by James Allison, August 14, 2004

“When did companies become people?”  Nina Totenberg, Morning Edition, National Public Radio, July 28, 2014.

In answer to Ms. Totenberg’s question, some authorities say “1886,” others “never.”  Why such a wide range of answers, and who’s to be believed?

The other day I read a blog in which a fellow subscriber traced the judicial origin of Citizens United (2010). That particular case contains the Supreme Court ruling that lets dark money buy our elections as a corporate exercise of the free speech guaranteed by the Constitution. This subscriber thought the judicial precedent there was a 19th-century Gilded Age Supreme Court ruling that entitled corporations to the same Constitutional rights as natural born persons. The name of that ruling is Santa Clara v. Southern Pacific (1886).  

Should you turn to that ruling and read its headnote—a kind of Cliff Notes summary that has no judicial weight, being the work of the Court Reporter and not of the Court—you will get the impression, along with many generations of unwary lawyers, that Santa Clara did bestow those personhood rights on corporations. But if you take the trouble to read beyond the headnote, you will find that the Court did no such thing. What you will see instead is a routine ruling that Santa Clara County had erred in taxing Southern Pacific Railroad for a certain stretch of fencing along the railroad’s roadbed. This ruling was truly the work of the Court, not of the Court Reporter. As such, this 1886 Court had neither taken up nor settled any Constitutional issue, in particular not the issue of corporate personhood.    

So, whence came this fiasco? How exactly did Santa Clara rise to its phony status as the precedent that gives corporations the same Constitutional protections as real people?

Corporations have always been chartered by the states and therefore subject to state regulation, with one exception from the very beginning in the form of the Constitution’s “contracts clause.”  The latter provides that “No state shall . . . pass any . . . law impairing the obligations of contracts  . . .”  (Article 1, Section 10, Clause 1).  And early on, federal courts held firm despite frequent corporate complaints about state regulation: Corporations might have special privileges, such as limited liability, and contracts were immune to government interference, but corporations could not claim the same Constitutional protections as natural born persons.  

The Civil War changed everything. War brought the railroads both great wealth and the need for still more capital and labor to feed their gargantuan post-war growth, unencumbered by state regulation. Railroad moguls perked up when their lawyers suggested a novel solution based on the new 14th Amendment. It was so simple: All they had to do was persuade the U.S. Supreme Court to declare corporate personhood. That status would bring railroads under the protection of the 14th Amendment. Never mind that the 14th Amendment had been crafted to protect former slaves from abusive treatment by southern state governments. As corporate persons, railroads would profit from those very same Constitutional protections.

There were some false starts, but a fine opportunity arose in 1886, in a tax dispute between Santa Clara County and Southern Pacific Railroad. On the day of the hearing, just before the Justices turned to the matter at hand—the case that became Santa Clara v. Southern Pacific (1886)—they finished an informal discussion with a straw poll. This poll showed that every Justice favored corporate personhood. Privy to that poll was the note-taking Court Reporter, lawyer Bancroft Davis, himself a former railroad executive.

Later, when it came time for Davis to write up his report, he asked Chief Justice Morrison R. Waite whether the headnote should include the pre-hearing bit about corporate personhood.  Waite had made it crystal clear that the case at hand had neither taken up nor settled any Constitutional questions. But he left it to Davis to decide the contents of his headnote. And Davis did just that.

How do I know all this? Because one day, as my wife and I examined Waite’s papers in the Library of Congress, we held in our hands the original correspondence between Court Reporter Davis and Chief Justice Waite.

But that is not the end of the story. How did that mere headnote get cited as the legal precedent for corporate personhood?

Chief Justice Waite plainly knew that Santa Clara v. Southern Pacific had settled no Constitutional issues, and would never have allowed his Court to claim otherwise. But Waite died on March 23, 1888¹.  With Waite out of the way, new court leadership, in the  person of Associate Justice Stephen Field, was not so scrupulous. Waite had scolded Field for being so obviously the railroad’s man, but in Waite’s absence Field ran wild. In 1889 Field wrote the court’s ruling against a railroad whose train had killed three of a farmer’s hogs (Minneapolis & St. Louis Railway Company v. Beckwith, 1889). In that ruling Field cited Santa Clara as a precedent for corporate personhood. That phony citation enshrined Santa Clara as precedent. If this made Field a scoundrel, he shared the blame with six fellow Justices present in both 1886 and 1889: Miller, Bradley, Harlan, Matthews, Gray, and Blatchford. Incidentally, the one newspaper notice I could find about this momentous ruling was a wry comment about the irony of a railroad’s spending so many thousands in the vain avoidance of a fine worth three hogs.

And what about such modern Justices as Lewis Powell, writing the majority opinion in First National Bank of Boston v. Bellotti, 1978?  In that opinion Powell’s Footnote 15 declares: “It has been settled for almost a century that corporations are persons  within the meaning of the Fourteenth Amendment, Santa Clara County v. Southern Pacific . . . 1886.”  

But his fellow Justice, William Rehnquist, was not so sure about that. In dissent, Rehnquist wrote that corporations were artificial persons not guaranteed the same Constitutional rights as natural persons. Without quite dismissing Santa Clara as a mere headnote of no judicial consequence, Rehnquist writes: “The Court decided at an early date, with neither argument nor discussion, that a business corporation is a ‘person’ entitled to the protection of the Equal Protection Clause of the Fourteenth Amendment.” He then cites Santa Clara as the target of his disdain.

If you happen to recognize Justice Powell as the author of The Powell Memo, his enthusiastic judicial advocacy of corporate personhood will come as no surprise.  What was The Powell Memo?

In 1971, a few months before his nomination to the U.S. Supreme Court, when Powell was celebrated as a Big Tobacco lawyer, the U.S. Chamber of Commerce approached him for advice.  How might corporations combat the government’s regulatory reforms—reforms then advocated so effectively by the likes of Ralph Nader’s Raiders. Powell obliged with a long, detailed memo that included significant advice about judicial action by courts favorable to corporate interests. The Powell Memo is widely seen as a forbear of the Federalist Society. And lo and behold, the culmination of Powell’s advice came 7 years later, when Powell wrote the majority opinion in Boston v. Bellotti (1978). That opinion cited Santa Clara v. Southern Pacific (1886) as precedent for corporate personhood.       

In dissent, Justice Rehnquist left no doubt about his own position: “The question presented today, whether business corporations have a constitutionally protected liberty to engage in political activities, has never been squarely addressed by any previous decision of this Court.”  

Should any modern Supreme Court take up the question of corporate personhood, it may face a curious dilemma: If a corporation is a person, it is a person owned by fellow persons, i.e., a slave.  But the 13th Amendment forbids slavery, except as punishment for a crime. And the same Amendment empowers Congress to enforce this article by appropriate legislation.  

A few years ago U.S. Senator Mitt Romney, running for President in a Republican primary, made the following reply to a citizen worried about the growing influence of corporations in our elections:

“Corporations are people, my friend!”

Really? 

Slavery is the fiction that a person is property.

Corporate personhood is the fiction that property is a person.

Anon 

¹Waite died four days after another another headnote reference to corporate personhood in Pembina Consolidated Silver Mining Co. v. Pennsylvania, 1888. Argued on Feb. 16, 1888, the Pembina headnote declares that ”. . . under the designation of ‘person’ there is no doubt that a private corporation is included in the Fourteenth Amendment.” But there is no pertinent argument to that effect in the body of the Pembina ruling, and no reference to Santa Clara. 

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