Last week, the Supreme Court agreed to hear a case challenging the Obama administration’s HHS mandate on the grounds that it violates the religious liberties of two companies, Conestoga Wood Specialties and Hobby Lobby. One of the main objections to the plaintiff’s complaint is that the First Amendment does not protect the rights of corporations. A similar claim was made when the Supreme Court protected corporations’ political speech in the Citizens United case. Such protections are actually a longstanding right of American corporations.
Presidential candidate Mitt Romney was ridiculed for saying that “corporations are people” at the Iowa State Fair in 2011.
But Romney was right. The idea that corporations are not persons or citizens entitled to constitutional protection is among the oldest of left-wing populist canards. In reality, there is a long history of the legal recognition of corporate personhood.
At the time the Constitution was adopted, there were very few corporations, and for most of the 19th century business was carried on through partnerships. Corporations were chartered by special acts of state legislatures for extraordinary, public-service purposes. But this did not mean that they were mere creatures of the state, with no rights of their own.
In 1815, the Supreme Court prevented the state of Virginia from dispossessing the property of the Anglican Church after that church had been disestablished.
Four years later, the Court gave its most famous defense of corporate rights, in the Dartmouth College case. The college had been founded in 1769 by a charter from King George III. In the early 19th century, the Jeffersonian Republicans of New Hampshire considered Dartmouth a redoubt of Federalism, if not outright Toryism. So the state legislature enacted a law that replaced the college’s trustees with members more favorable to their party, which the Supreme Court struck down as a violation of the Constitution’s prohibition on states’ impairing the obligation of contracts.
Chief Justice John Marshall defended the college as “an eleemosynary [charitable] and private corporation,” the mission of which the state could not simply reorient. This was a great boon to corporations, which states were now creating for all kinds of private purposes, without the need for special legislative acts, under “general incorporation” laws.
Marshall’s successor, Roger B. Taney, though he carried on Andrew Jackson’s “war” against the Bank of the United States, also recognized the legal rights of corporations. The Taney Court held, for example, that corporations could sue in federal courts under Article III’s grant of jurisdiction in suits between “citizens of different states.” They did not, however, have all of the “privileges and immunities” of citizens that are protected in Article IV. The Court also assumed that corporations chartered in other states (“foreign” corporations) could do business in any state that did not explicitly prohibit them.