Corporate Personhood and Business Law

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Corporate personhood is a controversial concept in which business corporations are afforded some of the same rights extended to individuals. This sample paper explores some of the ways in which corporate personhood is implemented in modern society.

What is corporate personhood?

Corporate personhood is the legal concept that allows business entities certain rights also extended to individuals. While the rights are limited legally and corporations do not have equal rights as people, there are several areas in which businesses are protected in the same way as a citizen. This concept has morality implications for individuals and businesses operating in a society that grants such protections.

At the root of the issue is the conceptual metaphor that relates a living and breathing person as being on the same moral platform as an inanimate object – the corporation. By studying both sides of the corporate personhood argument, an assertion can be made that illustrates the manipulation of the Fourteenth Amendment by business leaders and politicians, and supported by the Supreme Court, which is morally unjust.

While corporations certainly need a framework of moral reasoning to support economic operations, sneaking under the umbrella of the Fourteenth Amendment is nothing short of a crafty manipulation to empower corporate America. The metaphorical framework is the application of basic human rights and equality to a business entity. 

The Constitution and the Bill of Rights were originally implemented to provide strength in the ability to protect the citizens of the United States. The mission and intent of the legislation was to provide equality and establish rights that had been infringed upon by the British occupation. The founding fathers committed tremendous efforts to designing and developing this legislation.

The underlying theme of the Constitution is simple – to establish the people as having the power for government. This assertion has been a vision and desire of many developing nations over the course of history. Unfortunately, lawyers hired by corporations have spent countless hours tailoring the applications of the Constitution to businesses instead of people. The intent of the Constitution was never to grant corporations an equal status as people. The metaphorical framework was used by corporations to argue that business entities had the same rights as a human being. This is a moral dilemma because corporations are not people and should be a tool used by the people to conduct fair and equitable economic practices. 

Origins of the corporate personhood movement

The first movement towards granting corporate rights as equal to an individual came in the form of dissent on contractual dispute. In Trustees of Dartmouth College v. Woodward (1819) the college fired the superintendent, and as a result, the state legislation attempted to govern the college as an institution of the State. The grounds had been laid that the individual was the college that was protected by a contract to make business decisions such as the firing of an employee. The State disagreed, arguing authority over the college given governmental right, and the case landed in the Supreme Court. The decision was to permit the college the ability to make decisions under the terms of the contract and did not have to subject its authority to the State.

While this issue may seem unrelated to the topic of corporate personhood as it is seen in our society today, this is considered a landmark case that sparked the argument that corporations are separate entities that have rights and do not necessarily have to yield to government authority. This decision was used as precedent to argue that corporations are similar to colleges; in that, they are also governed by contractual authority.

Therefore, corporations should be granted similar privileges to Dartmouth College. Corporations again gained classification as a person in the case Santa Clara County v. Southern Pacific Railroad Company (1886). This case was the first that used the Fourteenth Amendment to assert that a corporation had the same constitutional rights and protections as a living person. Supreme Court Justice Waite was quoted during the case as saying

"Court does not wish to hear argument on the question whether 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” (1).

This comment was the first recorded authority granting corporations the same rights as a person.

So, corporations are considered "people"?

Under the terms of the law, a corporation can gain recognition as a person. The argument is that corporations are actually comprised of groups of people, and the law has the responsibility to offer rights and protections to those groups of people acting as a representative to the corporation. Corporate personhood gains its support through the Fourteenth Amendment. Although the Fourteenth Amendment was never intended to offer such rights, business leaders argued that the provisions do offer corporations the same rights as people.

The history of the Fourteenth Amendment appears fairly simple and the writing lends itself to derive legislative intent of the provisions. In short, the Amendment was adopted as a result of the Civil War and the handling of issues related to slavery; namely, former slaves, in granting them equal rights under the law as white land-owning citizens. 

There are significant social consequences of granting equal rights under the law to corporations. While businesses can be protected, they can only really be punished in terms of monetary gain. When a person’s rights are infringed where injury is caused, the defendant can find a lengthy prison term delivered by justice. Society has never been able to imprison and deter a corporation from ripping people off or negatively impacting the environment. As such, business leaders are often removed from punishment as the very nature of a limited liability corporation is to remove personal liability from the business activity.

Who's ultimately accountable?

So, what holds the negative corporate activity accountable? According to Hammerstrom (1) corporate personhood is a “high jacking of the Fourteenth Amendment.” Over the course of time the Supreme Court has used the original intent of the Fourteenth Amendment in response to several cases that have developed the current meaning and application of the Amendment. During the reconstruction period the government was struggling with how public policy can assist in the integration of former slaves with white society.

At that same time, the corporate America machine was gearing up and making progress towards the industrial revolution. Corporations were eager to gain additional influence and power within society to further promote enhanced profitability. Businesses started to hire more attorneys to advance their firm’s interests by exploiting the provisions of the Amendment. According to Hammerstrom (1)

“Of the 150 cases involving the Fourteenth Amendment heard by the Supreme Court up to the Plessy v. Ferguson case in 1896 that established the legal standing of 'separate but equal,'15 involved blacks and 135 involved business entities.”

Clearly, the intent of the Fourteenth Amendment was to address slavery issues; however, the record shows the obvious manipulation of the Policy by corporations acting in their own interests, with little regard for social responsibility.