How Corporations Became People

May 30th, 2011

Most people don’t know this fascinating and appalling little bit of legal history. I first learned about it back in 2003, from my friend and colleague Ted Nace’s Gangs of America.

Accounts of it are all over the web, but I’ll try to give you the short story here.

In casual discussions from the bench prior to arguments for Santa Clara County v. Southern Pacific Railroad (1886; a dispute over corporate taxation), Chief Justice Morrison Waite said something obiter dictum — “said in passing” — to the following effect:

…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.

The court reporter included this statement in the “headnote” to the case entry in the United States Reports — the record of Supreme Court decisions.

That court reporter was J.C. Bancroft Davis, former president of the Newburgh and New York Railway Company.

Davis checked with the chief justice before including the passage. The justice did not demur, though he did acknowledge:

we avoided meeting the constitutional question in the decision

So the passage — in the headnote, not the decision itself — had no force of law, no value as precedent.

But just three years later it was cited as precedent by Associate Justice Stephen J. Field in Minneapolis & St. Louis Railway Company v. Beckwith. It has been cited repeatedly thereafter.

Corporations are persons within the meaning of the clauses in the Fourteenth Amendment to the Constitution concerning the deprivation of property, and concerning the equal protection of the laws. Santa Clara County v. Southern Pacific Railroad, 118 U. S. 394, and Pembina Mining Co. v. Pennsylvania, 125 U. S. 181, followed.

Field was there for Santa Clara, so he knew it held no precedent value, but he cited it anyway, as if it did. For the grimy details of Field’s conflicts of interest, I’ll direct you here.

 

  1. May 30th, 2011 at 13:22 | #1

    If I had me some suspenders, I’d be snappin’em to say “Proud to be a law school dropout”….

    Once upon a time, I considered working up the refutation of strict constructionism/ original construction/ 4-corners doctrines etc – what have you, as their purpose is the same – by analogy to incompleteness in any formal system as robust as quantification theory allows. Surely, I thought, Scalia and Thompson and Alito (gawd is it possible he’s the densest but most vicious of them? King vs. Kentucky suggests as much) cannot think about the Constitution like Blackstone thought about the law generally –

    But then I decided I did not want to think stupid all the time, I’d rather just be some kind of “m” marxist and acknowledge that it does matter who gets picked to be umpire: “‘Till I calls’em, they ain’t”….

  2. May 30th, 2011 at 20:10 | #2

    I say if corporations are people, then they should be taxed like people – on revenues (from all sources) not profits, which are nothing more than accounting fictions, anyway.

    Cheers!
    JzB

  3. Olav Martin Kvern
    June 2nd, 2011 at 17:13 | #3

    Just have to add–if you’ve ever spent any time wondering, “How the heck did we end up this way?”–check out Ted’s book if you haven’t already. It’s a terrific read.

    Thanks,

    Ole

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