I guess I can understand that a corporation does do the things the column says like buy and sell property, hire and fire, sue and be sued, etc. However, it seems a stretch to me to think that it requires personhood for a coporation to be able to do those things.
Would things really be so different if corporations were stripped of rights and personhood? It may be that it would have a big impact on specific things that pertain to a corporations’s personhood, but in general, why would it make much of a difference?
I would imagine that the language of business may stay the same, but the details would be different. For example, on the subject of suing, we could still say Corp X is being sued by John Doe, and Corp X countersues John Doe. Right now, we mean that the entity Corp X is suing and being sued. However, without personhood, could we simply make the clarification that Corp X refers to those in charge of it, like the CEO and the Board of Directors?
When I drive my car and it hit someone, the law does not say that my car is being sued by the injured driver. It says that me, the owner and operator of the car, is being sued. Why can we not simply fault those in charge of the corporation for its wrongdoings? If a corporation is guilty of, say, violating environmental laws, why cant we take that money for the fine out of both the corporation’s profits, and the pockets of its CEO? When a corporation is found guilty of sexual harassment, why not fire the person actually doing the harassing instead of fining the entire corporation AND anyone responsible for the actual harassment? Millions of dollars for faulty and dangerous products? Why cant we throw the Board of Directors, who knew about it, in jail in addition to taking their money?
I realize that some of these answers will invariably be “Because these people are in charge and they dont want it that way”. I dont want to go down that path, I simply want to know if there is some reason outside of the seemingly accidental landmark Supreme Court case that says we cannot treat the owners and operators of a corporation as the party of litigation.
Because without corporate personhood, corporations wouldn’t exist. If the owners or even the officers of a company had full liability for the company’s actions, most people wouldn’t invest or become officers of a company.
For instance, General Motors just went bankrupt. Since General Motors is a person under the law…since it’s a separate entity, it’s responsible for all the debts it accrued. Take that away, and the stockholders become responsible for all the debts General Motors accrued. Would you ever buy stock in a company like GM if you knew that you’d be responsible for any debts that it accrued?
You don’t necessarily need personhood to do those things, but you do need to have an individual legal identity. X Corp can buy property only if you can uniquely define X Corp, in a legal sense.
In terms of being sued, Captain Amazing had it right, corporations would not exist if they didn’t have this separate legal identity. It’s not even so much that they would cease to exist, but the separate identity, the separation of liability, is a huge part of the corporation concept. Would anyone with brains write a check and put their personal money into a business venture that someone else ran, if they could be personally sued over his decisions, and lose far more than they invested?
All of the answers given so far are good, but they don’t address the issue in the linked column - should corporations have the same status as natural persons for the purposes of constitutional provisions, such as the 14th Amendment?
After all, it would be possible to provide in statute that a corporation has the same attributes of personhood necessary to own property, to sue and be sued, and to have limited liability for its shareholders, without going so far as to say that it has all the attributes of a natural person, including status as a person for constitutional purposes.
It would be possible to amend laws like legal liability and bankruptcy to have non-person corporations retain their separate nature from the shareholders.
However, that’s the point of personhood for a corporation - you don’t have to rewrite half the laws and precedents in the nation to include corporations. Corporations are automatically assumed to have every law apply to them just like those laws apply to individuals.
It is worth pointing out that some laws refer to natural persons which means there is a legal way to exclude corporations from protection.
While the OP begins by citing a Cecil column, he is seeking debate about corporate personhood. Therefore, I’ll move this thread from General Questions to Great Debates.
Thanks for the responses. I’ve just been finding it difficult lately to mesh what I know about persons and civil rights with the personhood concept. I believe the two can co-exist without counting corporations as a legal entity with its own rights. Granted, I’m not a lawyer, so I haven’t thought about the details, but I’ll respond to the issues posed with how I see this non-personhood thing working out
Isn’t that how a smaller company works? The CEO of McDonalds might not have personal responsibility when it comes to his food poisoning people, but if I ran a small restaurant and my food becomes tainted and someone gets sick, they can sue me personally. I don’t see why, with the promise of vast riches, someone wouldn’t desire to run some small risk for a large gain. Basically what I am saying is that people take large risks for large gain all the time, it doesn’t seem like this corporation personhood thing should be any different.
That brings up an interesting question: How big does your small mom-and-pop store have to be in order to be granted personhood as a corporation? At what point (profits, # of employees, etc.) can I be free from the liability of what my store does?
If I could clarify, I would never have the stockholders be subject to any liability. They are blameless, I feel. My proposition mainly has the executives in charge of the company with direct decision-making powers be culpable. If a CEO decided that it wasn’t cost effective to put in some safety measures, for example, I wouldn’t hit the CFO or the Board of Directors with any responsibility. If the CEO’s responsible, then I would treat it just as if he personally ordered unsafe measures to be taken, resulting in the subsequent injury. Taking away personhood for a corporation does not have to mean that any of the stockholders would be liable. In your example, using my rules, the money earned by the CEO and the decision-makers since being hired would be subject to confiscation by the bankruptcy courts just as if any one of us filed for bankruptcy; our assets would be vulnerable. For labor’s protection’s sake, lets limit it to only the money and assets earned since these persons became in charge of GM. All of the money they earned since would be subject to seizure. I don’t see why that would require a great deal of change in our existing laws nor do I see why it would deter future applicants to GM’s top positions. I would imagine it would make them more responsible owners
What if we modified liability to the, I believe, more fair rules above? First, an investor or shareholder is never liable, the rules for that would remain unchanged as now. However, those in charge, the upper echelon management, would be liable up to the point where they began their jobs. No assets accrued before their hiring would be touched, but if they took over GM and it went bankrupt, they would be liable for repossession all of the money they earned since they were hired at GM. Wouldn’t that make it more fair? I mean, if I declared bankruptcy tomorrow, anything I earned in my life (subject to exceptions like retirement) is up for grabs. I dont get the right to keep my car if I cant pay for it, so why should GM’s execs get to keep the money they earned if they ran that company to the ground?
I dont want to say you guys are being cynical…but I dont know how to end that sentence :dubious: I think such rule changes would usher in more responsible and honest management. People would make their products safe, they wouldn’t cut corners, they would follow the law and not try to exploit loopholes. The only way that couldn’t work is if one believed that all companies did this and could not make a profit doing business honestly. I happen to believe otherwise. And if not, so what? If businesses couldn’t survive without being honest, then they shouldnt survive as they are.
In this case I would say that it is much easier and much defensible to simply say that the writers of the NYT had first amendment rights. The “paper” itself doesnt need rights because it doesnt write anything. Actual humans with actual rights create the articles that are published within the pages of the NYT. I would be baffled to hear anyone suggest why that is impossible and harder.
No point. You just have to incorporate. It doesn`t matter if one person owns the corporation, 10 people do, or if another company does.
Why would you hold the manager of a corporation liable instead of its owners? They’re the ones who own it. He’s just doing their work for them. Could I form a bunch of corporations dedicated to doing dastardly evil things and hire of a bunch of unwitting officers to carry out my nefarious misdeeds?
For what it’s worth, I do lots of things in the name of my corporation for which I’d be held personally accountable. For instance, every tax return I sign. I can’t say “yeah, it was willfully dishonest, but it’s the corporation’s corporate return not mine so nyaaa!”
The writers don’t own the printing presses. If the corporation doesn’t have First Amendment rights, I think this necessarily means that the NYT, as a newspaper, could be ordered to cease production by the Government.
Or, on a different tack, if MoveOn or the NRA do not have First Amendment rights, the Government could ban their advertisements.
YogSosoth, the answers to your questions are really the meat of a whole college course on corporate law.
Fundamentally, you’re right that things could still be made to work if corporations were not treated as persons. You’d just have to modify every single law in every jurisdiction to explain how it affects people vs. corporations. That adds a lot of extra words without adding much extra meaning because we’d still want to preserve most of the rights and capabilities of corporations as persons.
When it comes to the issue of personal liability vs. corporate liability, it’s a hugely complicated issue that real law suits are fought over every day. Right now, there is a lawsuit by the former shareholders of WaMu against the former executives of WaMu, alleging breach of fiduciary duty to the shareholders and seeking damages. (This is, in effect what you argue should happen to GM execs).
The bottom line is that the employees of a corporation act as its agents, and have a fiduciary responsibility to the shareholders. Agency laws generally hold the agent harmless when acting on behalf of the principal - this is true whether we’re talking about a corporation-officer relationships, a lawyer-client relationship or a trustee-beneficiary relationship. Agents get a great deal of protection - you have to prove not just that they screwed up, but that they intended to screw up (gross negligence or fraud), or should have known they were screwing up (simple negligence). Fiduciary duty is much the same - the responsibility is to look out for the best interests of the shareholders, but there’s no expectation of perfection. Mistakes are fine as long as they’re something a reasonable person would have done in the same situation.
As with personhood, tapping into existing agency and fiduciary duty rules means that corporations benefit from existing law and existing precedents. They know how their relationships in the corporation work because it’s just like other relationships they’ve already experienced.
If it helps, think of it like biological evolution. Wouldn’t it be better if dolphins could breathe water? Sure it would… but proto-dolphins only had lungs to work with. It was easier to make incremental adaptations to the existing lungs than to scrap lungs and create gills from scratch.
A corporation is a legal entity. It has nothing to do with size. You can have a corporation that’s very small. Alternatively, you can have a really large company that’s not a corporation.
And officers of corporations are already liable for things that they do. Just ask Ken Lay or Jeffrey Skilling if the fact that Enron was a corporation meant that they weren’t legally liable for its actions.
And under certain circumstances, corporate officers are civilly liable. It’s called the responsible corporate officer doctrine. If an officer has the ability to correct a health, safety, or environmental violation and doesn’t, he’s liable for that violation, or if he breaks criminal or civil law, he’s liable for that.
If you want a case where corporate officers were found liable, check out most recently, the Scrushy decision. Richard Scrushy was the CEO of HealthSouth Corporation, which owns hospitals and rehabilitation centers across the country. When Scrushy was CEO, he falsified all sorts of profit statements, and he was sued by stockholders, and just a month ago, he was found liable for $2.97 billion.
By entering into ever larger corporations, we create collectives richer than any one man. But by calling them persons, we create “persons” richer than any one man: immortal supermen that trump individuals. Sure, that’s what a state is, or a church; but ideally, the church & the state stand for more than “enrich the shareholders.” And then, somehow, we’re putting those ersatz persons under the control of other persons, who act as brain & nervous system for the corporation–yet appear to deny that they are fully responsible for those decisions.
I submit that corporations may have gained the sociological significance of religion itself. They define an apparent norm of proper collective action, which is now seen as a model for politics in some quarters. They act in the name of a superhuman person unseen by human eyes. Are they just enterprises, or are they false gods?
The least we should do is hold executives responsible for the decisions they make with the shareholders’ money & the workers’ industry.
Well, we do. If an executive breaks the law, he can be sent to prison. If he acts against the interests of the shareholders and board of directors, he can be kicked out.
Not that I disagree with your point but just to nit pick your analogy, dolphins are warm blooded, and IIRC water isn’t oxygen rich enough to meet the needs of a warm blooded metabolism . It’d need to be something like 20x oxygen richer.
Only in theory. The exec has many layers between him and the actually illegal actions they permit. They generally plead like the army does, that it was rogue privates who did it.
The board of directors are interlocking. They are execs themselves and are friends and colleagues. They do not police the execs.
The shareholders do not vote out anybody. it does not happen. Major corporation have thousands and thousands of stockholders who have no idea of the internal management of the corp. They are scattered around the world. The only ones that show up are those with huge portfolios. But proxy statements give the incumbents huge power.
