6 ms·

Legal analysis of the personhood granted to corporations

20 points by ashley 17y ago

Chirael 17y ago
Interesting article. I was always under the impression that corporations weren't "persons" but "entities". I have seen several references to "natural persons" as opposed to corporation or other entities, in various legal documents. So I suppose that if corporations are "persons", then at the least they are (by inference) "unnatural" persons :)
- ashley 17y ago
  The funny thing with personhood conferral is that it was an obiter dictum (sort of non-binding comment made by the judges that is not part of the official decision) that was interpreted by the court stenographer in the 19th century Santa Clara County v. Southern Pacific Railroad (whose case was ruled in favor of Southern Pacific on a technicality rather than any explicit ruling on the personhood of corporations). So now with Thursday's Citizens United ruling, it will be interesting to see whether corporations will have to be federally chartered and thereby be revoked of constitutionally protected status or whether this case opens the door to potentially unfettered powers granted to corporations, now that campaign finance is protected "free" speech under the 1st Amendment.
  - hga 17y ago
    NO NO NO! The Citizens United case has had absolutely no change to "campaign finance", and the law and case law about campaign finance "reform" has always recognized its status as political speech. What Citizens United has done is to return to "corporations" (including the non-profit Citizens United that successfully sued the FEC) the rights to free speech and freedom of association they enjoyed prior to Austin v. Michigan Chamber of Commerce and McCain-Feingold. No longer can governments censor (in the real meaning of the world) their speech in elections. In both these examples, campaign finance and election period speech, there are still "reasonable" regulations, like various sorts of disclosure (although Thomas disagreed, based on the nasty retaliation that's been seen lately against people making small contributions to causes that many don't like; I expect this will be revisited after the first murder that comes from this disturbing trend). For those who think this is a bad thing, I say that the answer to speech you don't like is more speech, not government censorship of the speech you don't like. (Need I mention the slippery slope the latter presents?)
    - ashley 17y ago
      You're right to say that Citizen United does not change how we view campaign finance as protected speech for humans. I definitely was wrong and unclear on that point, but I respectfully disagree about the implications of the Citizens United ruling: my point is that this ruling sets the stage for allowing undue power to corporations, both non-profit and for-profit. Corporations are not living beings with unalienable rights, so we should not have worried that limiting their speech would have implications for us human beings. For Scalia being such a conservative reader of the law, he certainly took a highly judicial activist position in this ruling. excerpted from the article: In vivid contrast, the majority overruled a 19-year-old precedent (Austin v. Michigan Chamber of Commerce) that had lambasted the corporation, when it entered the political arena, because of ”the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s suport for the corporation’s political ideas.” The problem with treating corporations as if they have a "right" to free speech and freedom of association is that they have a disproportionate amount of influence arising from their sheer size and aggregated wealth. We have other mechanisms to ensure that size and wealth do not override the voices of the small and poor in elections (look at how the Senate is constructed versus the House or how we have the electoral college to ensure that wealthier coastal states do not decide presidential elections). And also, the fact that we grant any rights to corporations at all arises from a court stenographer's foot-note that later opened up loopholes for clever (although might I add shortsighted) lawyers in subsequent cases that eventually snowballed into granting rights to this nebulous entity. As Justice Stevens noted in his dissent to the Citizens United ruling, "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it.” And yet, we worried that limiting the financial power of corporations will potentially infringe upon OUR (human) 1st Amendment rights. That is the problem for me. We created the corporate entity like a machine to serve our purposes; it does not exist with unalienable rights as we human beings do. Who donates the most to campaigns, 501(3)(c) non-profits and charities or Fortune 1000 corporations whose explicit purpose is to generate profits for stakeholders?
      - 17y ago
azzleandre 17y ago
I think it is kind of rediculous. Who's going to jail, if a corporation as a "person" robs, steals, beats or even kills? A Personhood is not only constituted by its acts, but also by it's intentions, the way it's intentions are created and least but not last: The way it suffers / can be punished.
- ugh 17y ago
  I think it’s a useful concept. Let me try to convince you of that: nearly everything we do requires corporations. A human alone cannot possibly get his opinions heard without help from other humans. In the end we really need corporations. We might to often have that wrong picture in our minds when thinking of freedom of speech, of the noble thinker, alone in his room, writing down his opinion and the government anxious to shut him down. That’s probably not how it ever worked. You need a publisher, you need an ISP. The government might very well grant you freedom of speech. If they can limit the rights of corporations however they damn well please that freedom of speech is not worth very much. Corporations are how humans do stuff. Corporations are important. Corporations have to be protected from the government.
  - azzleandre 17y ago
    You're right. I have to agree with you on that. And I may haven't been clear enough, about what my problem is with awarding personhood to corporations. I think that you can't judge corporations the way you can judge humans. You have to apply a different "personhood" to a company, since corporations are not natural. They don't consist of what a human being consists, but of what human beings contributed to that consistence.
    - ugh 17y ago
      Yes, I think they are different. Personhood is a useful concept but – I guess I’ll have to agree with you – only to a point. I would argue that corporations should have rights, yet not necessarily always the same ones persons have. It’s quite obviously complicated :)
pierrefar 17y ago
What happens when (say) a car company designs a car whose fuel tank has a tendency to explode, or for the whole car to flip over in accidents? What happens if these accidents end up killing the driver? Is it manslaughter or murder?
flatline 17y ago
Every time I hear one side or another of this argument, I think of Accelerando. First corporations gain status as individuals, then they become self-aware computers and ultimately convert all the mass in the solar system into a giant computer to run their simulations, expelling humans in the process. Maybe I'm just taking it too far...
veqon 17y ago
Some very sensible reforms are: If you cannot become eligible to vote, you cannot donate to any campaign. All donations must be reported online with 24 hours.
- brown9-2 17y ago
  This is exactly what this article speculates on - if they have free speech, are they not entitled also to vote? Voting is a form of speech.
  - yummyfajitas 17y ago
    The answer is simple: corporations only have the rights they are granted by their owners. I have the right to free speech and and I can use my possessions to exercise this right. I can criticize Obama verbally, in a document on my computer or I can publish that document to my website. Why can't I use my corporation to pursue the same goal? I also have the right to vote. I don't get a second vote for my computer, however. Similarly, my corporation doesn't give me another vote. Corporations don't have free speech. Their owners have free speech, and they can use their corporation to exercise those free speech rights.
    - DanielBMarkham 17y ago
      Agreed. This does seem like an over-complicating of something very simple. Five guys sit in a room and decide to use their poker profits to run a political commercial. It's all fine. Same five guys sit in a board room and vote to use company money to run a political commercial. It's all bad. I must be missing something.
      - yummyfajitas 17y ago
        What you are missing is that the people pushing regulations also want to prevent 5 guys spending their poker profits on political speech. Some history: Back in 2000, a bunch of guys decided to use their money to run political commercials. These commercials persuaded people vote against McCain in the Republican primary. 2 years later, McCain pushes a law which tries to prevent this. The goal of political speech limitations is to prevent anyone besides certain elites (and not other elites) from affecting an election. Since spending money is necessary to get a message out, they try to restrict spending money on political speech.
elblanco 17y ago
Sounds like the cyberpunk dystopia of corporations = the state is one step closer.
grellas 17y ago
It is hardly a radical idea in modern western society to treat a corporation as a so-called "legal person." Only real people can think and act as individuals but there are all sorts of situations when they want to associate with one another, form groups, and act in some coordinated fashion through the group. All sorts of business associations fit within this category: corporations, LLCs, partnerships, limited partnerships, business trusts, trade associations, etc. All sorts of other entities are not directly business-related but otherwise constitute groups formed for various important associational purposes: labor unions, non-profit organizations, political organizations, etc. With respect to all such entities, somewhere in the law books one will always find some form of formal authorization recognizing that the entity can be established under law and that it has legal rights and responsibilities. It can take certain prescribed organizational forms. It can admit or exclude real persons as owners, principals, or beneficiaries of the entity. It can appoint real persons to manage its affairs within the rules and confines of what the law prescribes it can do. It can enter into contracts. It can sue. It can be sued. It has certain compliance responsibilities necessary to meet minimum requirements to begin and to continue its status as the particular type of entity that it is. In giving these entities the power to act in this manner, the law effectively recognizes them as fictional "persons" for legal purposes only. This is short-hand way of saying that they have the same rights as individuals would have in a like situation. For example, if my corporation sells you a product and you refuse to pay, "it" (as a legal "person" acting through its lawfully recognized representatives) can file suit in a court of law to get a judgment against you and can exercise all available legal rights to enforce that judgment and collect its money. Similarly, "it" can go to a bank and open an account in "its" name. Or it can file "its" charter document giving it birth as an entity. Or file "its" dissolution papers signifying its legal death. In all such cases, "it" can only act through real individuals who do these things in some manner that the law recognizes as being in a proper representative capacity. They act as its agents and bind it legally in its affairs. Can such entities commit torts or crimes? Absolutely. In such cases, the entity itself may be hit with money judgments or fines and its authorized agents who participated in the actions constituting the tort or crime may have direct liabilities of their own for their conduct, or even face criminal sanctions, including imprisonment. Corporations are "persons" in the sense just described. As readily appears from this analysis, though, there is nothing at all strange about recognizing them as such. They are "persons" in the same way as, e.g., labor unions are "persons" - that is, the law recognizes their power to act lawfully as entities in the society and to do the things they are allowed to do under the charter and statutes authorizing them to be formed in the first place. Against this background, a few observations about this piece: 1. It is hardly correct to suggest that the Supreme Court does not know what it is doing by recognizing the "personhood" of corporations because, given this logic, the next step is to give General Motors a right to vote. Throughout decades if not centuries of experience in the law's dealings with entities, it has always been clear that the legal rights given to entities must be appropriate to the form of entity involved and need not extend to all rights held by living individuals. It is perfectly sensible to say that a corporation (or a labor union, for that matter) has protectable free speech rights but does not have things such as a right to vote. A vote represents the suffrage rights of the citizenry and inherently applies to individuals only. Speech can be done by real individuals acting as individuals or by entities acting through their authorized representatives advocating on behalf of the entity. 2. All sorts of corporations have been routinely accorded free speech rights in an unbroken chain right up through this recent decision - they are called the "press," and everywhere we look we find the New York Times, the Wall Street Journal, and myriad other corporations exercising unquestioned free speech rights as organizations. What the Supreme Court did 20 years ago, and what was reversed in the recent decision, was to say that any corporation not acting as part of the press did not have protectable speech rights. 3. The above constitutes a legitimate debate about the proper scope of the First Amendment. But the recent decision does nothing radical in this respect. It pretty much restores the politics of American issue-advocacy to the state it has always been in prior to the last decade or so. 4. Nothing radical has been decreed with respect to the "personhood" of corporations. This is a long-established and non-controversial legal concept that has now been applied to a particular question of constitutional law over which various factions have vigorously fought. The application of the concept might be disputed, as it was in this case and by the majority and dissenting justices, but the concept itself can hardly be disputed unless we are to strip all entities of their power to function in our modern society.
azzleandre 17y ago
After reading the posts on HN a while, I've came across a lot of articles, that where about the ineffectiveness of interactions between people (e.g. 'the 10 startup-mistakes to avoid'). Just because more people working on something or investing more money on an issue, doesn't make their aim more intelligent. Neither their way of approaching it. Considering a society, we allready have an entity that has to be maneuvered in the least stupid way possible. Adding new entities to that process doen't help if it creates new layers of hierachy. It's a matter o preferences I think: Is it for the 'greater good' (thing at the top of hierarchy) or is the greater good to serve the smallest entity (i.e. a human being). Equating corporations with humans could deprive humans of their liberties, since corporations can speak, cry and lie louder. If the law is there to protect our liberties, I don't see how this aim is archieved more effectively by putting additional entities/hierarchies (i.e. corporations) in between.

20 points by ashley 17y ago

Interesting article. I was always under the impression that corporations weren't "persons" but "entities". I have seen several references to "natural persons" as opposed to corporation or other entities, in various legal documents. So I suppose that if corporations are "persons", then at the least they are (by inference) "unnatural" persons :)

ashley 17y ago
The funny thing with personhood conferral is that it was an obiter dictum (sort of non-binding comment made by the judges that is not part of the official decision) that was interpreted by the court stenographer in the 19th century Santa Clara County v. Southern Pacific Railroad (whose case was ruled in favor of Southern Pacific on a technicality rather than any explicit ruling on the personhood of corporations). So now with Thursday's Citizens United ruling, it will be interesting to see whether corporations will have to be federally chartered and thereby be revoked of constitutionally protected status or whether this case opens the door to potentially unfettered powers granted to corporations, now that campaign finance is protected "free" speech under the 1st Amendment.
- hga 17y ago
  NO NO NO! The Citizens United case has had absolutely no change to "campaign finance", and the law and case law about campaign finance "reform" has always recognized its status as political speech. What Citizens United has done is to return to "corporations" (including the non-profit Citizens United that successfully sued the FEC) the rights to free speech and freedom of association they enjoyed prior to Austin v. Michigan Chamber of Commerce and McCain-Feingold. No longer can governments censor (in the real meaning of the world) their speech in elections. In both these examples, campaign finance and election period speech, there are still "reasonable" regulations, like various sorts of disclosure (although Thomas disagreed, based on the nasty retaliation that's been seen lately against people making small contributions to causes that many don't like; I expect this will be revisited after the first murder that comes from this disturbing trend). For those who think this is a bad thing, I say that the answer to speech you don't like is more speech, not government censorship of the speech you don't like. (Need I mention the slippery slope the latter presents?)
  - ashley 17y ago
    You're right to say that Citizen United does not change how we view campaign finance as protected speech for humans. I definitely was wrong and unclear on that point, but I respectfully disagree about the implications of the Citizens United ruling: my point is that this ruling sets the stage for allowing undue power to corporations, both non-profit and for-profit. Corporations are not living beings with unalienable rights, so we should not have worried that limiting their speech would have implications for us human beings. For Scalia being such a conservative reader of the law, he certainly took a highly judicial activist position in this ruling. excerpted from the article: In vivid contrast, the majority overruled a 19-year-old precedent (Austin v. Michigan Chamber of Commerce) that had lambasted the corporation, when it entered the political arena, because of ”the corrosive and distorting effects of immense aggregations of wealth that are accumulated with the help of the corporate form and that have little or no correlation to the public’s suport for the corporation’s political ideas.” The problem with treating corporations as if they have a "right" to free speech and freedom of association is that they have a disproportionate amount of influence arising from their sheer size and aggregated wealth. We have other mechanisms to ensure that size and wealth do not override the voices of the small and poor in elections (look at how the Senate is constructed versus the House or how we have the electoral college to ensure that wealthier coastal states do not decide presidential elections). And also, the fact that we grant any rights to corporations at all arises from a court stenographer's foot-note that later opened up loopholes for clever (although might I add shortsighted) lawyers in subsequent cases that eventually snowballed into granting rights to this nebulous entity. As Justice Stevens noted in his dissent to the Citizens United ruling, "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it.” And yet, we worried that limiting the financial power of corporations will potentially infringe upon OUR (human) 1st Amendment rights. That is the problem for me. We created the corporate entity like a machine to serve our purposes; it does not exist with unalienable rights as we human beings do. Who donates the most to campaigns, 501(3)(c) non-profits and charities or Fortune 1000 corporations whose explicit purpose is to generate profits for stakeholders?
    - 17y ago

azzleandre 17y ago

I think it is kind of rediculous. Who's going to jail, if a corporation as a "person" robs, steals, beats or even kills? A Personhood is not only constituted by its acts, but also by it's intentions, the way it's intentions are created and least but not last: The way it suffers / can be punished.

ugh 17y ago
I think it’s a useful concept. Let me try to convince you of that: nearly everything we do requires corporations. A human alone cannot possibly get his opinions heard without help from other humans. In the end we really need corporations. We might to often have that wrong picture in our minds when thinking of freedom of speech, of the noble thinker, alone in his room, writing down his opinion and the government anxious to shut him down. That’s probably not how it ever worked. You need a publisher, you need an ISP. The government might very well grant you freedom of speech. If they can limit the rights of corporations however they damn well please that freedom of speech is not worth very much. Corporations are how humans do stuff. Corporations are important. Corporations have to be protected from the government.
- azzleandre 17y ago
  You're right. I have to agree with you on that. And I may haven't been clear enough, about what my problem is with awarding personhood to corporations. I think that you can't judge corporations the way you can judge humans. You have to apply a different "personhood" to a company, since corporations are not natural. They don't consist of what a human being consists, but of what human beings contributed to that consistence.
  - ugh 17y ago
    Yes, I think they are different. Personhood is a useful concept but – I guess I’ll have to agree with you – only to a point. I would argue that corporations should have rights, yet not necessarily always the same ones persons have. It’s quite obviously complicated :)

pierrefar 17y ago

What happens when (say) a car company designs a car whose fuel tank has a tendency to explode, or for the whole car to flip over in accidents? What happens if these accidents end up killing the driver? Is it manslaughter or murder?

flatline 17y ago

Every time I hear one side or another of this argument, I think of Accelerando. First corporations gain status as individuals, then they become self-aware computers and ultimately convert all the mass in the solar system into a giant computer to run their simulations, expelling humans in the process. Maybe I'm just taking it too far...

veqon 17y ago

Some very sensible reforms are: If you cannot become eligible to vote, you cannot donate to any campaign. All donations must be reported online with 24 hours.

brown9-2 17y ago
This is exactly what this article speculates on - if they have free speech, are they not entitled also to vote? Voting is a form of speech.
- yummyfajitas 17y ago
  The answer is simple: corporations only have the rights they are granted by their owners. I have the right to free speech and and I can use my possessions to exercise this right. I can criticize Obama verbally, in a document on my computer or I can publish that document to my website. Why can't I use my corporation to pursue the same goal? I also have the right to vote. I don't get a second vote for my computer, however. Similarly, my corporation doesn't give me another vote. Corporations don't have free speech. Their owners have free speech, and they can use their corporation to exercise those free speech rights.
  - DanielBMarkham 17y ago
    Agreed. This does seem like an over-complicating of something very simple. Five guys sit in a room and decide to use their poker profits to run a political commercial. It's all fine. Same five guys sit in a board room and vote to use company money to run a political commercial. It's all bad. I must be missing something.
    - yummyfajitas 17y ago
      What you are missing is that the people pushing regulations also want to prevent 5 guys spending their poker profits on political speech. Some history: Back in 2000, a bunch of guys decided to use their money to run political commercials. These commercials persuaded people vote against McCain in the Republican primary. 2 years later, McCain pushes a law which tries to prevent this. The goal of political speech limitations is to prevent anyone besides certain elites (and not other elites) from affecting an election. Since spending money is necessary to get a message out, they try to restrict spending money on political speech.

elblanco 17y ago

Sounds like the cyberpunk dystopia of corporations = the state is one step closer.

grellas 17y ago

It is hardly a radical idea in modern western society to treat a corporation as a so-called "legal person." Only real people can think and act as individuals but there are all sorts of situations when they want to associate with one another, form groups, and act in some coordinated fashion through the group. All sorts of business associations fit within this category: corporations, LLCs, partnerships, limited partnerships, business trusts, trade associations, etc. All sorts of other entities are not directly business-related but otherwise constitute groups formed for various important associational purposes: labor unions, non-profit organizations, political organizations, etc. With respect to all such entities, somewhere in the law books one will always find some form of formal authorization recognizing that the entity can be established under law and that it has legal rights and responsibilities. It can take certain prescribed organizational forms. It can admit or exclude real persons as owners, principals, or beneficiaries of the entity. It can appoint real persons to manage its affairs within the rules and confines of what the law prescribes it can do. It can enter into contracts. It can sue. It can be sued. It has certain compliance responsibilities necessary to meet minimum requirements to begin and to continue its status as the particular type of entity that it is. In giving these entities the power to act in this manner, the law effectively recognizes them as fictional "persons" for legal purposes only. This is short-hand way of saying that they have the same rights as individuals would have in a like situation. For example, if my corporation sells you a product and you refuse to pay, "it" (as a legal "person" acting through its lawfully recognized representatives) can file suit in a court of law to get a judgment against you and can exercise all available legal rights to enforce that judgment and collect its money. Similarly, "it" can go to a bank and open an account in "its" name. Or it can file "its" charter document giving it birth as an entity. Or file "its" dissolution papers signifying its legal death. In all such cases, "it" can only act through real individuals who do these things in some manner that the law recognizes as being in a proper representative capacity. They act as its agents and bind it legally in its affairs. Can such entities commit torts or crimes? Absolutely. In such cases, the entity itself may be hit with money judgments or fines and its authorized agents who participated in the actions constituting the tort or crime may have direct liabilities of their own for their conduct, or even face criminal sanctions, including imprisonment. Corporations are "persons" in the sense just described. As readily appears from this analysis, though, there is nothing at all strange about recognizing them as such. They are "persons" in the same way as, e.g., labor unions are "persons" - that is, the law recognizes their power to act lawfully as entities in the society and to do the things they are allowed to do under the charter and statutes authorizing them to be formed in the first place. Against this background, a few observations about this piece: 1. It is hardly correct to suggest that the Supreme Court does not know what it is doing by recognizing the "personhood" of corporations because, given this logic, the next step is to give General Motors a right to vote. Throughout decades if not centuries of experience in the law's dealings with entities, it has always been clear that the legal rights given to entities must be appropriate to the form of entity involved and need not extend to all rights held by living individuals. It is perfectly sensible to say that a corporation (or a labor union, for that matter) has protectable free speech rights but does not have things such as a right to vote. A vote represents the suffrage rights of the citizenry and inherently applies to individuals only. Speech can be done by real individuals acting as individuals or by entities acting through their authorized representatives advocating on behalf of the entity. 2. All sorts of corporations have been routinely accorded free speech rights in an unbroken chain right up through this recent decision - they are called the "press," and everywhere we look we find the New York Times, the Wall Street Journal, and myriad other corporations exercising unquestioned free speech rights as organizations. What the Supreme Court did 20 years ago, and what was reversed in the recent decision, was to say that any corporation not acting as part of the press did not have protectable speech rights. 3. The above constitutes a legitimate debate about the proper scope of the First Amendment. But the recent decision does nothing radical in this respect. It pretty much restores the politics of American issue-advocacy to the state it has always been in prior to the last decade or so. 4. Nothing radical has been decreed with respect to the "personhood" of corporations. This is a long-established and non-controversial legal concept that has now been applied to a particular question of constitutional law over which various factions have vigorously fought. The application of the concept might be disputed, as it was in this case and by the majority and dissenting justices, but the concept itself can hardly be disputed unless we are to strip all entities of their power to function in our modern society.

azzleandre 17y ago

After reading the posts on HN a while, I've came across a lot of articles, that where about the ineffectiveness of interactions between people (e.g. 'the 10 startup-mistakes to avoid'). Just because more people working on something or investing more money on an issue, doesn't make their aim more intelligent. Neither their way of approaching it. Considering a society, we allready have an entity that has to be maneuvered in the least stupid way possible. Adding new entities to that process doen't help if it creates new layers of hierachy. It's a matter o preferences I think: Is it for the 'greater good' (thing at the top of hierarchy) or is the greater good to serve the smallest entity (i.e. a human being). Equating corporations with humans could deprive humans of their liberties, since corporations can speak, cry and lie louder. If the law is there to protect our liberties, I don't see how this aim is archieved more effectively by putting additional entities/hierarchies (i.e. corporations) in between.