Home > Academic Articles, Corporate Personhood Series > The Doctrine of Corporate Personhood

The Doctrine of Corporate Personhood

Summary:

  • Corporate personhood is the legal doctrine which holds that corporations are separate entities that deserve to be treated as persons under the 14th Amendment.
  • Has not always been this way; industrial revolution changed the prevalence and role of corporations.
  • Corporations today are still considered persons, but it may have all started with a head note error.

This article is by Christopher Hoffman, a 2L at Chicago-Kent.

“Corporate personhood” refers to the legal doctrine which recognizes a corporation as a “self-autonomous, self-directed entity in which rights inhered,” including constitutional rights such as freedom of speech.[1] In essence, the doctrine holds that corporations are separate entities from their individual shareholders that deserve to be treated as “persons” under the 14th Amendment. Today, the doctrine is universally accepted in American jurisprudence, although some critics question the wisdom of granting the same constitutional rights belonging to “natural” persons to corporations who, with the backing of the State, may “live” forever while aggregating vast sums of wealth. Recently, during oral arguments in Citizens United v. FCC, Justice Sonia Sotomayor suggested that the Supreme Court may have erred originally by imbuing “a creature of state law with human characteristics.”[2] Justice Sotomayor’s statement raised more than a few eyebrows as it was a relatively rare shot across the bows of the corporate world from such a prominent jurist.

Although corporate personhood is broadly accepted today, during the 18th and 19th centuries academics battled over the legal status of corporations. At that time, widespread distrust for large institutions and aggregations of wealth soured classical republicans on the idea of granting broad property rights to corporations.[3] Moreover, for centuries corporations were relatively rare monopolistic creations of state law setup to pursue national objectives within a fairly limited grant of authority. In Dartmouth College v. Woodward, a seminal decision on the status of corporations, the Supreme Court recognized the historically narrow rights afforded to corporations. Chief Justice Marshall wrote, “A corporation is an artificial being, invisible, intangible . . . [I]t possesses only those properties which the charter of its creation confers upon it . . . .”[4] In short, as entities created by positive law, corporations’ rights were limited to those obtained from their government grant.

The viewpoint expressed in Dartmouth College held until the end of the 19th century by which time the Industrial Revolution had transformed the American economic landscape from an agrarian society with wealth built upon land and agriculture into an industrialized economy controlled by private individuals who combined in the corporate form. As corporations became easier to form, they gained prominence and influence which shifted the tide in favor of imbuing corporations with the property rights and constitutional guarantees enjoyed by “natural” persons. No longer was the corporation viewed merely as a “creature” of the State whose power derived directly from the sovereign. Instead, the corporation was viewed as an individual, or “person,” with the right to be free from undue government interference.

Many of the early cases recognizing corporate personhood dealt with property issues such as taxation. For example, in Santa Clara County v. Southern Pacific Railroad, a railroad company launched an equal protection challenge against a provision of the California state constitution that denied railroads the right to deduct mortgages from the taxable value of their property, a right afforded to “natural” persons.[5] The Court never reached the equal protection issue; however, the case contained an infamous head note written by the court reporter, J.C. Bancroft Davis, which stated that all of the justices agreed that corporations are “persons” under the 14th Amendment’s equal protection clause.

Critics argue that Bancroft Davis willfully misinterpreted the Court’s position. After all, Davis had previously served as president of Newburgh and New York Railway Co. which raised a conflict of interest. Regardless of whether Davis misconstrued the Court’s position, since Santa Clara County, the Court has consistently held that corporations are persons for equal protection purposes. As such, corporations enjoy many of the constitutional guarantees protected by the Bill of Rights and applied against the states by the 14th Amendment.


[1] See Gregory A. Mark, The Personification of the Business Corporation in American Law, 54 U. Chi. L. Rev. 1441, 1442-43 (1987)

[2] Jess Bravin, Sotomayor Issues Challenge to a Century of Corporate Law, Wall St. J., Sept. 17, 2009 available at http://online.wsj.com/article/SB125314088285517643.html.

[3] See Mark, supra note 1, at 1443-55.

[4] Trustees of Dartmouth College v. Woodward, 17 U.S. 518, 636 (1819).

[5] Santa Clara County v. S. Pac. R.R., 118 U.S. 394 (1886).

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