic society. It is whether a union can express its views on the issues of an election and on the merits of the candidates, unrestrained and unfettered by the Congress. The principle at stake is not peculiar to unions. It is applicable as well to associations of manufacturers, retail and wholesale trade groups, consumers' leagues, farmers' unions, religious groups, and every other association representing a segment of American life and taking an active part in our political campaigns and discussions. It is as important an issue as has come before the Court, for it reaches the very vitals of our system of government. Under our Constitution, it is We The People who are sovereign. The people have the final say. The legislators are their spokesmen. The people determine through their votes the destiny of the nation. It is therefore important -- vitally important -- that all channels of communication be open to them during every election, that no point of view be restrained or barred, and that the people have access to the views of every group in the community.
[edit] LegislationSee also: Creature of statute
The laws of the United States hold that a legal entity (like a corporation or non-profit organization) shall be treated under the law as a person except when otherwise noted. This rule of construction is specified in 1 U.S.C. §1 (United States Code),[15] which states:
In determining the meaning of any Act of Congress, unless the context indicates otherwise-- the words "person" and "whoever" include corporations, companies, associations, firms, partnerships, societies, and joint stock companies, as well as individuals;
This federal statute has many consequences. For example, a corporation is allowed to own property and enter contracts. It can also sue and be sued and held liable under both civil and criminal law. As well, because the corporation is legally considered the "person," individual shareholders are not legally responsible for the corporation's debts and damages beyond their investment in the corporation. Similarly, individual employees, managers, and directors are liable for their own malfeasance or lawbreaking while acting on behalf of the corporation, but are not generally liable for the corporation's actions. Among the most frequently discussed and controversial consequences of corporate personhood in the United States is the extension of a limited subset of the same constitutional rights.
Corporations as legal entities have always been able to perform commercial activities, similar to a person acting as a sole proprietor, such as entering into a contract or owning property. Therefore corporations have always had a 'legal personality' for the purposes of conducting business while shielding individual stockholders from personal liability (i.e., protecting personal assets which were not invested in the corporation).
The stronger concept of corporate personhood, in which (for example) First, Fifth, and Fourteenth Amendment rights have been asserted by corporations, is often traced to the 1886 U.S. Supreme Court case Santa Clara County v. Southern Pacific Railroad (118 U.S. 394). In that case, before oral argument took place, writing a summary of the decision in a headnote to the Court's opinion, court reporter Bancroft Davis stated:
"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 the opinion that it does."[16]
Thus, at the outset, the Waite Court assumed that corporations were entitled to protection under the Fourteenth Amendment. However, the court did not specifically address the matter of whether corporations could be considered 'persons' with respect to the Fourteenth Amendment as the decision made such a finding unnecessary (being based on less expansive law).
Liberal/progressive author and radio/TV talk show host Thom Hartmann has argued that the court was reluctant to establish precedent in that decision. Chief Justice Waite wrote in private correspondence that, "we avoided meeting the [Constitutional] question." Hartmann's book "Unequal Protection" cites the correspondence between Waite and Bancroft Davis (available in the Library of Congress) which he says demonstrates that Waite did not intend to create a legal precedent. The question of whether corporations were persons within the meaning of the Fourteenth Amendment had been argued in the lower courts and briefed for the Supreme Court, but in this interpretation, the Waite Court did not explicitly decide upon this issue. In numerous cases since, however, the Court has reiterated that corporations are protected in many activities by the equal protection clause of the Constitution. The extent of the protection is what continues to be at issue. Generally speaking, corporations may invoke rights that groups of individual may invoke, such as the right to petition, to speech, to enter into contracts and to hold property, to sue and to be sued. However, they may not exercise rights that are exclusive to individuals and cannot be exercised by other associations of individuals, including the right to vote and the right against self incrimination.
Ralph Nader and others have argued that a strict originalist philosophy, such as that of Justice Antonin Scalia, should reject the doctrine of corporate personhood under the Fourteenth Amendment.[17] Indeed, Chief Justice William Rehnquist repeatedly criticized the Court's invention of corporate constitutional "rights," most famously in his dissenting opinion in the 1978 case First National Bank of Boston v. Bellotti.[18] Nonetheless, these justices' rulings have continued to affirm the assumption of corporate personhood, as the Waite court did, and Justice Rehnquist himself eventually endorsed overruling "Austin," dissenting in "McConnell v. FEC."
