The Legal Anomaly that Constitutes Corporate Personhood

Santa Clara County v. Southern Pacific Railroad Company is well-known as the Supreme Court case that established corporate personhood, the legal notion that a corporation, separate from its associated human beings, has some of the legal rights enjoyed by natural persons including Constitutional rights. To be sure, corporations were extended certain rights by the Supreme Court prior to Santa Clara. In Dartmouth College v. Woodward, the Supreme Court determined that corporations were protected by the Contracts Clause of the Constitution; over time, other court decisions continued to confirm that corporations had limited constitutional protection.[1]

It was not until 1886, when Santa Clara was decided, that the notion of corporate personhood was legally confirmed, albeit in the most unusual way. The original case revolved around the state of California taxing fences owned by the Southern Pacific Railroad Company – taxes that Southern Pacific claimed the state had not properly subtracted its outstanding mortgages from.[2] Consequently, Southern Pacific refused to pay taxes on its fences and Santa Clara County brought action against the company, arguing that the fence tax was appropriate due to the fact that the county could also tax the land which situated the fences.[3] Ultimately, the Supreme Court, with the unanimous opinion written by Justice John Marshall Harlan, ruled that the state wrongfully excluded a deduction for the outstanding mortgages and that the California constitution required that the state and its counties separately assess the land and fences before increasing taxes.[4]

It is important to acknowledge that nowhere in the opinion itself was corporate personhood discussed. However, one of Southern Pacific’s defenses involved the Fourteenth Amendment; specifically, it was argued that “the provisions of the constitution and laws of California…are in violation of the Fourteenth Amendment of the Constitution, in so far as they require the assessment of their property at its full money value, without making deduction, as in the case of railroads [that are only] operated in one county, and of other corporations, and of natural persons, for the value of the mortgages…”.[5] Through this statement, Southern Pacific was essentially arguing that California, by not deducting the company’s mortgage before taxing the company as was done when taxing natural persons, was treating the company unfairly.

Although the Supreme Court did not address this issue in its official opinion, a headnote by Supreme Court reporter J.C. Bancroft Davis noted that “Before argument, Mr. Chief Justice Waite 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 opinion that it does.’”[6] Although written on and in the margins of the Santa Clara ruling, headnotes are not law and more importantly are not precedential – yet Davis’ headnote became the basis for the solidification and expansion of corporate personhood that is still in use today. Many have written on these course of events, but how exactly the headnote in Santa Clara became used as precedent has yet to be explored. Investigating when and how Santa Clara was used immediately after the case was decided will not only trace the use of corporate personhood in the U.S. legal system since Santa Clara, but will also reveal more about the origins of corporate personhood.

Santa Clara was first cited by Justice Harlan himself while dissenting in Fire Association of Philadelphia v. People of the State of New York, just six months after the original decision. In his dissent, Harlan quoted Davis’ headnote, just as above, and stated that “it is equally clear that a corporation of one state, doing business in another state by her consent, is to be deemed, at least in respect to that business, a ‘person’ within the jurisdiction of the latter state, in the meaning of the fourteenth amendment”.[7] Harlan clearly supported corporate personhood, enough to use a non-precedential headnote in Fire Association as a verified legal standard. However, this usage, because of its use in a dissent, does not constitute precedent.

It wasn’t until 1887, in Singer Manufacturing Company v. Wright, that Santa Clara was used as precedent in an opinion by the Northern District Court of Georgia. The case, arising from a suit by Singer Manufacturing Company against the state of Georgia to enjoin the collection of taxes.[8] In his opinion, Justice Newman stated that “it was for some time doubted by the court whether the word ‘person,’ as used in the fourteenth amendment, included corporations. Indeed, it has been settled by some courts that it does not. But it is now considered settled, I presume, by the language used by Chief Justice Waite, speaking for the supreme court, in the case of Santa Clara Co. v. Railroad, 118 U.S. 396, 6 Sup.Ct.Rep. 1132, that corporations are so included and entitled, as fully as natural persons, to its protection”.[9] This interpretation of Santa Clara, however, is both incorrect and inappropriate. Although Justice Newman argues that the matter of corporate personhood had been settled, the lack of legitimate precedent says otherwise. Despite this, through Singer Manufacturing, corporate personhood became legal precedent and Santa Clara quickly became used in a myriad of cases to reinforce the notion.

Over the next year, Santa Clara was used as precedent in both Stockton, Attorney General of New Jersey v. Baltimore & N.Y.R. Co. and others and Charlotte, C. & A.R. Co. v. Gibbes. In Stockton, it was stated that “in the recent case of Santa Clara Co. v. Railroad, 118 U.S. 396, 6 Sup.Ct.Rep. 1132, the doctrine that corporations are not citizens or persons, within the protective language of the constitution, was unanimously disapproved, and the court expressly held that they are entitled, as well as individuals, to the equal protection of the laws, under the fourteenth amendment of the constitution”.[10] In Charlotte, when debating corporate personhood, it was declared that “in Santa Clara Co. v. Railroad, 118 U.S. 396, 6 Sup.Ct.Rep. 1132, the court seemed to be so well satisfied upon the point that they declined to hear argument on the question whether the provision in the fourteenth amendment to the constitution of the United States, which forbids a state from denying to any person within its jurisdiction the equal protection of the laws, applies to corporations; the chief justice saying: ‘We are all of opinion that it does.’”[11] As with Singer Manufacturing, Santa Clara was used incorrectly as precedent supporting corporate personhood – an event that never actually occurred in the eyes of the law.

Santa Clara has been used to justify corporate personhood as recent as 2013, in Hallowich v. Range Resources Corporation in which the court argued that “had the framers intended the protections of article I, § 1 to extend to business entities, they certainly could have written, ‘All persons are created equally free and independent….’ They did not. Indeed, it is federal amendment XIV’s use of the word “person” that makes its protections applicable to business entities, because its drafters were presumed to have known that “person” is a legal term of art, encompassing business entities under the common law. This was so clear that chief justice Waite ruled, prior to oral argument, that: The court does not wish to hear argument on the question of whether the provision in the Fourteenth Amendment to the constitution, which forbids a state to deny to any person within its jurisdiction the equal protections of the laws, applies to these corporations. We are all of the opinion that it does.”[12] The use of the phrase “chief justice Waite ruled” is particularly interesting, as the use of the verb “ruled” assumes that Chief Justice Waite’s statement is legal precedent when in fact, is not.

Tracing the history of Santa Clara beyond J.C. Davis’ headnote and into the headnote’s usage both immediately and long after it was written provides more insight into how corporate personhood became established as legal precedent. The inscription of court commentary is by no means unusual, however, in the case of Santa Clara, Justice Waite’s fateful verbal acknowledgement of corporate personhood became used as precedent for over a century. Even more interestingly, this headnote was almost immediately used as precedent in opinions by judges who should have known the non-legal and un-precedential nature of Justice Waite’s statement. In this sense, corporate personhood was the direct result of a legal anomaly, and has become the bulwark for the American social, economic, and political systems through later cases such as First National Bank of Boston v. Bellotti, Citizens United v. Federal Election Commission, and Sebelius v. Hobby Lobby.

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[1] Trustees of Dartmouth College v. Woodward, 17 U.S. 518 (1819)

[2] Santa Clara County v. Southern Pacific Railroad Company, 118 U.S. 394 (1886)

[3] Ibid.

[4] Ibid.

[5] Hartmann, Thom. Unequal protection the rise of corporate dominance and the theft of human rights. San Francisco: Berrett-Koehler, 2009.

[6] Ibid.

[7] Fire Association of Philadelphia v. People of the State of New York, 7 U.S. 108 (1886).

[8] Singer Manufacturing Company v. Wright, 33 F. 121 (1887).

[9] Ibid.

[10] Stockton, Attorney General of New Jersey v. Baltimore & N.Y.R. Co. and others, 32 F. 9, 13 (1887).

[11] Charlotte, C. & A.R. Co. v. Gibbes, 4 S.E. 49, 55 (1887).

[12] Hallowich v. Range Resources Corporation, 2013 WL 10254260 (2013).