"An artificial being": John Marshall and corporate personhood.

Author:Wolfe, Christopher J.
 
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Two of the Supreme Court's most controversial decisions in recent history--Citizens United v. EEC (1) and Burwell v. Hobby Lobby (2)--both relied on a legal concept that was little-discussed in the majority opinions: corporate personhood. Justice Kennedy's opinion for the Court in Citizens United and Justice Alito's opinion for the Court in Hobby Lobby focused on the rights of free speech and the free exercise of religion, more or less accepting that those rights can inhere in corporate persons. Some of the strongest public reactions to these opinions have to do precisely with the fact that they are defenses of the rights of corporate persons and not rights of natural human beings. (3)

Dissenting opinions in Citizens United and Hobby Lobby dealt with the issue of corporate personhood at much greater length than the majority opinions. Justice Stevens, in his dissent in Citizens United, discussed the original understanding of the First Amendment's application to corporations. He concluded that the Founders did not believe that the protections afforded to natural persons, like freedom of speech, would extend to corporations. (4) Justice Ginsburg, in her Hobby Lobby dissent, approvingly cited Justice Stevens's opinion in Citizens United as part of her argument that Chief Justice John Marshall and the Framers did not intend for corporate persons to have the protection of free exercise of religion. Ginsburg wrote:

[T]he exercise of religion is characteristic of natural persons, not artificial legal entities. As Chief Justice Marshall observed nearly two centuries ago, a corporation is "an artificial being, invisible, intangible, and existing only in contemplation of the law." (5) Justices Ginsburg and Stevens are not the only ones who have interpreted Chief Justice Marshall's Dartmouth College opinion in this wav. Chief justice Rehnquist in his First National Bank of Boston v. Bellotti (6) dissent made much the same claim about Marshall's line from Dartmouth College. (7) Whether or not Justice Ginsburg's quote from Dartmouth College actually demonstrates that Marshall was against corporate persons having constitutional rights is an important question. Marshall made restrictive statements about corporate personhood similar to those made in Dartmouth College in at least four other opinions he wrote in his tenure on the Supreme Court: Bank of the United States v. Deveaux, (8) Osborn v. Bank of the United States, (9) Bank of the United States v. Dandridge, (10) and Providence Bank v. Billings. (11) The main question of this Article is whether Marshall's view of corporate personhood necessarily entails a restrictive interpretation of the rights of corporate persons. This Article will argue that Marshall's statements suggesting a restrictive interpretation of corporate personhood do not entail a restrictive interpretation of their rights, given the context in which those statements were made.

This Article examines the Constitution's original understanding of corporate personhood by paying special attention to the issues raised by Justices Stevens and Ginsburg. (12) Chief Justice Marshall's early precedents, which helped enshrine corporate personhood in Supreme Court case law, will be the main focus of this discussion. Since Marshall's time on the Court, the law has undoubtedly undergone major changes; however, Marshall's opinions serve as a good foundation for such an analysis. Some of these changes concern corporations themselves, such as the addition of state general incorporation laws, which facilitated the tremendous growth of commercial corporations during the remainder of the 19th century, (13) while others have to do with the ratification and incorporation of the 14th Amendment, such as the extension of equal protection to corporations against state interference found in Santa Clara County v. Southern Pacific Railroad, (14)

Section One briefly evaluates the original intent of the constitutional clauses concerning corporate personhood from the era of the Articles of Confederation through ratification to better assess Marshall's view of those clauses. Section Two discusses influences on Marshall's view of corporate personhood, including Founders such as Alexander Hamilton and jurists from the English common law tradition. Section Three discusses Marshall's thoughts on corporate personhood, paving special attention to the restrictive statements he made about corporations. And lastly, Section Four analyzes the accuracy of recent interpretations of Marshall's view of corporate personhood, such as those found in justice Stevens's dissent in Citizens United and Justice Ginsburg's dissent in Hobby Lobby.

  1. AN IMPLIED POWER TO CREATE CORPORATE PERSONS AND DUTY TO PROTECT THEM ONCE CREATED

    The bare text of the Constitution itself neither allows Congress to create corporate persons nor makes it a duty to protect corporate persons' constitutional rights. Rather, Chief justice Marshall and his contemporaries inferred the existence of such congressional power. They considered the power of the federal government to create corporations an implied power derived from the Necessary and Proper Clause. They understood the Contract Clause of Article I, Section 10, to imply the duty of the federal government to protect the rights of corporations, whether those corporations were created at the federal or state level. (15) Marshall also considered whether corporate persons have standing to bring cases in federal court, raising questions about the interpretation of Article III, Section 2.

    1. Corporate Personhood Under The Articles of Confederation

      States were the main governments granting franchises to corporations in early America, and they generally considered corporations to have some of the qualities of legal personhood. Corporations differed from joint-stock associations (also present during the Colonial and Articles periods) in that those groups were not considered legal persons. (16) The power to create corporate persons was considered a sovereign power. Initially, colonial governments were granted this power by the King's agents; after the colonies broke away and created new state governments, the power to create corporate persons was considered part of the sovereign power of the state governments. The Articles of Confederation gave scant assurance that a state corporate charter from one state would be honored in another state. (17) The Articles' only mention of this issue is an oblique reference to interstate commerce for the "people" of a state in Article IV:

      [T]he people of each state shall have free ingress and regress to and from any other state, and shall enjoy therein all the privileges of trade and commerce, subject to the same duties, impositions and restrictions as the inhabitants thereof respectively, provided that such restrictions shall not extend so far as to prevent the removal of property imported into any state, to any other State of which the Owner is an inhabitant.... (18) More assurance for corporate charters across state borders was desired when it came time to create a new constitution in 1787.

      Whether or not the Continental Congress itself had the power to create corporations was a question debated during this period. In 1781, Alexander Hamilton began his first efforts to create a national bank by encouraging Robert Morris (then Superintendent of Finance) to create the Bank of North America. Some at the time (such as Thomas Fitzsimmons) protested the chartering of the Bank, while others (such as Thomas Paine) supported it. (19) James Wilson delved into the difficult problem of constitutional justification for that 1781 Act. (20) The problem was that the Articles of Confederation only allowed the Continental Congress to legislate according to expressive delegated powers, (21) and the power to create a corporation such as the Bank of North America was not expressly enumerated. Wilson was forced to resort to an argument outside the Articles, claiming that the power to incorporate for national goals flowed from the Union mentioned in the Declaration of Independence, which preexisted the Articles. (22) Wilson pointed to examples of similar powers the Continental Congress had already exercised, such as the administration of national territory and the incorporation of new states. (23)

      Wilson's resources for arguing that the creation of a corporation was permissible under the Articles' government were few, but he had even fewer resources for arguing that there was a duty to defend the rights of that corporation. In the Bank of North America's charter, the Continental Congress explicitly recommended that states create laws "making it a felony without benefit of clergy, for any person to counterfeit bank notes, or to pass such notes, knowing them to be counterfeit." (24) Many states, including Wilson's Pennsylvania, did, in fact, pass laws protecting the Bank of North America Corporation, but the key point is that the Bank was dependent on the states to provide that protection. (25) Several states also passed their own charters of incorporation for the Bank of North America that overlapped the Continental Congress's charter. Wilson considered those state charters to be superfluous.

      Wilson's arguments concerning the constitutionality of the Bank of North America would turn out to be highly significant for the future of corporate personhood and implied powers. (26) With a new Constitution and the removal of the expressly delegated powers requirement, Alexander Hamilton was able to argue that the charter incorporating the Bank of the United States was constitutional based on reasons similar to Wilson's regarding implied sovereign power. (27) Hamilton's arguments would in turn influence Marshall's opinions in McCulloch v. Maryland and Dartmouth College v. Woodward.

    2. Corporate Personhood at the Philadelphia Convention

      There was less discussion of corporate personhood or corporations at the Philadelphia...

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