Business transactions and President Trump's "emoluments" problem.

Author:Tillman, Seth Barrett
Position:Donald Trump

Recently, some have argued (1) that the term "emoluments," as used in the Constitution's Foreign Emoluments Clause (2) and Presidential Emoluments Clause, (3) reaches any pecuniary advantage, benefit, or profit arising in connection with business transactions for value. (4) There is good reason to doubt the correctness of this position. Why? The Presidential Emoluments Clause states:

The President shall, at stated Times, receive for his Services, a Compensation, which shall neither be increased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them. (5) If the emoluments-are-any-pecuniary-advantage position were correct, if "emoluments" as used in the Constitution extended to any pecuniary advantage, then presidents are and would have been precluded from doing business with the United States government. However, George Washington, who had presided over the Philadelphia Convention, (6) did business with the Federal Government on more than one occasion while he was president. He purchased several lots of land in the new federal capital at public auction. One such set of purchases took place on or about September 18, 1793. (7)

The public auction was run by three commissioners: David Stuart, Daniel Carroll, and Thomas Johnson. Who were they? David Stuart was a member of the Virginia convention that ratified the Federal Constitution. Stuart was also a federal elector in the first federal election for President and Vice President of the United States. (8) Daniel Carroll was a member of the Federal Convention that drafted the Constitution and later a member of the First Congress. (9) Thomas Johnson was the first Governor of Maryland following independence, a member of the Maryland convention that ratified the Federal Constitution, and afterwards he served as a Justice of the Supreme Court of the United States. (10)

So among the four participants (Washington and the three commissioners) were: three members of the Continental Congress; (11) three members of pre-independence colonial legislatures or post-independence state legislatures; (12) two members of state conventions that ratified the Constitution; two members of the Federal Convention (including the Convention's president); a member of the First Congress; a Justice of the Supreme Court of the United States; a governor; a federal elector for President and Vice President; and, our first President. Collectively these four are, undoubtedly, an accomplished group. Are we really to believe that not only did all four officials willingly, openly, and notoriously participate in a conspiracy to aid and abet the President in violating the Constitution's Presidential Emoluments Clause, but that they also left--for themselves and their posterity--a complete and signed documentary trail of their wrongdoing? (13)

The emoluments-are-any-pecuniary-advantage position amounts to: (1) President Washington was at best grossly negligent, if not crooked; (2) Washington's allies openly supported obvious and profound constitutional lawlessness; and (3) Washington's political opponents were altogether and unaccountably silent--silent in Congress, (14) silent in newspapers, and silent even in their private correspondence. The emoluments-are-any-pecuniary-advantage position amounts to a naked assertion by twenty-first century legal academics (15) that they understand the Constitution's binding legal meaning better than those who drafted it, ratified it, and put it into effect during the Washington administration.

The alternative view is that linguistic and historical humility compel reasonable minds to recognize that much of the language within our more than two century-old Constitution is opaque. It follows that--in order for twenty-first century citizens to understand what the Constitution's opaque language meant when ratified (and what it continues to mean today) in regard to a specific (but otherwise obscure) legal term, namely, "emoluments"--reasonable persons must look to the actual conduct of the Framers, the Ratifiers, and the original practice of the three branches when they were squarely confronted with the need to determine the meaning of a particular legal term on concrete facts. (16)

It is incontrovertible that President George Washington, in a private capacity, engaged in business transactions for value with the Federal Government, notwithstanding that he received or intended to receive a pecuniary advantage. Given Washington's very public conduct, a modern interpreter should be reluctant to conclude that such advantages, benefits, and profits amount to a constitutionally proscribed "emolument." (17) Moreover, it stands to reason that if the benefits flowing from business transactions for value (with the Federal Government) are not constitutionally proscribed "emoluments" for the purposes of the Presidential Emoluments Clause, then the benefits flowing from similar transactions for value with foreign states, foreign agencies or instrumentalities, or with foreign state owned or state controlled commercial entities (18) are not constitutionally proscribed "emoluments" for the purposes of the Foreign Emoluments Clause or any other clause. Both the Presidential Emoluments Clause and the Foreign Emoluments Clause use precisely the same term: "emolument." (19)

Indeed, from the perspective of modern, as opposed to eighteenth century, governance norms, President Washington's business transactions posed a nonfrivolous risk of moral hazard, conflicts, and corruption. Unlike transactions struck between genuinely adverse profit-maximizing parties at arms-length, President Washington was speculating on land in public auctions--that is, public auctions managed by commissioners whom he had personally appointed. (20) As a result, Washington was on both sides of each and every one of these transactions; (21) yet, no one then, or since, has ever impugned the propriety of his conduct, much less the legal validity or constitutionality of his purchases. (22)

So what is an "emolument"? That question has been squarely addressed by the Supreme Court of the United States and state supreme courts.

Supreme Court Case Law

In Hoyt v. United States, (23) Justice Nelson, for a unanimous Supreme Court, explained:

These terms ["fees" and "commissions"] denote a compensation for a particular kind of service to be performed by the officer, and are distinguishable from each other ... they are also distinguishable from the term emoluments, that [term] being more comprehensive, and embracing every species of compensation or pecuniary profit derived from a discharge of the duties of the office. (24) The Hoyt Court's definition of emolument is not "obscure;" (25) indeed, the Hoyt Court's definition has been cited approvingly by the Executive Branch (26) and Legislative Branch. (27) It follows that President Washington may very well have derived pecuniary advantages, benefits, and profits from his business transactions with the Federal Government, but the benefits flowing from those business transactions were not "derived from [his] discharging] the duties of [his] office." (28) Hence, no constitutionally proscribed "emoluments" were involved. It seems this is the consensus position. (29)

Modern State Case Law

In 1975, the Supreme Court of New Mexico explained that the term emolument "does not refer to the fixed salary alone that is attached to the office, but includes such fees and compensation as the incumbent of the office is by law entitled to receive." (30) This is also the view of judicial authority from other state supreme courts, including, for example, the Supreme Court of Washington (31) and the Supreme Court of Minnesota, (32) of state executive branch officers, (33) and of persuasive domestic (34) and foreign (35) scholarly authority. Again, an "emolument" extends to what an officeholder is "by law entitled to receive." No one is legally entitled to a "present." So a mere present cannot fall under the aegis of the Presidential Emoluments Clause, which uses only emoluments-language. Bribes are illegal; by contrast, emoluments are legal entitlements. It follows that the two categories are mutually exclusive. Thus a plaintiff alleging a bribe cannot seek relief under the Presidential Emoluments Clause (using only emoluments-language) or the Foreign Emoluments Clause (using emoluments-language and presents-language). Finally, business transactions for value are voluntary and private; emoluments, by contrast, are legal entitlements mandated by public laws or regulations. The terms of business transactions are negotiated (or, at least, potentially negotiable); by contrast, emoluments are fixed by law. Even applying the most free-form (36) living constitutionalism, (37) there is...

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