By Bryce Watchell (PO ’21)
“Corporate personhood” sounds like an oxymoron, and yet it is a fundamental component of the American judicial system. The Supreme Court time and time again has affirmed that corporations have rights in many capacities: they can own property, sue and be sued, enter into binding contracts, and be held liable in a court of law. However, these abilities are not unlimited: they cannot bear arms, run for office, or vote in elections. When and how did the court determine what rights might be claimed by corporations—and why does corporate personhood matter?
The 1819 case Trustees of Dartmouth College v. Woodward laid the groundwork for corporate rights by establishing that a corporation (in this instance, a private college) could be protected by the Constitution. At the time, this was a radical precedent. At issue in the case was whether the state of New Hampshire could intervene in the charter of Dartmouth college. The Court found that the college was entitled to the same protections that were afforded to individual persons by the contracts clause of the Constitution, and that state action to undermine this was unconstitutional. Though the facts of the case are not particularly salient, the precedent they set was groundbreaking.
A few years later the case was followed by Society for Propagation of Gospel v. Town of Pawlet, which further emphasized a corporation’s protection of rights under the constitution. The court asserted that an English corporation’s land grants were protected from the state of Vermont’s efforts to revoke them. In the ruling, the court explicitly stated that protection of property rights (like the contracts clause) extended to corporations. A few years later, Chief Justice Marshall summarized the newly-established principle well in Providence Banks v. Billings when he wrote, “The great object of an incorporation is to bestow the character and properties of individuality on a collective and changing body of men.” And thus, in the early 19th century, the logic for corporate rights became well concretized.
Dartmouth College v. Woodward may have established that corporations have rights, but the 1886 case Santa Clara County v. Southern Pacific Railroad Company established something stronger: that corporations may act and be defended as persons, thus establishing the “corporate personhood” concept. Ironically, the case established this principle via an erroneous headnote. (Headnotes are brief summaries of cases, not written by judges, meant to allow a reader to quickly determine what issue(s) are involved in an opinion.)
In the headnote, the court reporter, J.C. Bancroft Davis, quoted Chief Justice Waite who in oral arguments for the case had said, “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.” Both headnotes and the inclusion of quotes from oral arguments within in them do not constitute legal opinions, and as such cannot be cited as precedent. Davis’s inclusion of the quote established a principle discussed but not affirmed by the court in its official opinion, and thus, it should have been excluded from his summary.
Nonetheless, the Santa Clara County headnote was cited and confirmed by another court case just two years later—Pembina Consolidated Silver Mining Co. v. Pennsylvania. Despite the initial error, Pembina officially established corporate personhood once and for all.
Over a century of court cases spanning well into the 20th century slowly built upon the principle of corporate personhood, growing the number of rights guaranteed to corporations while strengthening their conviction. However, in recent years, the concept of corporate personhood has been the subject of some controversy, as cases like Burwell v. Hobby Lobby Stores and Citizens United v. Federal Elections Committee have made their way into the public eye. Next week, check back to understand what limits to corporate rights have been set, and see how these two cases align with or depart from legal precedent discussed in this post.