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Corporations, Personhood, Metaphors, and Legal Fictions:

One follow-up thought about corporations and constitutional rights; I argue that corporations should generally possess free speech rights and various other constitutional rights, but not because corporations are "persons" and therefore should have the right that persons have. The corporation-as-person is a valuable legal fiction, and it's built on the same sort of metaphor we often use with regard to groups (e.g., "the Catholic Church teaches," "the ACLU argues," and the like). But we shouldn't fall into the trap of actually believing that our legal fictions and our metaphors are real.

Thus, I argue that corporations should generally have First Amendment rights, Takings Clause rights, and the like because those protections protect the rights of individuals. If you take a corporation's property without compensation, you're taking its owners' property. If you ban corporations from speaking about the corporate income tax, you're interfering with the rights of corporate owners and managers to speak through the group -- just as a ban on partnerships', nonprofit ideological associations', and churches' speech interferes with the rights of people who speak through those groups.

But it doesn't follow that the Cruel and Unusual Punishment Clause has any meaning as to corporations, which I don't think can be punished in a way that we would see as "cruel" (unless someone persuades me that the Unusual Punishments component has some meaning as to corporations). Neither does it follow that the Self-Incrimination Clause has any direct meaning as to corporations, which can't actually be witnesses. Likewise, it doesn't follow that we should have the same heightened constitutional protections for actions aimed at dissolving corporations as we do in death penalty cases, on the grounds that the action is a "death penalty" to the corporation; that too would be excessive reliance on a metaphor that isn't helpful here (corporate dissolution as actual death). Similarly, restrictions on corporate ownership of firearms should be constitutional or not depending on your views about whether the individual right to bear arms includes the right to associate with others in certain ways to do so -- they shouldn't turn on the neat but unsound syllogism that a corporation is a person, persons have the right to bear arms, and corporations therefore have the right to bear arms.

J. Aldridge:
I argue that corporations should generally possess free speech rights and various other constitutional rights, but not because corporations are "persons" and therefore should have the right that persons have.

Doesn't real individuals make the speech and approve of it within a corporation? A corporation does not have to have First Amendment rights for individuals to express themselves individually or collectively.
9.22.2009 3:47pm
ruuffles (mail) (www):

If you take a corporation's property without compensation, you're taking its owners' property. [...] -- just as a ban on partnerships', nonprofit ideological associations', and churches' speech interferes with the rights of people who speak through those groups.

When you say "owners" of a "corporation," you mean shareholders? How does that translate to non-profits or churches? The donations that they get don't amount to a stake in the organization.

I'm quite bewildered that it takes 3 to 4 pages of discussion to make the case that corporations should have some (many) of the same rights as individuals. It's almost as if they're emanating ... from some penumbra.

If you use the same argument that opponents of Roe use, then since the Constitution doesn't mention organizations or groups or corporations, doesn't that leave it up to the states to regulate? * I grant you, just as Justice Stevens pointed out that leaving abortion up to the states as a routine legislative matter would also leave it up to the states to impose birth limits, the stripping of organizations right to speech does have strange results.

* exceptions
1) militias
2) press
9.22.2009 3:53pm
Putting Two and Two...:
I'm surprised that the GOP hasn't added a plank to their platform opposing same-sex mergers...
9.22.2009 4:00pm
yankee (mail):
If you take a corporation's property without compensation, you're taking its owners' property.

This cannot possibly be right. Ownership of property is nothing like ownership of a corporation that owns property.

If I have, say, a 40% ownership share in a property, I have the right to use and enjoy that property. If I own 40% of a corporation that owns a property, I have no rights whatsoever to use and enjoy that property. I can use and enjoy the property only if the corporation (through its various officers) allows me to do so. I can vote for directors who will appoint officers who will allow me to use and enjoy the property, but if I have the effective power to elect such directors I may well be violating my fiduciary duty to the non-controlling shareholders. Taking the corporation's property reduces the value of my shares, but it does nothing to my interest in the property.
9.22.2009 4:07pm
ShelbyC:

If I own 40% of a corporation that owns a property, I have no rights whatsoever to use and enjoy that property.


You have a right to a very specific use and enjoyment of that property. And if the govt takes it, they deprive you of that right.
9.22.2009 4:18pm
ruuffles (mail) (www):

You have a right to a very specific use and enjoyment of that property.

Suppose you buy one (1) share of Coca-Cola. What "specific use" and "enjoyment" does that entitle you to?
9.22.2009 4:20pm
Colin Fraizer (mail):
Prof. Volokh makes a valuable point that we shouldn't let our metaphors cloud our thinking about constitutional rights.

I would add that we shouldn't let our abstraction of language cloud our thinking about those rights either. The first amendment does not guarantee people a right to free speech. It prohibits Congress from making laws restricting speech.

If the constitution guaranteed a right to people, I think corporations would be on shaky ground with regards to free expression, but it doesn't. (I think that ground would be firmed up by "peaceably assemble" and "petition the Government" a few words later.)
9.22.2009 4:27pm
ShelbyC:

Suppose you buy one (1) share of Coca-Cola. What "specific use" and "enjoyment" does that entitle you to?



The right to one (1) share of Coca-Cola's future profits/dividends.
9.22.2009 4:28pm
byomtov (mail):
If you ban corporations from speaking about the corporate income tax, you're interfering with the rights of corporate owners and managers to speak through the group

In large modern corporations the individual shareholders have little or no effective way to "speak through the group." Nor would they necessarily agree on what political messages ought to be sent.

Besides, the shareholders obviously retain their individual speech rights, as well as the right to join or form political organizations. I think EV's argument is one of those that sounds nice in the abstract, but doesn't reflect the realities of how corporations actually operate in the US.
9.22.2009 4:29pm
Losantiville:
I always thought the corporate form was a good way to dodge restrictions on minors' ownership of firearms.

Form a corporation, transfer your guns to it, transfer the stock to your children.

Have there been any restrictions on ownership of firearms by sole proprietorships, partnerships, corporations, and trusts that did not apply to individuals?
9.22.2009 4:30pm
Mike G in Corvallis (mail):
Hmm. In some science fiction stories (e.g,. novels by Alexis A. Gilliland), Artificial Intelligences achieve legal "personhood" by becoming self-owned corporations.

If and when AIs are created, incorporation might be a good way to secure their rights. It might be a good idea not to establish precedents or interpretations of the law that would rule out this route.
9.22.2009 4:35pm
Angus Lander (mail):
Suppose a corporation has some money that - for whatever reason - nobody is permitted to access or use (say someone, long-dead, willed it to the corporation with the proviso that it just sit in the coffers; or say that it just appeared in the coffers one day, and the corporations' policy for dealing with things that appear in its coffers is to leave them there). Is it okay for the government to expropriate those fund? If not, why? It's hard to see how any person is harmed.

Nor does the judgment that a corporation has property rights commit me to the view that it may not be subjected to cruel and unusual punishment. Insofar as corporations cannot feel the sort of pain that they'd have to feel in order to be subjected to cruel punishment, the eighth amendment does not apply (or, if it does, conjoins with facts about corporations' affective structure to imply that no punishments are prohibited).
9.22.2009 4:38pm
egd:
ruuffles:

If I have, say, a 40% ownership share in a property, I have the right to use and enjoy that property.

So there's no legally enforceable option that allows you to agree with the 60% owner how to use or occupy that property? You have a right to use it at any time and in any manner?

You should present this theory to some time share owners. They will be very interested.
9.22.2009 4:41pm
einhverfr (mail) (www):
Prof. Volokh:

I think the individual rights line only goes so far. Under that analysis the government can more easily insist that corporate form-based restrictions are fairly narrow, as Kagan did in the Citizens United oral arguments-- it starts to sound like legislation criminalizing terrorizing black folk by burning crosses on their front lawns,* a very narrow law aimed at a very compelling public interest.

* The restriction at issue in R.A.V was unconstitutionally overbroad but it isn't clear to my mind here that this example would be.

I think a sounder way to look at this is through Justice Marshall's framework which was that a corporation is a fictitious entity, existing only in law. Therefore it can have rights which may be expressly granted to it, and it may have rights which must be, in our system, necessarily extended to it.

If a corporation appears in court, it is entitled to due process because that is a fundamental and systemic protection in our system against arbitrary government. Similarly, participation in the marketplace of ideas must be protected (though monopolizing of the market may not be). This sort of reasoning allows Austin v. Michigan Chamber of Commerce to be narrowed rather than overruled. (McConnell is too confusing and poorly structured to be much of a precedent itself.)

However, a corporation might have very limited third amendment protections if at all. Second amendment protections also might be more restricted.
9.22.2009 4:50pm
ruuffles (mail) (www):

ruuffles:


If I have, say, a 40% ownership share in a property, I have the right to use and enjoy that property.


So there's no legally enforceable option that allows you to agree with the 60% owner how to use or occupy that property? You have a right to use it at any time and in any manner?

Though I was intrigued by the analysis, I didn't write it.
9.22.2009 4:54pm
jej:

Suppose you buy one (1) share of Coca-Cola. What "specific use" and "enjoyment" does that entitle you to?

and

The right to one (1) share of Coca-Cola's future profits/dividends.


Actually, all your share gives you is the right to one vote at a shareholder's meeting. That's it. Everything else flows from that, if the directors of the company so decide.
9.22.2009 4:54pm
ShelbyC:

Actually, all your share gives you is the right to one vote at a shareholder's meeting. That's it.


No, I'm pretty sure it gives me the right to 1 share of future profits. (dividends, not RE).
9.22.2009 5:02pm
yankee (mail):
If I have, say, a 40% ownership share in a property, I have the right to use and enjoy that property.

So there's no legally enforceable option that allows you to agree with the 60% owner how to use or occupy that property? You have a right to use it at any time and in any manner?

The default rule of co-ownership in American law (at least for real property) is tenancy in common. In a tenancy in common, all of the owners, regardless of the percentage ownership, have the right to the full use and enjoyment of the property, though the owners have a duty of good faith and fair dealing with respect to one another. If one of the owners denies another other use and enjoyment of the property, the excluded owner may bring an action for ouster. The owners may of course reach an agreement among themselves regarding how to use the property.
No, I'm pretty sure it gives me the right to 1 share of future profits. (dividends, not RE).
9.22.2009 5:20pm
PQuincy1:
Thanks for raising such an important distinction, and for a thoughtful (if not fully articulated) take on it.

To extend the question, though: the force of personhood under a regime of natural and constitutional rights such as ours is that certain rights are presumed to be natural. This was an important plank, if a controversial one, in the Declaration of Independence, although the Constitution, more cautiously, avoids most references to 'nature' (wisely, as the 'birther' debate about 'natural born citizen' reveals!) Certainly, in most public rhetoric, the Constitution is seen as protecting the natural rights of citizens, rather than as creating them de novo, and this accords well with the Lockean intellectual assumptions of its authors.

The distinction between a biological (dare I say 'natural') person and a fictional or corporate person is therefore important, because the former can enjoy natural rights, whereas the latter cannot.

That does not mean that a corporation should not have rights. As Professor V. argues, they might well be granted certain rights, such as free speech. Rather, the important distinction is that the award of such rights is neither given by nature or guaranteed by the Constitution: rather, it is a legislative choice for prudential (or at least political) reasons) to award corporations any rights at all. This makes corporations very different from (now I will say it): natural persons, who enjoy rights both by explicit Constitutional guarantee, and implicitly by 'nature'.

Once we recognize that corporate rights are grants of privilege, rather than arising from nature, then the discussion of the prudential value of giving various kinds of corporations various rights can proceed with far less confusion than is currently the case.
9.22.2009 5:25pm
frankcross (mail):
The co-ownership of a corporation may be different than the co-ownership of real property. But that doesn't make it a distinction with a difference. If I have $50,000 worth of shares in a corporation, and the property of the corporation is expropriated, I am left with nothing. That sure sounds like a taking of my property.
9.22.2009 5:29pm
yankee (mail):
Oops, this sentence was supposed to be blockquoted:
No, I'm pretty sure it gives me the right to 1 share of future profits. (dividends, not RE).

By default, a shareholder has the right to a proportional share of future dividends, if any are declared, and to a proportional share of any assets remaining upon liquidation.

In the absence of a declared dividend or liquidation, a shareholder, regardless of the percentage ownership, has no rights to the corporation's property. If I own a share in Coca-Cola, I cannot take over a Coca-Cola warehouse and use it as my personal apartment, nor can I sell or rent the warehouse, even if I distribute the proceeds proportionately to Coca-Cola's other shareholders. The authority to sell the warehouse belongs to Coca-Cola's officers, and not to any individual shareholder. The same goes for everything else Coca-Cola owns.
9.22.2009 5:30pm
ShelbyC:
yankee:

The default rule of co-ownership in American law (at least for real property) is tenancy in common.


That's the default rule, but there are plenty of non-default rules where an owner doesn't have a right to full enjoyment. A silent partner, much like a corporate shareholder, might have only a right to profits from the property. But that doesn't mean the govt can take their property. And did you mean to addres my "share of future profits" comment? I saw it kinda stuck down there :-)
9.22.2009 5:30pm
ShelbyC:

By default, a shareholder has the right to a proportional share of future dividends, if any are declared, and to a proportional share of any assets remaining upon liquidation.

In the absence of a declared dividend or liquidation, a shareholder, regardless of the percentage ownership, has no rights to the corporation's property. If I own a share in Coca-Cola, I cannot take over a Coca-Cola warehouse and use it as my personal apartment, nor can I sell or rent the warehouse, even if I distribute the proceeds proportionately to Coca-Cola's other shareholders. The authority to sell the warehouse belongs to Coca-Cola's officers, and not to any individual shareholder. The same goes for everything else Coca-Cola owns.


Correct. That is what I meant by "a very specific use and enjoyment" in my earlier comment. Sorry if that was unclear.
9.22.2009 5:34pm
yankee (mail):
The co-ownership of a corporation may be different than the co-ownership of real property. But that doesn't make it a distinction with a difference. If I have $50,000 worth of shares in a corporation, and the property of the corporation is expropriated, I am left with nothing. That sure sounds like a taking of my property.

It is a distinction with a difference. Say 10% of the corporation is expropriated. Then the value of your shares decreases to $45,000. But no property that you have the actual right to use has been taken from you. All that's happened to you is that some property you own (the shares) has decreased in value.

I think the best analogy is to the Supreme Court's "regulatory takings" jurisprudence, which is about cases where government action reduces the value of property.
9.22.2009 5:34pm
yankee (mail):
Correct. That is what I meant by "a very specific use and enjoyment" in my earlier comment. Sorry if that was unclear.

Sure, it sounds like we don't disagree about anything there. I just think the difference between owning property and owning a corporation that owns property is significant enough that you can't just say, as Eugene does, that taking corporate property is the same as "taking its owners' property." All you are doing to the owners is reducing the value of their property (the shares).

I'm not interested in saying that corporations should have no 5th Amendment rights, but I don't think Eugene's argument is very good.
9.22.2009 5:40pm
ShelbyC:

But no property that you have the actual right to use has been taken from you.


Isn't earning a profit from it "using" it?
9.22.2009 5:41pm
David Schwartz (mail):
It is a distinction with a difference. Say 10% of the corporation is expropriated. Then the value of your shares decreases to $45,000. But no property that you have the actual right to use has been taken from you. All that's happened to you is that some property you own (the shares) has decreased in value.
Right, but "actual right to use" is a distinction without a difference. A "right to use" is not the only right one can have in property and other types of rights can be just as real and just as much ownership rights.
9.22.2009 5:46pm
ShelbyC:

I just think the difference between owning property and owning a corporation that owns property is significant enough that you can't just say, as Eugene does, that taking corporate property is the same as "taking its owners' property." All you are doing to the owners is reducing the value of their property (the shares).


I have a very difficult time seeing how the fact that nominal ownership technically resides with a legally ficticious entity makes a difference. If we accept the fact (which maybe you don't) that people have natural, as opposed to govt created, property rights, you'd think that those rights would attach regardless of the technical form of ownership, no? And would be equally protected by the 5A?
9.22.2009 5:50pm
Ari Indik (mail):

Neither does it follow that the Self-Incrimination Clause has any direct meaning as to corporations, which can't actually be witnesses.


Sure they can, at least in civil cases. See Fed. R. Civ. P. 30(b)(6).
9.22.2009 6:11pm
frankcross (mail):
yankee, I see your point, but I don't think it makes a case against corporate personhood. I think you agree that if the government expropropriates the entire corporation it would be a taking. But not if it expropriates 10%. That doesn't seem very logical and subject to a wildly inefficient corporate process by which the company's assets are subdivided and shareholders given direct interests in all the subdivisions, so that taking 10% of the corporation would be 100% of the shareholder's interest in the subdivided property taken and hence a taking. Seems pretty pointless.
9.22.2009 6:34pm
Gilbert (mail):
I don't see why you can't apply the first amendment to corporations through the freedom of the press while denying that corporations possess personhood for other legal purposes. That even seems to track your (the post author's) gut reaction on the subject.
9.22.2009 6:47pm
Crunchy Frog:
frankcross:

I think you agree that if the government expropropriates the entire corporation it would be a taking. But not if it expropriates 10%.

So, if the city decided that in the course of a street widening project that it was going to appropriate 10% of the real estate my house sits on, that's not a taking? In what universe?
9.22.2009 7:18pm
ShelbyC:

So, if the city decided that in the course of a street widening project that it was going to appropriate 10% of the real estate my house sits on, that's not a taking? In what universe?


No, that would be a taking in every universe. The arguement was that if the govt took, say, 10% of a corporation's property it is not a taking of an individual's property, since the individual doesn't loose any property, just a drop in the value of their property.
9.22.2009 7:47pm
einhverfr (mail) (www):
ShelbyC:

The arguement was that if the govt took, say, 10% of a corporation's property it is not a taking of an individual's property, since the individual doesn't loose any property, just a drop in the value of their property.


I wonder though... If the state declared certain land to be public right of way without purchasing it would that be takings?
9.22.2009 8:01pm
Connecticut Lawyer (mail):
PQuincy-"Rights" that are granted by legislation are not rights at all, since they can be revoked at any time by legislative fiat.

The question is this: Do you believe that the Government may seize corporate property without due process or condemn corporate property without paying any compensation at all (let alone just compensation)? It does no good to say that the legislature can give corporations rights to due process or just compensation since what the legislature gives it can take away. If you think that the Government can't do that, you need a theory to explain why not. IMHO, Prof. Volokh has suggested a valuable way to start thinking about this problem.

Now I believe that there a lot of leftists who would argue that it's just fine if the Government can search corporate property without search warrants and seize corporate property without compensation for the common good. I leave it to you to decide whether that's more like Mao or Madison.
9.22.2009 8:13pm
second history:
.....it doesn't follow that we should have the same heightened constitutional protections for actions aimed at dissolving corporations as we do in death penalty cases, on the grounds that the action is a "death penalty" to the corporation; that too would be excessive reliance on a metaphor that isn't helpful here (corporate dissolution as actual death).

I disagree. Arthur Andersen LLP (AA), as a corporation, was charged with violating 18 U.S.C. § 1512(b)(2)(A) and (B), and


.....did knowingly, intentionally and corruptly persuade . . . other persons, to wit: [petitioner’s] employees, with intent to cause” them to withhold documents from, and alter documents for use in, “official proceedings, namely: regulatory and criminal proceedings and investigations.


AA was basically convicted for following its own document retention policies and not for any corrupt practice. AA ceased to exist, throwing thousands of individuals out of work (in 2002 some 83,000 were employed by AA). It wasn't until three years later when the Supreme Court reversed the conviction, a pyrrhic victory if there ever was.

While the government lost the case (on the basis of flawed jury instructions), they achieved the result they wanted, the death of an American corporation. What option after conviction did AA have? None. It can't regain its existence. Corporations have no protection from overzealous prosecutors for whom reputation is the currency of the business world. Corporations deserve heightened protection from such a government execution.
9.22.2009 8:23pm
second history:
Corporations have no protection from overzealous prosecutors for whom reputation is the currency of the business world.

This should read "Corporations for whom reputation is the currency of the business world have no protection from overzealous prosecutors."
9.22.2009 8:26pm
byomtov (mail):
Corporations for whom reputation is the currency of the business world

And here I thought currency was the currency of the business world.
9.22.2009 8:29pm
ShelbyC:
einhverfr:

I wonder though... If the state declared certain land to be public right of way without purchasing it would that be takings?


You're asking me? I sure think so. Of course, I think many regulatory takings are takings.
9.22.2009 8:39pm
ReaderY:
A corporation isn't just an association of people -- it's an association that enjoys limited liability. If one drops the personhood metaphor, saying a corporation has right means not just that individuals have a right, it means that individuals have the right plus the right to enjoy limited liability while doing it.

The 2nd Amendment is as good an example as any. Why should people have a constitutional right to have limited liability from damages for firearms accidents (let alone intentional acts)? It doesn't seem to say so anywhere in the constitution, at least the written one accessible to us mere mortals.

Why can't a state say that if you want to play with guns, you have to accept personal liability for any damage you cause, so we won't let limited-liability entities do it? One could also solve such problems by alternative means such as by requiring insurance. But why should a state be required to solve it that way?

Is there a functional difference between saying a corporation can't doing something and saying that individuals who do it have to accept personal liability (and hence have to associate in a way that retains personal liability?)
9.22.2009 9:16pm
The River Temoc (mail):
I'm pretty sure it gives me the right to 1 share of future profits.

The board has to declare the dividends, which it's under no legal obligation to do.
9.22.2009 9:49pm
David Schwartz (mail):
The board has to declare the dividends, which it's under no legal obligation to do.
Another distinction without a difference. Many kinds of property present direct benefits in conditional ways. An option to buy a particular commodity at a particular value by a particular date, for example.

You might as well argue that no fungible good can be property. What's the difference between saying "the government took $20 from me" and "the government reduced the value of my $100 to $80"?

"They still left me with something" does not translate to "they didn't take all of anything".
9.22.2009 10:08pm
true religion jeans on sale (mail) (www):
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9.22.2009 10:15pm
Steve:
What's the difference between saying "the government took $20 from me" and "the government reduced the value of my $100 to $80"?

What's the difference between saying "my neighbor took $20 from me" and "my neighbor did something that reduced the value of my property by $20"?

I'll let the theorists answer this one, but it's probably not an accident that the former has been actionable since time immemorial and the latter, not necessarily so.
9.22.2009 10:17pm
DeezRightWingNutz:
Aside from the personhood issue, it seems like some people invoke the limited liability corporations enjoy as the basis for not extending them first amendment rights. I think the argument is that people give up their rights as consideration for, essentially, contracting with the government for limited liability.

So, can a person who gets an FCC license, or a marriage license (assuming 1A is incorporated against the states) be said to have contracted away their 1A rights, if the gov't makes that part of the bargain?

Also, I'd like to see someone address the quote above:


The first amendment does not guarantee people a right to free speech. It prohibits Congress from making laws restricting speech.



"Congress shall make no law... abridging the freedom of speech."
9.22.2009 10:26pm
DeezRightWingNutz:
One final comment...

Why do people always use MS or GE as their models of examples of corporate governance, and how remote the shareholders are from running the business. There are a lot of closely held corporations where one person has total control of a corporation.
9.22.2009 10:30pm
JaredS:
ReaderY:

Corporations do not shield people from liability for their actions as agents of the corporation, rather they shield the owners from liability in their capacity as such (they do not shield the owners from actions taken in other roles they might have).

If playing with guns is within the scope of your employment and you shoot someone, you and your employer will be jointly liable. Employers are very often sued for the actions of their employees because that's where the money is, not because the employees can't be sued.
9.22.2009 10:54pm
Frank Snyder (mail):

The corporation-as-person is a valuable legal fiction, and it's built on the same sort of metaphor we often use with regard to groups (e.g., "the Catholic Church teaches," "the ACLU argues," and the like). But we shouldn't fall into the trap of actually believing that our legal fictions and our metaphors are real.


I find it difficult to view the Catholic Church or the Walt Disney Company as a "metaphor." Is there such a thing as the "United States of America"? Is it "real"? Or is it simply a handy metaphor for a particular agglomeration of people and resources? Is the Social Security Administration or the U.S. Army only a metaphor? Do they have any roles or purposes other than those of their own individual members? If I cross the border from West Texas into New Mexico, have really gone from one state to another? Or are they simply two metaphors?

The Walt Disney Company, for example, is no more a "legal fiction" or a "metaphor" than the U.S. Army. It was not "created" by the state of Delaware when it filed its certificate of incorporation (in 1997, as I recall), any more than my children were "created" when the State of Texas issued them birth certificates. Filing with the state gave it some legal rights vis-a-vis the government, but the Company long predated the filing. It has vast amounts of resources and power, will likely long outlast any of the humans who have been part of it, and exercises tremendous influence in the world. What has more power and influence in the world, the Walt Disney Company or the Republic of Nauru?

If the "United States" is real but "General Motors" is a metaphor, does GM stop being a metaphor when it's acquired by the United States? Why is the Catholic Church, with 2,000 years of history and a billion members, less "real" than the U.S. Department of Energy?
9.22.2009 11:02pm
ShelbyC:

I find it difficult to view the Catholic Church or the Walt Disney Company as a "metaphor."


The corporations themselves aren't metaphors, treating them as "persons" is.
9.22.2009 11:11pm
einhverfr (mail) (www):
I think the question is whether "corporation as person" is a legal construct or if it is a legal fiction.

My own thinking is that it is the former, not the latter, and that for this reason most of the same considerations that go into strong bill of rights protection for natural persons apply to corporate persons as well. But like all constructs, it fails sometimes. For example, I am hard-pressed to see how Engblom v. Carey could ever be applied to protect a corporate person.
9.23.2009 12:54am
arbitraryaardvark (mail) (www):
I'm surprised that EV holds these views.
What are the public policy arguments in favor of letting governments torture corporations, force them to incriminate themselves, or restrict their right to defend themselves?
One social function of rights is to protect people (and "persons"). But another function is to constrain government.
Denying some rights to corporations would create a new class of potential victims for governments to oppress. One reason that there are laws against cruelty to animals is that people who practice cruelty to animals often graduate to cruelty to humans.
Now, it may be that EV is making a reductionist argument, of the sort that any potential violation of the right of a corporate person can be reframed as a violation of the rights of natural persons, and so it ends up making no difference. But if so, what's the harm in going along with the legal fiction and treating corporations as if they had rights?
I do understand that corporations shouldn't have the right to vote, or run for office, or maybe even marry. And maybe there are other classes of rights corporations shouldn't have. I might agree about the death penalty example. But I see no reason for the first 2d 5th and 8th amendments not to apply. I'd need to see a more convincing argument.
As an aardvark, I've long had an interest in the idea of shell corporations as a way to accommodate property interests of those not currently recognized as natural persons.

A person who owns one share of stock has a right to the annual report, to attend shareholder meetings, and introduce shareholder resolutions. I've known people to own one share of stock for just these reasons.
9.23.2009 2:21am
Frank Snyder (mail):

The corporations themselves aren't metaphors, treating them as "persons" is.


But why is this necessary? Are we conceding that the state has absolute power except when it specifically clashes with an individual right? Do not other groups -- like families, for instance? -- have right that are independent of the individual rights of the members?
9.23.2009 3:25am
David Schwartz (mail):
What's the difference between saying "my neighbor took $20 from me" and "my neighbor did something that reduced the value of my property by $20"?

I'll let the theorists answer this one, but it's probably not an accident that the former has been actionable since time immemorial and the latter, not necessarily so.

If he took the $20 because he won it from you in a bet, it's not actionable. If he decreased your property's value by poisoning your grass, you bet it's actionable. In fact, the one thing that almost certainly would not be relevant was whether he took all of something or decreased the value of something.

However, this is a case where it does matter whether you are deprived of property or whether its value is decreased. The problem is that the distinction is not quite so literal. Otherwise, any taking of money that didn't take every dime you had could be construed as the value of the set of money including the taken money and non-taken money being decreased.

Taking property wholesale is more like taking all of something, even if each individual owner only owns a share of something. To argue otherwise would lead to some absurdities -- for example, the government taking a timeshare wouldn't take "all of" anything any individual owned and wouldn't require any compensation.
9.23.2009 3:55am
byomtov (mail):
Why do people always use MS or GE as their models of examples of corporate governance, and how remote the shareholders are from running the business. There are a lot of closely held corporations where one person has total control of a corporation.

Because these are the kinds of companies that dominate the US economy.

Also because there is no real problem in the case of a corporation controlled by one person. Any restrictions you place on the corporation do not affect the owner acting as an individual.
9.23.2009 11:41am
one of many:
Reading your distinction between Corporations and individuals I would distill it to "Limitations on corporations which would affect the rights of the people who make up the corporation are unacceptable while limitations on corporations which would not affect the rights of the people who make up corporations are acceptable." As for the 8th, I cannot imagine something being cruel as long as it only applies to the corporation alone(hmm, drawing and quartering the employees of a corporation as punishment for the corporation's behavior would be cruel, although that would also qualify for individual 8th amendment protection instead of corporate), however unusual can impact the property rights of the people who have an ownership interest in the corporation if we accept that 'unusual' covers arbitrary and capricious fines.
9.23.2009 12:58pm
MMJMAC (mail):
Why don't many conservatives believe that the same principle applies to the free speech rights of labor unions? If you want to interfere with the right of a labor union to exercise its right to express opinions on, say the Employee Free Choice Act, by requiring the permission of each individual union member before allowing the use of a portion of his or her dues to go toward the union's political activities, including political speech, then why cannot you similarly require the permission of each individual shareholder to allow the use of a proportionate part of his or her ownership interest in the corporation before using corporate money to pay for the corporation's political activities, including political speech? After all, there is no guarantee that each individual shareholder of a corporation necessarily shares the opinion of the corporate leadership concerning the corporate income tax than there is that all union members share the same opinion about EFCA. Is there a principled reason for a such a distinction between labor unions and corporations, or is it all just about politics and whose ox is being gored? Any suggestions? Enlighten me.
9.23.2009 1:20pm
markm (mail):
MMJMAC: Because any shareholder who disapproves of the corporation's use of funds can simply sell her shares. There are plenty of other companies to invest in. OTOH, if she is an auto worker in Detroit, she might be able to find a non-UAW job in another state. if she is a high school teacher, even that won't help much; 90% of the jobs in her specialty in this country are unionized by affiliates of the NEA. Unions are allowed by law to seek monopolies on labor, and frequently achieve them.

Second, the real question isn't why corporations should have free speech rights, but why corporations such as CBS and the New York Times have them and others don't.
9.23.2009 6:49pm
arbitraryaardvark (mail) (www):
Scenario: Company car is parked 10 minutesovertime at a parking meter, gets a ticket which isn't paid.
Town ordinance reads that the $5 fine doubles for each day it isn't paid, company now owes $1 billion. No individual is liable. Company has settled all of its claims (due process, excessive fines etc) except cruel and unusual punishment claim. Can/should the case be able to go forward?
9.23.2009 9:28pm
Rich Rostrom (mail):
Frank Snyder: The Walt Disney Company... was not "created" by the state of Delaware when it filed its certificate of incorporation... any more than my children were "created" when the State of Texas issued them birth certificates.

Your children have a physical existence independent of any paperwork. Walt Disney Company does not. It owns physical assets - but it could sell all those assets tomorrow. It has physical employees - but all those employees could quit tomorrow. The corporation would still exist. It would still have contractual obligations, intellectual property, debts owed and credits due - but all those things are abstractions. One cannot point to them, as one could point to one of your children.

There are corporations which have no employees, and no assets other than funds held as bank account balances. These corporations are no less real than Walt Disney Company.

MMJMAC: Because payment of union dues is compulsory. And having a job is very different from owning stock in a corporation. For nearly everyone who has a full-time job, that job is their livelihood. By contrast, hardly anyone lives on the proceeds of shareholding in a single corporation.
9.24.2009 2:48am
Frank Snyder (mail):
Rich --

No, the corporate charter is like a driver's license: it is a document that gives a person or group a specific set of state-conferred rights. It is not synonymous with the business organization. The Walt Disney Company has an existence entirely independent of the piece of paper in the Delaware file drawer. It could convert its corporate charter tomorrow into some kind of Cayman Islands trust, or get personally acquired by Bill Gates and run as a sole proprietorship, and everything about it (except a handful of its legal rights) would be exactly the same. In exactly the same way a child born in Russia becomes a U.S. citizen when adopted in Texas, but when of age can file some different papers and become a Russian citizen again. Her U.S. papers confer some rights; Russian papers would confer some different rights. But the child is unchanged.

Sure, there are things called "corporations" which are nothing more than filings in a clerk's office. But there are corporations whose power and influence changed the world, such as the British East India Company. The fact that the rights of corporations (and thus the terminology) have been extended over time to single individuals is irrlevant. There are millions of corporations and partnerships and sole proprietorships and families and churches and nonprofit organizations and benevolent organizations and universities that have at least as much physical existence as my children.

Hardly anyone takes pains to point out that a U.S. state is, like a corporation, a legal fiction whose existence is based on a piece of paper. Most of us seem to believe that the Commonwealth of Virginia, for example, is "real" in a way that a corporation is not. But Virginia began as a joint stock company, then became a Crown colony, then became an independent state, then became a U.S. state, then became part of the Confederacy, then became a U.S. state again -- all without ceasing to be "Virginia."

My point is that Eugene's post seems to accept as a given a binary world in which the only things that exist are Individuals ("persons") and State, while every other group in society (even those vastly more long-lived and powerful than some current foreign governments) must be treated as "metaphorical persons" if they are to enjoy any protection at all from the State. This is is a common view among Con Law scholars, but it's by historical standards a relatively recent point of view. That it has become so entrenched in modern thought that an important scholar tosses it off as an obvious metaphor simply reflects the vast increase in the scope of the modern State and its supremacy over every other group in society. (That supremacy is, so far as Western civilization goes, also a fairly recent deveopment.)
9.24.2009 5:22am
ReaderY:
I do think it's worth mentioning the basic Roe v. Wade principle that we have an essentially binary system -- without personhood there are no rights at all, only derivatives of someone else's rights and interests.

Also, if long-standing precedent on the definition of "personhood" could be changed, wouldn't this make Roe v. Wade easier to overrule?

It's worth noting that in Roe the Supreme Court didn't find "biological facts" relevant to the question of personhood, but based the personhood question on a textual analysis of the use of the term in the Constitution. Personhood under Roe is a legal concept, not a biological one. Basing it on biology would undermine one of Roe's fundamental pillars.
9.24.2009 10:25am
MMJMAC (mail):
Rich Rostrom and markm: Thank you for your responses. First of all, it seems to me that union membership per se is not tied to employment status. One can be a union member without being employed in any particular job; one can be retired; one can be voluntarily unemployed and still retain union membership. So it doesn't seem to me that just because union membership may be required in order to obtain a particular job in a particular shop has anything to do with one's free speech rights as a union member, nor should it affect the free speech rights of the union. Second, with regard to corporations, what about the corporate shareholder who disagrees with the particular form of a corporation's political action or speech, yet does not wish to sell his or her shares because the corporation is doing well and presents, as an economic matter quite apart from its political involvements, a good investment which he or she chooses not to part with. He or she continues to obtain the benefits and the burdens and rights and responsibilities of corporate ownership as long as he or she owns the shares, just the same as a union member retains the rights and responsibilities and benefits and burdens of union membership as long as he or she remains a union member. I do not see where the corporate shareholder who is holding onto his shares as a profitable investment is in any different position that the union member who stays in his union for its benefits. The corporation has the use of his money for as long as he remains a shareholder, just as the union has the use of it's members money as long as they remain members of the union and regardless of where they are employed. If both the shareholder and the union member disagree about the corporation or the union's poltitcal action, I can't see why they shouldn't have the same exact rights to decide whether to allow their money to be used for purposes they disagree with. And if corporations are allowed to use corporate money for poltical advertising, lobbying, campaign cotributions and the like without restriction, then I see no pricipled reason why unions should not be able to do the same. What is fair one should be fair for both.
9.24.2009 9:37pm

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