3 of 3 DOCUMENTS

Copyright © Tulane University 1987.
Tulane Law Review

February, 1987

61 Tul. L. Rev. 563

LENGTH: 19639 words

ARTICLE: THE CORPORATION IS A PERSON: THE LANGUAGE OF A LEGAL FICTION.

NAME: SANFORD A. SCHANE *

BIO: 

* Professor of Linguistics, University of California, San Diego. B.A., 1958, Wayne State University; M.A., 1962, University of Michigan; Ph.D., 1965, Massachusetts Institute of Technology; Liberal Arts Fellow 1985, Harvard Law School.  I am grateful to Morton J. Horwitz for discussion on some of the issues raised in this paper.

 SUMMARY:
  ...  In the nineteenth century, particularly in France and in Germany, there was a flourish of interest in the nature of corporate personality -- or what the French call la personalite morale. ...  The Court's hybrid proposal, encompassing elements of both the group theory and the person theory, turned out to be not only the strangest twist in this story of diversity of citizenship, but also one of the most bizarre legal fictions in the history of the Court. ... It is true that in an ideal world where all of the shareholders are citizens of the state in which the corporation is incorporated, one would not need to look into the citizenship of each individual shareholder in order to see whether there was diversity of citizenship. ...  Machen notes: "If you can imagine that a corporate entity is a person, you can also imagine that this person has a mind. ... A metaphorical interpretation is also possible when a physiological verb occurs with an institutional noun. ...  First, a singular collective noun can trigger either singular or plural number agreement depending on whether it refers to the group or to its members, but an institutional noun does not allow dual number; it denotes uniquely the corporate entity. ...  

 TEXT:
 [*563]  The law allows corporations to do some of the things that people do.  They may enter into contracts, buy and sell land, commit torts, sue and be sued.  Other rights and liabilities are denied.  Corporations cannot hold public office, vote in elections, or spend the night in jail.  In spite of evident differences between a corporation and a flesh-and-blood human, there are sufficient similarities for the law to treat the corporation as a person.  n1 The word "person" as used in a statute will usually be construed to include corporations, so long as such an interpretation fits within the general design and intent of the act.  n2 The edification of the corporation to the status of person is one of the most enduring institutions of the law and one of the most widely accepted legal fictions.
The hypostatization of the corporation is by no means a recent innovation.  As early as 1444, it was asserted in the Rolls of Parliament that "they [the Master and Brethren of the Hospital] by that same name mowe be persones able to purchase Londez and Tenementz of all manere persones."  n3 Three centuries  [*564]  later, Blackstone gave the following definition of legal persons: "Natural persons are such as the God of nature formed us; artificial are such as are created and devised by human laws for the purposes of society and government, which are called corporations or bodies politic."  n4 In the nineteenth century, particularly in France and in Germany, there was a flourish of interest in the nature of corporate personality -- or what the French call la personalite morale.  n5 Although British and American jurists showed remarkably little concern for these metaphysical discussions, American law did not entirely escape the effects of the philosophical issues.  On more than one occasion, the Supreme Court has had to determine whether, within the meaning of the Constitution, the terms "person" and "citizen" apply to corporations.  n6
In this Paper, I examine the philosophical background, some of the major constitutional controversies, and the linguistic basis of treating the corporation as a person.  First, I present three views of corporate personality -- what I shall call the creature, the group, and the person theories.  These treat the corporation as an artificial entity, as an aggregate of persons, and as a real entity, respectively.  Then, I look briefly at these theories in relation to the growth of American corporations.  Next, I consider the Supreme Court's confrontations with the constitutional issues surrounding the interpretation of the words "person" and "citizen." By analyzing the language of the opinions, I argue for the Court's espousal of particular viewpoints on the nature of corporate personality.  Finally, I turn to the linguistic grounds for the dictum: The Corporation is a Person.  This expression is  [*565]  not a mere metaphor for the sole convenience of the law.  I demonstrate that it is normal linguistic usage to talk about institutions (such as corporations) as if they are persons.  The law has cleverly managed to exploit this important aspect of language.
 
I.  THEORIES OF CORPORATE PERSONALITY
The word "corporation," derived from the Latin corporatus, made into a body, designates a body of men joined together for a common purpose.  Does this body have rights distinct from those of the individuals composing it?  The philosophical implications of this question occupied the minds of German and French jurists throughout the nineteenth century.  n7 Three different theories were to evolve.  n8
Savigny, in Germany, was the principal proponent of the creature theory.  n9 His ideas stem from a belief in the individualistic nature of the person.  According to Savigny, a human being, as a conscious and willing entity, by his very existence possesses certain inalienable rights.  The law confirms this unique status of the individual.  Legal relations, at the most fundamental level, take place between one person and another.  Now, individuals may enter into an association, but the resulting group has no independent existence on its own, and unlike a natural person, it has no preexisting rights.  Only in contemplation of the law does it become a legal entity -- a persona ficta, an artificial, moral, or juristic person.  It is commonly referred to as invisible and intangible -- without body and without soul.  n10 The concession theory represents a variant of this view.  The right to incorporate is seen as a special privilege granted by the sovereign.  Accordingly, the corporation exists only as a creation of the state.  Whatever powers  [*566]  it has are strictly limited to those spelled out in its charter, and if it acts beyond its legal competence those acts are ultra vires and therefore void.
The assumption that the corporation as a legal person is an artificial entity -- a creature that emanates uniquely from the state -- conflicts with two other notions: first, man as an independent being has the natural right to join freely with other persons and to form associations; second, these associations take on a cohesion and an existence of their own.  n11 The first objection constitutes the main argument behind the group theory.  The second forms the foundation for the person theory.
The group theory had as its chief advocates, Ihering in Germany and Vareilles-Sommieres in France.  n12 Like the creature theory, it recognizes human beings as the original bearers of rights.  Among them is the right to join together and to do business under an assumed name.  But the ensuing business enterprise thereby does not become a separate entity to be treated as a legal person.  The group theory holds that although it may be convenient to speak of the rights of a corporation and therefore to think of it as a legal unit, corporate rights, in actuality, are nothing other than those of the component members.  Persons conducting business under a corporate name are entitled to the same protection of the law that is guaranteed to them as individuals.  Consequently, a corporate name can never be the name of any artificial being; it is simply a useful label for identifying the members of the group, in much the same way that a family name serves as a cover term for the members of a family.  n13
Gierke, in Germany, was the main spokesman for the person theory.  n14 He advocated that groups are as "real" as the persons  [*567]  who form them.  He pointed out that it is an undeniable aspect of human nature for persons to join together to form groups.  Families, clans, nations, guilds, unions, corporations -- these are just a few of the kinds of associations that occur.  Both individuals and groups are natural entities within all societies, and in societal interactions there must be a trade-off between the wishes of individuals and the endeavors of groups.  Furthermore, the group is more than just an expression of the sum of its members.  It acquires a common will and pursues its own goals, and its life continues regardless of changes in membership.  The law may or may not recognize the group, but that endorsement in no way affects its reality, for it exists in its own right.  n15
Within the framework of the person theory, one may still refer to corporations as artificial persons, particularly whenever one needs to distinguish them explicitly from natural persons.  Such reference, however, should not be confused with the similar terminology of the creature theory.  Under the latter theory, the corporation is a legal person created by law. Under the person theory, the corporation is a legal person naturally, as much as any human being.
At the beginning of the nineteenth century in America, it was the creature or concession theory that dominated thinking on corporate personality.  n16 This was to change with the spectacular rise of private corporations in the latter half of the nineteenth century and the first part of the twentieth.  The new economic needs clashed with the premises of the creature theory.  There developed an increasing mistrust in the efficacy of special charters granted by the state.  They restricted the creation of new companies and interfered with corporate growth.  Worse yet, they led to corruption, political favoritism, and monopolies.  [*568]  Consequently, there arose a movement for free incorporation -- for making the corporate form available universally as a regular and normal feature of business activity.  Although free incorporation turned out to be incompatible with the concession theory, for a while it appeared that the group theory could accommodate the new economic structure.
The group theory treated corporations in terms familiar to partnership law.  After all, the corporate members had freely decided to come together to enter into agreement.  Yet there were basic conceptual problems in attempting to adjust the partnership model to corporations.  Whereas the composition of a true partnership tends to remain stable, a corporation has no such rigidity, and its membership may fluctuate constantly.  Furthermore, unlike a partnership, where the members are individually and severally responsible for the debts of the company, a corporation brings limited liability to its members.  Finally, in a partnership the members share in decision making; however, with the growth of large corporations and with the advent of stock exchanges for trading shares, shareholders have become mere investors and decision making has shifted to an elite corps of officers and directors.  The group theory, by treating the corporation as a partnership, did not effectively accommodate the special features of corporate immortality, limited liability, and distribution of power.
The person theory ultimately emerged as the most amenable to the evolving needs of American corporations.  This theory conceived of the corporation as a real entity that existed independently of its members.  Hence, the precise make-up of the membership became immaterial.  A corporation could have its own property and incur its own debts.  It was understandable, then, that the liabilities of the members were not coextensive with those of the company.  Finally, as a person, a corporation had the power to delegate responsibilities to its agents -- the officers and directors.  The person theory, in its treatment of the corporation as a bearer of rights and duties, freed corporations from those restrictive notions that were built into the creature and group theories.
These three theories of corporate personality recognize different interests of society.  The creature theory emphasizes the ultimate power of the sovereign; the group theory the contractual rights of individual persons; and the person theory the economic  [*569]  freedom of formal organizations.  However, my primary concern in this paper is not with the metaphysical underpinnings of theories of corporate personality or with the changing conceptual needs of American corporations.  I mention these philosophical and historical developments because they provide an essential background for approaching and appreciating a series of judicial events that occurred in America beginning in the nineteenth century: The highest court of the land took an interest in the nature of corporate personality and in the language used to discuss it.
 
II.  THE SUPREME COURT'S VIEWS OF CORPORATE PERSONALITY
The United States Supreme Court, on several occasions, has had to confront the thorny question of whether the corporation is a person.  n17 One set of cases concerns federal jurisdiction.  The issue in these cases is whether national courts, empowered by article III of the Constitution to handle controversies between citizens of different states, can entertain suits by or against corporations.  A second group of cases deals with the rights of foreign corporations -- in particular with the issue of whether a foreign corporation is entitled to the privileges and immunities guaranteed to citizens under article IV and to the equal protection of the laws ensured to persons under the fourteenth amendment.
In treating the jurisdictional question, the Supreme Court, from the outset, rejected the creature theory of corporate personality.  n18 At first, it adopted the group theory.  n19 When this conception of the corporation proved impractical, the court shifted to the person theory.  n20 However, this move turned out to be prematurely radical, and the Court recanted by adopting an interesting compromise position, one that embraced elements of both theories.  n21
 [*570]  In dealing with the rights of foreign corporations, the Court in the beginning held firmly to a version of the creature theory.  n22 Later, its orientation changed because of the particular constitutional issues involved.  The Court inquired into the nature of citizens and persons and into the applicability of these terms to corporations.  In order to include corporations under the rubric of "persons," the Court leaned first toward the group theory.  n23 In the end, though -- both for federal jurisdiction and for the rights of foreign corporations -- it will be the person theory that prevails.
To state, in the analysis of a case, that the Supreme Court was operating within a particular theory is not to imply that the justices explicitly and knowingly reached decisions by applying well-defined sets of principles.  In fact, at the time of most of the cases, the theories had not yet been articulated in the form that we know them today.  Nor did the discussions that were taking place in Europe seem to find their way into the opinions written by the Court.  The different theories must be understood as explanatory models useful for interpreting the Court's decisions.  They bring coherence and structure to what otherwise might be disparate events, and they provide a conceptual background against which to trace the evolution of American corporate personality.  To begin this story we turn to the jurisdictional issue.
The United States has a dual judiciary structure.  There are both federal and state courts.  The Constitution envisages that the state courts will handle most disputes.  A federal court may become the forum of adjudication either because of the subject matter of the case or because of the character of the litigants.  Article III, the judiciary article of the Constitution, sets the limits on the judicial power of the federal government.  Subject matter jurisdiction "shall extend to all Cases . . . arising under this Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority . . .,"  n24 and "to all Cases of admiralty and maritime Jurisdiction."  n25 From time to time, through Judiciary Acts,  n26 Congress has enlarged the role  [*571]  of the national courts.  It has given them exclusive jurisdiction of criminal cases arising under national law  n27 and of suits originating under patent and copyright laws.  n28 In addition, article III specifies the character of the litigating participants.  It extends the federal judicial power to:
(1) "Cases affecting Ambassadors, other public Ministers and Consuls";
(2) "Controversies to which the United States shall be a Party";
(3) "Controversies between two or more States";
(4) "[Controversies] between a State and Citizens of another State";
(5) "[Controversies] between Citizens of the same State claiming Lands under Grants of different States";
(6) "[Controversies] between a State, or the Citizens thereof, and foreign States, Citizens or Subjects"; and
(7) "[Controversies] between Citizens of different States."
 
It is this last class that is the focus of our interest.  n29
When two persons are citizens of the same state and they have a dispute that concerns a matter of state law, they must appear in a court of that state.  However, if they are citizens of different states, then a federal court may hear their case, even though the subject matter deals uniquely with state law.  The rationale behind diversity of citizenship is to enable an out-of-state litigant, who feels that he might not receive equal treatment in a state court located in the home state of his adversary, to bring the suit into the more neutral territory of a federal court.  n30 In allowing federal jurisdiction where there is diversity of citizenship, the Constitution expressly speaks of "Controversies  [*572]  . . . between Citizens of different States."  n31 It does not mention corporations.  n32 Does this language mean that the federal forum is denied where a dispute is between corporations of different states?  Is litigation involving corporations to be restricted entirely to state courts?  If an individual of one state suing a citizen of another state can turn to the impartial umbrella of the federal courts, might this same individual not be equally desirous of this protection where he, as an outsider, sues a corporation in its home state?  The Supreme Court definitely thought that the litigants in such cases were entitled to its beneficence.  Under the guise of "Controversies between Citizens of different states," the Court has managed to bring corporations through the doors of federal courtrooms.  n33
The question of federal jurisdiction in regard to corporations first came before the Supreme Court in 1809, in the celebrated case of Bank of the United States v. Deveaux.  n34 Plaintiff bank, chartered in Pennsylvania, was suing Deveaux, a tax collector for the state of Georgia, for physically removing funds from the bank in payment of taxes that the bank claimed it did not owe.  The defendant tax collector was quite happy to have the suit heard in a Georgia court.  The plaintiff, of course, had reason to prefer a federal tribunal and brought an action of trespass in the Circuit Court of the United States for the District of Georgia.  The defendant maintained that there could be no federal jurisdiction because the corporation was not a citizen of  [*573]  Pennsylvania -- nor for that matter could it be a citizen at all.  Yet the clause of article III that refers to "controversies between citizens of different states" is the only one applicable to questions of diversity of citizenship.  Whether corporations have access to national courts must hinge ultimately on the interpretation of this clause.  n35
Does the meaning of the term "citizen," as used in article III, apply to corporations?  The Court began its inquiry by looking into the nature of a corporation:
As our ideas of a corporation, its privileges and its disabilities, are derived entirely from the English books, we resort to them for aid, in ascertaining its character.  It is defined as a mere creature of the law, invisible, intangible, and incorporeal. . . .  n36
 
Through its choice of adjectives and in its direct reference to the corporation as a creature, the Court's definition fits squarely within the conceptual framework of the creature theory.  Had the Court adopted such a perspective of the corporation, then indeed, it would be difficult to see how such a lifeless, formless entity -- a creation of a state -- could ever be construed as a citizen.  The Court itself affirms this viewpoint: "That invisible, intangible, and artificial being, that mere legal entity, a corporation aggregate, is certainly not a citizen; and, consequently, cannot sue or be sued in the courts of the United States. . . ."  n37 Had the Court gone no further, the issue might have been permanently settled, and corporations would have been barred forever from the national courts.  But the Supreme Court had no intention of so depriving corporations.
The creature theory, in treating the corporation as a non persona and in denying that it could ever be a citizen, was totally inadequate for sustaining any argument for the admission  [*574]  of corporations into federal courts.  The Supreme Court needed to find support for jurisdiction in some other conception of the corporation.  The Court shifted its view from the corporation itself, and instead focused on its constituent members.  This set the stage for an interpretation of citizenship compatible with the group theory: "If the corporation be considered as a mere faculty, and not as a company of individuals, who, in transacting their joint concerns, may use a legal name, they must be excluded from the Courts of the union."  n38 The protasis of this sentence sets forth two contrasting views of a corporation: it is an entity ("a mere faculty"), but it is also a group of individuals.  What is surprising about this sentence is the unexpected appearance further on of the pronoun "they." Notice the impact of this plural pronoun, whose antecedent can only be the noun "individuals." The Court hints at the lamentable plight of these individuals should they be denied federal jurisdiction.  Observe how different the force of the statement would have been, had the Court used the pronoun "it," in which case "corporation" would have been the antecedent.  Would an impersonal corporation warrant similar humane consideration?
The Court went on to develop more fully the group perspective:
[A corporate] name, indeed, cannot be an alien or a citizen; but the persons whom it represents may be the one or the other; and the controversy is, in fact and in law, between those persons suing in their corporate character . . . and the individual against whom the suit may be instituted.  n39
 
By looking beyond the corporate name, one lifts the corporate veil and sees beneath it the true members of the corporation.  It is they who are entitled to the Court's protection.
The group theory was sufficient to bring corporations within the diversity of citizenship requirement of article III: The members, who are real persons -- and not the corporation -- qualify as citizens.  The interests of the corporation become instead the interests of its members; consequently, the latter cannot be deprived of their constitutional right of access to federal courts simply because they choose to band together to conduct their  [*575]  business under a corporate name.  n40 At this point in history, the Court had no need to go further, and certainly it was not yet prepared to embrace the person theory -- to recognize any claim that the corporation itself might qualify as a bona fide citizen.  Citizens, after all, could only be real persons.  This view appears among the summary statements: "For the term citizen ought to be understood as it is used in the constitution, and as it is used in other laws.  That is, to describe the real persons who come into court, in this case, under their corporate name."  n41
The Deveaux decision established a diversity procedure for corporations.  In order to determine whether there was indeed diversity of citizenship, there had to be a proper averment in the record.  An averment in this situation constituted an allegation about the character of the litigating parties.  Where a litigant was a corporation, a sufficient averment required not only mention of the corporate name, but, more importantly, also a declaration concerning the citizenship of the shareholders of the company.  One would look to the shareholders -- the members of the corporation.  If their state citizenship was different from that of the other party to the suit, then the requisite diversity was met.  This procedure had to be applied in conjunction with a rule established three years earlier, in 1806, in the case of Strawbridge v. Curtiss.  n42 The Strawbridge principle -- still valid today -- governs diversity whenever either party consists of several persons.  It requires that there be no overlap of citizenship -- that is, none of the essential parties on one side of the suit may have the same state citizenship as any one on the other side.  In other words, the citizenships of the members of the groups must constitute disjoint sets.  Such a requirement, when applied to corporations, would work well enough for local companies where the shareholders are either all residents of the same state, or if not, then at least of just a few states.  It would work against any large national corporation having shareholders from virtually every state.  In the latter situation, the corporation would in effect be barred from the federal courts, for whenever just one of its multitude of stockholders happened to share state citizenship with anyone from the opposing side, diversity would be defeated.
 [*576]  The Supreme Court, in 1844, confronted this special situation in the case of Louisville, Cincinnati & Charleston Railroad Co. v. Letson.  n43 Letson, a citizen of New York, brought suit for breach of contract against the railroad company in the federal circuit court for the district of South Carolina.  Defendant railroad, in an endeavor to extricate itself from federal jurisdiction, contended that not all of its shareholders were citizens of South Carolina.  Two of them were citizens of North Carolina.  Worse yet, one of the shareholders was a banking corporation and two of its shareholders were from New York, Letson's home state.  As a consequence of the Deveaux ruling, it appeared that the plaintiff and two of the true defendants were citizens of New York.  According to the Strawbridge principle, this situation produced overlap of citizenship, and ipso facto, lack of complete diversity.  The dilemma here is that some of the shareholders had citizenship that warranted the exercise of federal jurisdiction because of diversity of citizenship, while others had citizenship that militated against it.  The Court clearly favored the former group: "[I]f it be right to look to the members to ascertain whether there be jurisdiction or not, the want of appropriate citizenship in some of them to sustain jurisdiction, cannot take it away, when there are other members who are citizens, with the necessary residence to maintain it."  n44 Once again, the Court was anxious to allow diversity of citizenship for corporations.
The group theory of the corporation, as embodied in Deveaux, was decidedly unsuitable for admitting federal jurisdiction in cases such as Letson. Corporate citizenship needed to be established on an entirely different basis.  The Supreme Court, in an astonishing act of verbal legerdemain, conjured up a new ruling, one in accord with the person theory:
A corporation created by a state . . . though it may have members out of the state, seems to us to be a person, though an artificial one, inhabiting and belonging to that state, and therefore entitled, for the purpose of suing and being sued, to be deemed a citizen of that state.  n45
 
Further along in the opinion, the Court reiterated this view: "[A] corporation created by and doing business in a particular  [*577]  state, is to be deemed to all intents and purposes as a person, although an artificial person . . . capable of being treated as a citizen of that state, as much as a natural person."  n46 The language here is remarkably different from that in Deveaux, where the Supreme Court, in rejecting the creature theory, at first had characterized the corporation in terms drawn from that theory.  The corporation was referred to in Deveaux as an "artificial being," as a "mere legal entity," as a "creature of the law," and as "invisible," "intangible," and "incorporeal."  n47 In Letson, it was different.  The corporation had been explicitly called a person.  To be exact, it was an "artificial" person, distinguishable from a "natural" person, a human being.  n48 The distinction, of course, is acknowledged within the person theory.  Yet, in spite of this contrast between artificial and natural, it is essential to note that the Court has referred to both entities -- the corporation and the human being -- as persons.  Through the medium of a common label, corporations and people are rendered similar to each other.  This linguistic ploy enables one to speak of the former but to treat it as though it were the latter.
In what way then is a corporation like a person?  The Court's reason for establishing corporate personhood rests on a somewhat curious notion of habitancy.  A corporation that has been created and is doing business in a state resembles an individual born and living there; it belongs to and inhabits that state.  It seems to be a person simply by virtue of residency.  Because residency is generally an important criterion for establishing state citizenship in persons, that notion constitutes a crucial link in the Court's argument.  From the premises that a corporation is a kind of person, that it is a resident of a state, and that residency governs citizenship for persons, the conclusion about citizenship for corporations must follow.  But the Court in Letson did not merely suggest that a corporation can be or should be a citizen.  It took a more aggressive stand.  The Court decreed that a corporation shall be a citizen.
It is the word "deemed" that effects this transformation, a word drawn from the special class of verbs known as performative or illocutionary.  An illocutionary act is one where a speaker,  [*578]  by using a performative verb, creates the state denoted by that word.  n49 For instance, in asserting "I promise to send you the money," I commit myself now to a future obligation of payment; my utterance of the performative verb "promise" constitutes, at that moment, an act of promising.  Similarly, a duly authorized clergy person or justice of the peace who says, in the appropriate circumstances, "I pronounce you man and wife," creates the marital state by making this pronouncement.  In a like manner, the Supreme Court, in declaring that it deemed a corporation to be a citizen, by its use of this word, brought to fruition the new legal status so described.
This illocutionary act on the part of the Court simultaneously bestowed on corporations both personhood and citizenship.  Note that both attributes are essential.  It would have accomplished nothing had the Supreme Court declared corporations to be persons, but not citizens.  Article III of the Constitution explicitly mentions "controversies between citizens of different states," not persons from different states.  But in order for a corporation to be a citizen, it must first be considered a person, for the notions of person and of resident are necessary conditions for the Court's interpretation of citizen.  Furthermore, the common term "person" conveniently blurs some of the differences between corporations and human beings.  Once the corporation, through residency, has been recognized as a person, albeit an artificial one, it is then "capable of being treated as a citizen . . . as much as a[ny] natural person."  n50 This indeed is language indicative of the person theory.
Even though the Letson case, decided nearly forty years after Deveaux, was a triumph for the person theory, the notion that a corporation is a citizen did not sit comfortably with all the brethren of the Supreme Court.  Three dissenters, in three cases, questioned how it was possible for a corporation to be deemed a citizen when the meaning of the word "citizen" had always been understood quite differently in the Constitution.  n51  [*579]  Mr. Justice Daniel attacked the very premise that had led to corporate citizenship in the Letson decision.
[A]lthough citizenship implies the right of residence, the latter by no means implies citizenship. . . .  [T]he Constitution does not provide that those who may be treated as citizens, may sue or be sued, but that the jurisdiction shall be limited to citizens only; citizens in right and in fact.  n52
 
Daniel, like a good semanticist, pointed out that residence and citizenship were not reciprocal relations: from the presence of the former one could not deduce the existence of the latter.  To do so would be both bad logic and a juristic sham.  He went on to suggest that if the Court were indeed serious in treating a corporation as a citizen, then "it must be so treated to all intents and purposes. . . ."  n53 As a citizen, it should be able to hold public office and even to "aspire to the Office of President of the United States."  n54 There was no doubt in Daniel's mind about the identity of citizens.  They were, above all else, human beings.  n55
The Letson decision turned out to be an embarassment for the Supreme Court.  So brazen an application of the person theory was unduly premature.  Its method for establishing diversity of citizenship was to have a life span of just ten years.  In 1853, the Court repudiated the idea of the corporation as a citizen, and in its stead put forward an odd compromise position.  If the decision of Letson had been bold, the newer one was, in some sense, more radical.
The case of Marshall v. Baltimore & Ohio Railroad Co.  n56 is interesting not only because it established an unusual procedure for diversity of citizenship, but also because it portrays one of the Court's rare philosophical forays into the nature of corporate personality.  The Court's amusing observations concerning the creature theory and the power of words are worthy of note:
'A corporation, it is said, is an artificial person, a mere legal entity, invisible and intangible.'
 [*580]  This is no doubt metaphysically true in a certain sense.  The inference, also, that such an artificial entity 'cannot be a citizen' is a logical conclusion from the premise which cannot be denied.  n57
 
The Court was wary, though, of dealings with artificial entities.
But a citizen who has made a contract, and has a 'controversy' with a corporation . . . did not deal with a mere metaphysical abstraction, but with natural persons . . .  It is not reasonable that those who deal with such persons should be deprived of a valuable privilege by a syllogism or rather sophism, which deals subtly with words and names, without regard to the things or persons they are used to represent.  n58
 
The Court made it abundantly clear that it intended to play no metaphysical word games.  Yet it expressed no doubt that corporations came under the provisions of article III, and in order to ensure them continuing access to the federal forum, the Court found a new method for determining citizenship.  The Court's hybrid proposal, encompassing elements of both the group theory and the person theory, turned out to be not only the strangest twist in this story of diversity of citizenship, but also one of the most bizarre legal fictions in the history of the Court.
The Marshall case involved a Virginian who was suing the railroad, a Maryland corporation, for fees allegedly owed him for services in obtaining a right-of-way through Virginia.  He brought suit in a United States Circuit Court in Maryland.  In the averment in the record, the defendant railroad was described as a "body corporate by an act of the General Assembly of Maryland."  n59 It had been objected that this averment was insufficient to show jurisdiction in the federal courts.  The Supreme Court found the averment to be adequate, in spite of the fact that similar ones previously had been declared insufficient.  Unlike Deveaux, the averment in Marshall no longer mentioned the citizenship of the corporate members; instead, it attested to the place of incorporation. From this information, the Court, in a most curious manner, was to deduce the citizenship of the shareholders: "The persons who act . . . and use [the] corporate name, may be justly presumed to be resident in the State which  [*581]  is the necessary habitat of the corporation . . . and should be estopped . . . from averring a different domicil. . . ."  n60
It is true that in an ideal world where all of the shareholders are citizens of the state in which the corporation is incorporated, one would not need to look into the citizenship of each individual shareholder in order to see whether there was diversity of citizenship.  It would suffice merely to ascertain the place of incorporation, for example, by an averment to that effect.  From such a declaration one could infer that all of the shareholders were citizens of that place.  However, such a presumption about the citizenship of shareholders can withstand rigid scrutiny only in this ideal situation, where all of them are in actuality citizens of the state of incorporation.  What about the not-so-ideal cases?  What happens where there are shareholders from states other than the incorporating one? The Supreme Court dauntlessly proclaimed that, even in those cases, the presumption was not to be challenged.
The law has two kinds of presumptions -- rebuttable and conclusive.  A rebuttable presumption in law is like an hypothesis in science; it is a proposal that either finds support or else may be rejected, in accordance with the facts or the data.  However, there is a significant flaw in the analogy between legal presumptions and scientific hypotheses.  The law, unlike science, allows for conclusive presumptions -- presumptions that are not rebuttable, irrespective of the "true" nature of the facts.  The conclusive presumption enunciated in the Marshall case has as its consequence that the shareholders will be estopped from ever averring that some of them are citizens of a different state.  A conclusive presumption, of course, could very well be true.  For example, all of the shareholders might, in reality, be citizens of the state of incorporation.  It is important to note, though, that the law tends to resort to conclusive presumptions precisely in those cases where the facts are known to be false.  n61
The Court's embracing of a legal fiction in order to establish corporate citizenship expresses both its conviction that corporations indeed have the rights of citizens and, at the same time, its  [*582]  reluctance to attribute citizenship directly to them."  n62 Notice why I characterize the Marshall approach to citizenship as a hybrid of the person and group theories of the corporation.  First, one looks to the place of incorporation, thereby obtaining (although the Supreme Court does not admit to this) the citizenship of the corporation.  In this way the corporation is treated as a person.  However, because it is an artificial person, it lacks certain rights guaranteed to real citizens.  Next, from the corporate citizenship, one deduces, by conclusive presumption, the citizenship of its members.  Through this presumption, the corporation is considered as a group of individuals.  As natural persons, they are entitled to the constitutional protection that could not be given directly to the corporate citizen.
The Letson and Marshall cases share an important feature: The place of incorporation has become the decisive determinant of citizenship.  In the former case, the corporation itself was deemed a citizen of the state of incorporation; in the latter, all the shareholders were presumed to be citizens of that state.  In both instances, one looks to the place of incorporation, and if it is different from that of the other party, there is diversity.  This ruling is admirably suited for a corporation chartered in a single state, where it has its principal place of business and conducts most of its operations.  But many corporations do not fit this prototype.  A company may be incorporated in more than one state.  n63 Nor is it uncommon for a company incorporated in one  [*583]  state to maintain its headquarters, factories, and plants in some other state.  For example, there are many companies chartered in Delaware which conduct all of their business elsewhere.  Such corporations essentially reside in the other state.  Should citizens of that state be able to bring suit in a national court against, in essence, a "home" corporation?  Are citizens of the chartering state, in dealing with a corporation that, for all intents and purposes, resides elsewhere, to be denied access to federal courts?  These questions suggest that, perhaps for diversity purposes, one should look to the principal place of business of a corporation rather than to the state of its incorporation.  Or should corporations have dual citizenship, reflecting both place of incorporation and place of business activity?
In 1958, a little more than one hundred years after the Marshall decision, these problems were resolved by statute.  Section 1332, under Diversity of Citizenship, stipulates: "[A] corporation shall be deemed a citizen of any State by which it has been incorporated and of the State where it has its principal place of business. . . ."  n64 According to the interpretation of this statute, a company may be incorporated in one or more states, but it can have its main place of business in only one.  To be sure, the more states in which a corporation qualifies as a citizen, the more limited is its access to the federal courts.
Although the ruling in the Marshall case -- that the shareholders are presumed to be citizens of the state of incorporation -- still remains the official Supreme Court version for determining diversity of citizenship, nonetheless, the person theory, as it was articulated in the Letson case, in the end has triumphed.  The very language of Section 1332 attests to this vindication.  In words reminiscent of Letson, the corporation, once again, has been deemed a citizen.
Yet there was a substantial time lag between Letson and the statute in reference.  If a person theory had been rejected almost immediately after Letson, what events transpired so that this theory became more palatable?  After all, the Supreme Court, on more than one occasion, had affirmed that corporations were not citizens.  The support for a person view was to come from another area of the Constitution, and its acceptability there doubtlessly  [*584]  facilitated its penetration into the jurisdictional arena.  The focal point of this other area concerned the rights of foreign corporations.  n65 We turn to those cases.
In 1839, the Supreme Court had decided, in Bank of Augusta v. Earle,  n66 that a corporation created in one state does not have the unrestricted right to conduct business in another state.  The foreign corporation needs the host's consent.  The only exceptions were companies engaged in interstate commerce or in foreign trade, enterprises covered by the interstate commerce clause of article I.  The case of Bank of Augusta was heard thirty years after Deveaux, but before Letson. Although the Court had been willing to operate within the framework of the group theory in the Deveaux case -- maintaining that for the question of diversity of citizenship the members of a corporation had rights as citizens -- it was unwilling to extend this theory to the issue of foreign corporations.  The Court affirmed in Bank of Augusta that the privilege of individual citizens to enter into contracts within any state of the Union does not extend to the corporate entity: "Whenever a corporation makes a contract, it is the contract of the legal entity; of the artificial being created by the charter; and not the contract of the individual members.  The only rights it can claim are the rights which are given to it in that character. . . ."  n67 The notion that a corporation exists only by virtue of the state of its incorporation and that it gains its legal rights only through that act of creation is the view of the creature theory.  This theory, which had been rejected in Deveaux, was found entirely acceptable in Bank of Augusta. The Court had decided that corporations could not be kept out of federal courtrooms, but that they could be kept out of state territory.  The right to bring suit anywhere was a basic right -- one which corporations shared with individual citizens, whereas the right to conduct business within a particular state was not a privilege similarly shared.  In other words, states were free to favor local business interests.  n68
The Bank of Augusta ruling was to lay the foundation for a  [*585]  series of decisions concerning the imposition by states of special fees and taxes on foreign corporations.  The constitutional issues would turn on the privileges and immunities clause of article IV and on the equal protection clause of the fourteenth amendment.
In 1868, the case of Paul v. Virginia  n69 questioned the constitutional legality of a Virginia statute that required insurance companies not incorporated under the laws of that state to obtain a license in order to carry on business there.  Furthermore, Virginia would grant no license until the foreign corporation had deposited bonds of a designated character and amount with the state treasurer.  Domestic corporations, of course, were exonerated from this onerous imposition.  Paul, acting as agent for a New York insurance company, was convicted for want of a license.  The insurance company claimed that the Virginia statute, because of its discriminatory provisions against foreign corporations, violated the clause of article IV of the Constitution which asserts that "[t]he Citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the several States."  n70 In words still echoing the creature theory, the Court emphatically announced, in a unanimous decision, that corporations were not citizens within the meaning of that clause: "The term citizens . . . applies only to natural persons . . . not to artificial persons created by the legislature. . . ."  n71
Once again, we find the juxtaposition of two kinds of persons -- natural and artificial.  Recall the situation in Letson, where the Court played down this distinction and, instead, capitalized on the common reference to persons.  As a consequence of this commonality, persons of either kind, being inhabitants of a place, qualified as citizens of that place.  But the juxtaposition of these same words can be utilized for a completely contrary effect.  In the present instance, the Court deliberately opposed natural persons to artificial persons created by the legislature, for the Court intended that the term "citizens" should apply only to the former class.  At this point in history, the Supreme Court was unwilling to deprive a state of its right to exclude foreign corporations.  By treating corporations as creatures of the incorporating  [*586]  state, and by denying that they could ever be citizens, one could limit their inherent rights to those granted by the original charter.
In the very same year that the Supreme Court considered the case of Paul v. Virginia, Congress ratified the fourteenth amendment.  Section one of the fourteenth amendment begins by defining citizenship: "All persons born or naturalized in the United States . . . are citizens of the United States and of the State wherein they reside."  n72 The remaining provisions of section one, in setting limits on state power, create an interesting dichotomy between citizens and persons:
No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.  n73
 
The privileges and immunities clause refers specifically to citizens, whereas the due process and equal protection clauses mention persons.  This distinction affects the treatment of aliens, for example.  They are entitled to due process and equal protection, but not necessarily to all the privileges accorded citizens.  This terminological difference also has a consequence for corporations.
Nearly twenty years after Paul v. Virginia, in 1887, the Court decided on the applicability to corporations of these provisions of the fourteenth amendment.  The case of Pembina Mining Co. v. Pennsylvania  n74 concerned a company, incorporated in Colorado, that maintained an office in Philadelphia "for the use of its officers, stockholders, agents, and employees."  n75 The Auditor General and Treasurer of Pennsylvania assessed to the corporation a tax for an office license.  The plaintiff mining company contended that the Pennsylvania tax law was in violation of the privileges and immunities clause of the fourteenth amendment, and, furthermore, argued that because domestic corporations were exempt from the tax, the State also was violating the equal protection clause.  The Court noted that the reference to  [*587]  privileges and immunities in the fourteenth amendment was similar to that of article IV.  That the latter did not apply to corporations had already been decided in Paul v. Virginia.  n76 Once again, the Court affirmed that, so far as the Constitution was concerned, corporations were not citizens: "[T]he term citizens . . . applies only to natural persons, members of the body politic owing allegiance to the State, not to artificial persons created by the legislature, and possessing only such attributes as the legislature had prescribed. . . ."  n77 It is difficult, though, to see what else the Court could have concluded in view of the definition of citizenship at the outset of section one of the fourteenth amendment.  The "born or naturalized" qualification narrowly restricts citizenship to natural persons.  Corporations were not citizens, and so the privileges and immunities clause of the fourteenth amendment does not apply to them.  Nonetheless, the Court was unwilling to leave the fate of corporations completely at the whim of the states.  Corporations already residing within a state warranted fair treatment, and the Court found a way to extend protection to them.  The equal protection and due process clauses of the fourteenth amendment refer to persons, not to citizens.  The Court was prepared to include corporations within the category of persons: "Under the designation of person there is no doubt that a private corporation is included."  n78
Did the Supreme Court, in Pembina, state unequivocally that corporations are persons?  Did it adopt, at last, the person theory of corporate personality?  The answer to both questions must be no.  Certainly, the corporation has not been deemed a person, as it had blatantly proclaimed to be in the Letson case.  The Court's language is more subtle here.  The Court stated that a private corporation is to be "included under the designation of person."  n79 But to be "included under" is by no means synonymous with "is." Next, in regard to a particular theory of corporate personality behind the Court's decision, there seems to be ambiguity.  On the one hand, by denying that corporations could be citizens, the Court reiterated the creature doctrine of Paul v. Virginia; on the other hand, by treating them as persons, the Court seemed to be moving away from that position.  However,  [*588]  this shift of perspective does not mean that the Court had to embrace the person theory; it was sufficient for the Court to adopt the less controversial group theory.  Working within this framework, the Court was able to resolve the apparent conflict in its differential application to corporations of the terms "citizen" and "person." Let us see why.
The quotation last cited  n80 must be situated in the context of the sentences that precede and follow it:
The inhibition of the amendment that no State shall deprive any person within its jurisdiction of the equal protection of the laws was designed to prevent any person or class of persons from being singled out as a special subject for discriminating and hostile legislation.  Under the designation of person there is no doubt that a private corporation is included.  Such corporations are merely associations of individuals united for a special purpose, and permitted to do business under a particular name. . . .  n81
 
The language of the last sentence -- in particular, its reference to "associations of individuals" doing business "under a particular name" -- is language of the group theory.  Notice how the provisions of the fourteenth amendment would apply to the members of the corporation.  First, consider privileges and immunities.  The Court notes that those privileges enjoyed in one's home state, unless they are based on national law, do not extend necessarily to other states.  A corporate charter constitutes such a privilege.  It enables the incorporators, as a group, to act, for certain purposes, as an individual.  This privilege is granted by the state of incorporation to real persons.  It is to be enjoyed by them within the state, and its effects do not reach beyond the home borders.  So far as the Court is concerned, this issue no longer has anything to do with the question of whether corporations themselves are citizens.  The Court's strong creature language at the outset of the case  n82 is lip service to the decision of Paul v. Virginia.
In Pembina, the Court rephrased the issues in terms of state privilege and its effects on real persons.  The Court noted that although a state has the right to regulate corporate entry  [*589]  within its boundaries, once it has recognized a corporation and the latter has complied with requirements for admission there -- such as obtaining any necessary licenses, then the state must afford it treatment equal to that of similar domestic corporations.  Why?  Because to treat the foreign corporation worse would be to single out for discriminating and hostile legislation a class of persons, that is, the corporate members.  The latter, once they have been admitted to a state and are conducting business there, have vested interests -- property, franchises, agents, employees.  Those interests, because they are the interests of real persons, merit equal protection of the laws.  It is in this way that a corporation -- viewed as an association of individuals, looked upon as a class of persons -- comes to be included under the rubric of person within the fourteenth amendment.  n83
The next stage, of course, is for the corporation itself to become a person.  This momentous step occurred in 1909 (one hundred years after Deveaux), in the case of Southern Railway Co. v. Greene.  n84 The railroad company, chartered in Virginia, had acquired an extensive network of lines in Alabama.  Subsequently, Alabama imposed on all foreign corporations authorized to operate within the state, as a condition for continuing to do business there, a franchise tax based on the amount of capital stock.  Naturally, a similar burden had not been levied on domestic corporations.  The railroad claimed that because of this discriminatory treatment, it was not receiving the equal protection of the laws, and accordingly, that the state was acting in violation  [*590]  of the fourteenth amendment.  The Supreme Court interpreted the equal protection clause to mean "equal laws, applying alike to all in the same situation"  n85 and noted that if it were indeed the case that the plaintiff railroad was a person within the jurisdiction of Alabama, then according to the fourteenth amendment it should be entitled "to stand before the law upon equal terms."  n86 The Court reached its decision on this matter with little fanfare: "That a corporation is a person, within the meaning of the Fourteenth Amendment, is no longer open to discussion."  n87 The Court observed that this issue had been decided in the Pembina case.  As support for this position, it quoted the first two sentences (but not the crucial third one) of the decision.  n88 Recall that the first sentence refers to the singling out of a "person or class of persons" for the purposes of discriminating legislation, while the second sentence provides for the inclusion of a corporation under the designation of "person."  n89 The third sentence treats corporations as mere "associations of individuals."  n90 In the absence of this important sentence, it is easy to see how the other two could be construed as applying directly to the corporation rather than to its members.  In fact, the entire tone of the Greene opinion treats the corporation as a person in its own right.  Assets, rights, and duties are attributed to the corporation itself.  It had acquired extensive property holdings in the state, it had paid taxes upon its property and on its franchises, and it was subject to the jurisdiction of the state courts.  Furthermore, throughout the opinion, the Supreme Court referred to the railroad as the "corporation plaintiff." Nowhere was there any reference to the members of the corporation.  Nor did the Court propose that the corporation was an artificial being.  The Supreme Court was clearly speaking here from the perspective of the person theory.  The Court at last had proclaimed that the corporation was a person.
We have explored the application of the different theories of corporate personality to those sections of articles III and IV and those of the fourteenth amendment that refer to citizens, as well  [*591]  as to those parts of the latter that mention persons.  n91 If, within the meaning of the Constitution, corporations are to exercise rights as citizens or as persons, then a pure creature theory must be rejected.  An artificial entity created by a state may have recognition there, but it is a non persona otherwise.
As for diversity of citizenship, the Supreme Court, from the beginning, held tenaciously to the belief that corporations were included under the provision of article III that pertains to controversies between citizens of different states.  In its interpretation of this position, the Court at different times has had to embrace different theories of corporate personality.  It operated within the group theory in the Deveaux case.  It had a brief flirtation with the person theory in the Letson case, and it took a compromise attitude in the Marshall case.  The Court's changes in theoretical orientation reflected problems concerning corporate make-up and structure: The members of a corporation frequently were not from the same state, and the state of incorporation necessarily did not coincide with the place of business activity.  Only much later -- long after corporations had been successfully construed as persons within the provisions of the fourteenth amendment -- was the person view to prevail; by statutory fiat, a corporation was deemed a citizen of any state of incorporation and of its principal place of business.  Although this view has never received the official sanction of the Supreme Court, in the minds of most legal writers, jurists, and corporate lawyers, the corporation itself is a citizen of a state, and for diversity purposes one compares directly its citizenship to that of the opposing party.
As for the rights of foreign corporations, the Supreme Court  [*592]  was adamant in maintaining that corporations were definitely not citizens within the meaning of the privileges and immunities clauses of article IV and the fourteenth amendment.  The Court was unwilling to deprive states of the right to exclude foreign corporations not engaged in interstate commerce or in foreign trade.  In the cases of Bank of Augusta and of Paul v. Virginia, the creature theory was most effective in excluding corporations or their members from the category of citizens.  By denying article IV recognition to corporations, the Court could enable states to retain their exclusionary power.  Furthermore, within the fourteenth amendment, the "born or naturalized" qualification for citizenship made it nearly impossible to extend that notion to artificial persons.  On the other hand, once foreign corporations had been admitted into a state, the Court had no intention of leaving them completely at the state's mercy.  Corporations were not citizens, but, in the end, the Court was prepared to recognize them as coming under the rubric of persons within the equal protection clause of the fourteenth amendment.  In extending these guarantees to corporations, the Court in Pembina expressed its opinion within the framework of the group theory.  Later, in Greene, it turned to the person theory.
In regard to both diversity of citizenship and rights of foreign corporations, it is the person theory of corporate personality that ultimately holds sway: the corporation has been deemed a citizen in the former situation, and it has been declared a person in the latter.
 
III.  A LINGUISTIC ANALYSIS OF CORPORATE PERSONALITY
What makes the thesis that "the corporation is a person" so attractive, in spite of the fact that everyone knows that corporations are not people?  n92 Is this maxim a mere metaphor, a convenient legal fiction that enables the law, for particular purposes, to treat corporations in ways similar to persons?  Assuming that the law is in need of a class that includes both humans and corporations, is "person" the appropriate term?  Would "legal" subject or some analogous expression be less  [*593]  loaded?
The American philosopher John Dewey, in discussing corporate personality, expounded his expected pragmatic position in this war of the words.  n93 He argued that the conception of person is a purely legal notion.  It signifies whatever the law chooses to make it signify.  Dewey's elaboration of this point and an analogy he drew are worth quoting:
In saying that "person" might legally mean whatever the law makes it mean, I am trying to say that "person" might be used simply as a synonym for a right-and-duty-bearing unit.  Any such unit would be a person; such a statement . . . would convey no implications, except that the unit has those rights and duties which the courts find it to have.  What "person" signifies in popular speech, or in psychology, or in philosophy or morals, would be as irrelevant . . . as it would be to argue that because a wine is called "dry," it has the properties of dry solids. . . .  Obviously, "dry" as applied to a particular wine has the kind of meaning, and only the kind of meaning, which it has when applied to the class of beverages in general.  Why should not the same sort of thing hold of the use of "person" in law?  n94
What matters for Dewey is that the law requires the notion of a right-and-duty-bearing unit -- one that includes both human beings and corporations.  If the law uses the word "person" to describe that entity, this use does not imply any necessary connection, metaphorical or otherwise, between natural persons and institutions.  One could call this right-and-duty-bearing unit a robot, a table, or anything else.  The law had need of a concept for which no word previously existed, and so it chose an existing word to fill a gap in the lexicon.
As an example of this linguistic process, consider the word "leg" in the expressions "leg of a triangle" and "leg of a table." Here, an anatomical term has been extended to concepts pertaining to mathematics and to furniture, respectively.  Although there is doubtless a metaphorical origin in these other senses of "leg" -- after all, there is vertical extension and support of some structure -- nonetheless, the new meanings filled previous gaps in vocabulary, and today they have virtually nothing to do with  [*594]  anatomy.  The independence of the meanings is confirmed through language use.  Thus, a hosiery manufacturer, aiming his advertising campaign to an audience interested in legs, is not intentionally directing his message to mathematicians or to furniture dealers.  The circumstances under which there would be overlap between the different senses of "leg" are rare indeed, if not nonexistent.
Dewey would maintain that there is an analogous situation for the word "person" -- that is, its meaning of a legal person covers a completely separate domain from that of its ordinary, everyday reference to humans.  But such a claim is not borne out by the use of this word within the law.  Corporations can do many of the things that real persons do, and statutes originally intended for the latter to apply to the former as well.  Furthermore, the United States Supreme Court must have been sufficiently impressed by the striking similarity between the rights and duties of corporations and those of real persons to have pondered painfully over the interpretations of the words "person" and "citizen" within the Constitution.  In denying that there is any connection between the two senses of person -- the ordinary and the legal -- Dewey fails to account for why humans and institutions bear so singular a resemblance, and why the law constantly addresses corporations in language appropriate to persons.
Dewey's position on corporate personality is completely antithetical to that of Machen.  n95 Machen writes:
When a jurist first said, "A corporation is a person," he was using a metaphor to express the truth that a corporation bears some analogy or resemblance to a person, and is to be treated in law in certain respects as if it were a person, or a rational being capable of feeling and volition.  n96
 
For Machen, the term "person" does not have its origin in an arbitrary choice of words.  The corporation is called a person, precisely because one treats it as a person.  Furthermore, as a person, it can be conceived in ways not possible, had it been referred to in some other manner.  Machen notes: "If you can imagine that a corporate entity is a person, you can also imagine  [*595]  that this person has a mind.  Consequently, corporations can be guilty of fraud, of malice, or of crimes involving a particular mental state."  n97
I believe that Machen is much closer to the mark than Dewey.  The human mind indeed does attribute shared properties to corporations and persons.  I shall argue for this view by examining the language used in talking about corporations and other types of associations.  Some of this is metaphorical language, but much of it, surprisingly, is not.  I shall demonstrate that it is normal linguistic usage -- a part of ordinary language -- to speak about institutions as though they are persons, and that this way of talking is independent of the law.  The law did not invent the linguistic imagery of the corporation as a person.  Rather, it capitalized on a natural propensity already within language.  In shaping this conception of the corporation to its own pecuiliar needs, the law doubtless has exaggerated the imagery.  Although Machen's suggestion that we can ascribe fraud, malice, and mental states to corporations may at first blush seem outrageous, his proposal appears less so once we understand how the extension of human properties to corporate bodies is woven into the very fabric of language.
To demonstrate the affinity between persons and corporations, we shall look at the way language categorizes words for human and nonhuman entities.  Nouns, of course, are the kinds of words that represent entities.  The particular nouns that will be of interest to us are divided among four classes -- mythical nouns, that refer to individual imaginary beings; human nouns, that refer to individual human beings; collective nouns, that refer to aggregates of persons; and institutional nouns, that refer to associations.  Table I contains examples of each of the types. 
Table I	
Types of Nouns	
	 	 	 	
Mythical	Human	Collective	Institutional	
mermaid	chairman	committee	corporation	
unicorn	teacher	faculty	Harvard University	
pegasus	juror	jury	Supreme Court	
angel	priest	clergy	Catholic Church	
centaur	player	team	sporting industry	
 [*596]  Our objective is to determine how language deals with nouns such as "corporation." Does it treat them as artificial entities, similar to mythical nouns?  n98 Or are they more like real persons, resembling human or collective nouns?  Or do they belong perhaps in a class by themselves?  If corporations can be described in ways appropriate to persons, is the language of such description necessarily metaphorical or might some of it be literal?  In order to answer these questions, we need to look at the kinds of relations into which the different nouns can enter.  In language, relational phenomena are expressed primarily by means of verbs and verbal expressions.  The analysis, therefore, must take into account the types of predicates that occur with the various nouns.  I shall consider two sorts of relations between nouns, as subjects of sentences, and their verbs: number agreement or singular/plural marking; and selectional restrictions, or semantic compatibility.  The examples of (1) illustrate number agreement, while those of (2) portray selectional restrictions.  Examples preceded by an asterisk are ungrammatical or semantically anomolous; those preceded by a question mark are acceptable in special contexts only.
(1) a.  The judge has reached a decision.
b.  *The judges have reached a decision.
(2) a.  *The president took place at twelve noon.
b.  *?The cows dined in the pasture.
c.  *?The dish ran away with the spoon.
 
The error in (1b) is an agreement violation, whereas the dubious examples in (2) are semantically incongruous.  Thus, in (2a), a temporal verb has been used with a noun that does not describe an event; in (2b), a verb expressing a human activity has been attributed to a nonhuman; and in (2c), an animate activity has been assigned to an inanimate noun.  n99
I shall show how an analysis of the agreement phenomena and the selectional restrictions affecting nouns and verbs can  [*597]  shed light on the linguistic treatment of institutional nouns and can enable us to see in what ways corporations are like persons.  In this analysis, the class of human nouns will provide a useful reference base for discussing the other categories.  Therefore, I begin by enumerating some of the salient characteristics of this group.
Human nouns occur in either the singular or the plural -- referring to one member of the class or to more than one; and, in the singular, they govern gender (a masculine/feminine selection) in certain pronouns.  These grammatical properties are so well known that I dare not exemplify them.  Of more immediate interest are the selectional restrictions.  For convenience, I shall divide verbs that go with human nouns into three types -- physiological, cognitive, and activity.  This tripartite division is intended to reflect some basic characteristics about humans: They are physiological beings; they have particular states of mind, and they engage in social activities.  Table II contains examples of these verbs.
Table II
Types of Verbs
 
Physiological:
    eat, sleep, run;
    dine, take a siesta, jog.
 
Cognitive:
    think, know, realize, doubt, hear, see, feel;
    announce, say, claim, ask.
 
Activity:
    read, watch TV, build a house, make a phone call;
    play chess, cook, vote.
The physiological set relates to the physical organism.  Certain verbs (for example, eat, sleep, run) describe biological functions that humans share with other denizens of the animal world.  Other verbs (for example, dine, take a siesta, jog), although referring to similar physiological acts, normally apply to humans only.  Some of these could be included in the third group (for example, dining qualifies as a social activity as well as fulfilling a biological need).  Because the categories represent broad classifications, I shall not be concerned with overlap.
The cognitive group comprises verbs expressing mental states (think, know), perceptual characteristics (hear, feel), and  [*598]  communicative functions (say, announce).  n100 The activity class is the most comprehensive of the three.  Its multitude of verbs encompasses the myriad social practices in which humans are capable of engaging.
Thus far we have set up different categories of nouns and we have established three general verb classes that relate specifically to human nouns.  The procedure now is to determine whether these verb classes are compatible with mythical, collective, and institutional nouns.  This approach will enable us to ascertain in exactly what ways language treats artificial beings, groups, and corporate bodies as bearing conceptual resemblances to real persons.  Our excursion will cover literal language, metaphor, and personification.
Mythical nouns refer to imaginary, artificial, fictitious, and metaphysical beings -- to creatures inhabiting other realms and other worlds, and to creations of the mind.  These entities have whatever properties are bestowed on them through the imagination of their creators.  For example, mermaids are females and they swim.  Angels are asexual and they fly.  Naturally, the more closely -- physiologically, mentally, and socially -- mythical beings resemble humans, the more easily one can attribute human characteristics to them.  Note that whenever verbs expressing such traits occur with mythical nouns, the verbs have literal interpretations, not metaphorical ones.  This is because mythical nouns do not denote inanimate entities.  Compare the mythical nouns of (3) with the inanimate ones of (4):
(3) a.  The dragon gobbled up the knight in shining armor.
b.  The mermaid thought she would marry the drunken sailor.
c.  The angels were misbehaving all morning.
(4) a.  The automatic teller machine gobbled up my credit card.
b.  My computer terminal thinks that it's an Apple II.
c.  My car has been misbehaving all morning.
 
In (3), the mythical entities, in the imaginary realms that they  [*599]  inhabit, can literally engage in the activities ascribed to them.  Or, to put this another way, if they were to exist in our world, they could also perform those same actions.  In (4), the nouns refer to real objects of our world, but the entities denoted are inanimate.  Because the verbs in (4) are of the type that normally occur only with animate or human nouns, the entities there become personified; consequently, the verbs of (4) have only metaphorical interpretations.
A collective noun denotes a group of persons (faculty, jury, clergy) joined together for a common purpose.  Perhaps the most interesting grammatical property concerning these nouns is that they display a peculiar kind of number agreement.  Earlier, we noted that singular nouns, as subjects, require singular forms of verbs, and plural nouns take plural forms.  This feature of English grammar is so fundamental, so pervasive, and so well known that it seems trivial to remark on it.  I mention it because a singular collective noun can refer either to the group as a unit, or else to the separate individuals composing it, and the number of the verb will vary accordingly.  The verb shows singular number in the group sense, but plural number with the distributive meaning.  This use is reminiscent of the "joint" and "several" distinction found within the law.  Consider the examples of (5).
(5) a.  The faculty is being sued.  (joint or group sense)
b.  The faculty are being sued.  (several or distributive sense)
As further illustration of this variable number agreement, imagine a situation where each academic department of a university is entitled to a single vote on a certain administrative issue.  In order to obtain that vote, each of the faculty members of that department casts his or her own vote and sends it to the chairman.  The way the majority votes then becomes the departmental vote to be transmitted to the administration.  The sentences of (6) characterize this two-step process.
(6) a.  The law faculty have sent their votes to the chairman.
b.  The law faculty has sent its vote to the administration.
There are other grammatical features that demonstrate the dual reference of collective nouns.  In (6), in addition to the selection of singular/plural verb forms, we can observe also a difference  [*600]  in the choice of pronouns -- "it" for the group sense and "they" for the distributive.  The sentences of (7) are of a different sort.  They illustrate some adverbial expressions that typically are found with plural nouns.  Yet the examples of (8) show these same adverbials occurring with singular collectives.
(7) a.  There was little agreement among the senators.
b.  All of the ministers from the six churches met together.
c.  The jurors voted unanimously for capital punishment.
(8) a.  There was little agreement among the committee.
b.  All of the clergy from the six churches met together.
c.  The jury voted unanimously for capital punishment.
 
The sentences of (9) and (10) indicate further that adverbials with collectives are grammatical only for the distributive sense -- that is, the collective noun must refer to the individual members of the group, not to the group entity itself.  This restriction is not surprising in view of the fact that these adverbials carry plural reference.
(9) a.  The committee are unable to reach agreement among themselves.
b.  All of the clergy from the six churches are meeting together today.
c.  The jury have voted unanimously for capital punishment.
(10) a.  *The committee is unable to reach agreement among itself (themselves).
b.  *All of the clergy from the six churches is meeting together today.
c.  ?The jury has voted unanimously for capital punishment.
What is significant about collective nouns is that they denote groups of like persons.  Thus, a faculty is composed of teachers, a jury of jurors, a clergy of clerics.  We might expect such nouns to have many of the selectional restrictions of the corresponding human nouns.  This expectation, in fact, is borne out.  As the examples of (11) show, a collective noun, even taken in its group sense, is compatible with any verb (physiological, mental, or activity) that expresses a relation that can be attributed appropriately to the individual members of the group.
(11) a.  The faculty ate lunch.  (cf. The teachers ate lunch.)
b.  The faculty thought that the students would protest.  [*601]  (cf. The teachers thought that the students would protest.)
c.  The faculty signed a contract with the union.  (cf. The teachers signed a contract with the union.)
We are, of course, most interested in seeing how language deals with words such as "corporation." Institutional nouns have properties quite different from those that characterize collectives.  n101 The examples of (12) illustrate that singular institutional nouns are incompatible with plural verbs, pronouns, or adverbials.  n102
(12) a.  The corporation has aligned itself with labor.
b.  *The corporation have aligned themselves with labor.
c.  *There is dissension among IBM.
 
This data suggest that a singular institutional noun refers to the institutional body alone, and not to its constituent members.  The selectional restrictions between institutional nouns and their verbs will lend further support to this observation.  Let us look, then, at the distribution of physiological, cognitive, and activity  [*602]  verbs with institutional nouns.
The examples of (13) and (14) contrast directly the occurrence of physiological verbs with collective nouns and with institutional ones.  Whereas the sentences of (13) are perfectly natural, those of (14) are decidedly bizarre.
(13) a.  The team ate lunch.
b.  The jury took a walk.
c.  The faculty slept through the meeting.
(14) a.  ?Berkley ate lunch.
b.  ?Harvard took a walk.
c.  ?Toyota slept through the meeting.
 
Note that although the examples of (14) are anomolous in any literal interpretation -- after all, institutions, as entities, simply do not have the physiology of humans -- the readings become acceptable whenever they can be construed either metonymically or metaphorically.  It is instructive, then, to consider briefly the nature of metonomy and metaphor and to see how these linguistic phenomena affect the interpretation of institutional nouns.
Metonomy, in one of its functions, provides a way of referring to people through their institutional affiliations.  For example, (14a) would be an appropriate sentence in the following context.  Imagine a meeting with representatives from several different universities.  Due to limited eating facilities, all of the participants are not able to go to lunch at the same time.  An announcement is made that Berkeley will eat at twelve noon, Stanford at twelve-thirty, and Harvard at one o'clock.  The physiological verb "eat" is being used here metonymically.  That is, the act of eating is not imputed to the institutions per se, but rather to the persons representing those different establishments.  Analogous situations could be constructed for the other examples of (14).
A metaphorical interpretation is also possible when a physiological verb occurs with an institutional noun.  Compare the literal interpretation of (15a) with the metaphorical reading of (15b), where the institution has been personified.
(15) a.  The hungry teenagers gobbled up all the food in sight.
b.  The giant corporation gobbled up the smaller companies.
Examples (13)-(15) are intended to establish that physiological  [*603]  verbs do not occur naturally with institutional nouns.  When they do occur, the meanings are contrived -- the interpretations can be only metonymic or metaphorical.  n103 However, when we turn to cognitive verbs, we find a very different story.  Note the examples of (16).
(16) a.  Ford denied that the Pinto was a deathtrap.
b.  Princeton announced that it planned to raise fees.
c.  The Supreme Court decided to reverse the Roe v. Wade decision.
d.  The sporting industry believes that Americans don't buy very many hockey sticks.
e.  GM learned that Chrysler was thinking of coming out with a new compact.
 
Cognitive verbs occur freely and naturally with institutional nouns.  The verbs have their literal interpretations; hence, the sentences do not require special readings.  Nor do there seem to be restrictions on the particular cognitive verbs that are allowed.  All of them are likely candidates.  At first, it might seem surprising that cognitive verbs occur so readily with institutional nouns.  After all, the verbs do depict mental states, and there is no question that such states are in the domain of human capacity.  One might contend that the verbs of (16) are being used metonymically analogous to those of (14).  I reject such an analysis.  Recall that the sentences of (14), by themselves, were abnormal.  They required special contexts in order to be acceptable.  The sentences of (16), on the other hand, require no special settings for their intelligibility.  In isolation, they appear as perfectly normal sentences.  n104 To treat them as metonymic would leave unexplained this important difference between these sentences and those of (14).  Thus, I maintain that the literal meanings of cognitive verbs can be attributed directly to institutional nouns.  And the senses are identical to what they are when  [*604]  used with human or group nouns.
Finally, let us compare the selectional restrictions of activity verbs with both collective and institutional nouns.  The examples of (17) and (18) show activity verbs that are compatible with both types of nouns.
(17) a.  The team signed a contract with the union.
b.  The clergy sold its South African shares.
c.  The faculty sent a representative to lobby Congress.
(18) a.  IBM signed a contract with the union.
b.  The Catholic Church sold its South African shares.
c.  The cigarette industry sent a representative to lobby Congress.
 
The sentences of (19) and (20) indicate that other activity verbs are acceptable with collective nouns, but abnormal with institutional ones.
(19) a.  The faculty played chess.
b.  The committee made phone calls.
c.  The clergy voted for Reagan in the last election.
(20) a.  ?Yale played chess.
b.  ?Harvard Law School made phone calls.
c.  ?General Motors voted for Reagan in the last election.
 
The difference, of course, is that the activities depicted in (18) are those that the institutions in question are competent to perform, whereas those of (20) are outside of this range.  However, the sentences of (20) do admit of metonymic interpretations.  For example, (20a) can mean only that an individual representing Yale or a team from there played in a chess tournament.  But the sentences of (18), like those of (16), have literal interpretations.  If they are metonymic, it would be difficult to explain how they differ from (20).
One convincing way to show that the examples of (18) are very different from those of (20) is to find a sentence with both literal and metonymic interpretations.  As a potential candidate, consider (20c).  In its metonymic reading, it might mean that most of the employees of General Motors, as individual citizens, had voted for Reagan.  But suppose that the Supreme Court were to decide, now that corporations are persons within the provisions of the fourteenth amendment and citizens for jurisdictional purposes, to make corporations full-fledged citizens,  [*605]  entitled to vote in national elections.  Thus, General Motors would have a single vote.  If this state of affairs were to transpire, sentence (20c) would acquire a straightforward, literal meaning (analogous to the sentences of (18)).  Note that, in this hypothetical situation, the members of the corporation still retain their individual votes.  Hence, the corporate vote is not the vote of the members but the vote of the corporate body itself, and it is for this reason that (20c) gets a literal reading.
It is important to my argument to understand why the sentences of (18), with activity verbs, or those of (16), with cognitive verbs, are not metaphorical where institutional nouns are concerned, even though the verbs in those sentences refer to actions and mental processes that are typically human.  The literature on metaphor generally distinguishes between "live" metaphors and "dead" ones.  n105 A live metaphor is one whose figurative meaning is patently transparent.  A dead metaphor, historically, was once live, but is no longer perceived as such.  Present-day speakers take its meaning to be one of the literal senses of the word, and standard dictionaries usually cite the meaning in this way also.  The expressions alluded to previously -- "the leg of a triangle" and "the leg of a table" (as well as Dewey's "dry wine") -- are good examples of dead metaphors.  Most words from everyday language have had their meanings extended in this fashion.  The law, too, is no stranger to this brand of linguistic evolution.  For example, we speak of a contract that is "binding," but that nonetheless may be "broken." Today, no one thinks of these words as metaphorical.  (How else would we talk about these aspects of contracts?) Of course, the legal senses are different from the meanings that these words have when they refer to physical objects.  The binding of a contract is not the same kind of event as the binding of a stack of newspapers, and the breaking of a contract is a radically different activity from the breaking of an egg or a Ming vase.  Furthermore, any comprehensive dictionary gives separate listings for the different meanings of "bind" and "break."
When one considers the sentences of (16) and (18), the situation looks very different.  One is not aware here of separate meanings, whether they be literal or metaphorical.  Unlike  [*606]  "bind" and "break" and "leg," cognitive verbs and many activity words, when used with institutional nouns, have precisely the same meanings that they have with person nouns.  Nor do dictionaries give separate definitions for verbs used with both human and institutional nouns.  General Motors announces in the same manner that any live person announces, and the University of California sells its South African shares just as any individual does.  As an alternative analysis one might maintain that in (16) and (18) the institutional nouns are used metonymically -- that is, the nouns refer to representatives from the institutions.  According to such a claim, the interpretations of the verbs are literal precisely because the verbs denote activities performed by persons.  But I have argued that institutional nouns, with cognitive verbs and with many of the activity verbs, are not understood metonymically.  Compare again the sentences of (20), which must indeed have metonymic readings (if they are to be interpretable at all), with those of (16) and (18), which I claim have straightforward, literal meanings.  To treat all the examples as metonomy simply misses this crucial distinction.
At the outset of this Study, we noted that one of the positions on legal personality assumes that basic legal relations take place between one person and another.  The natural person then becomes a barometer against which other kinds of legal persons are defined and measured.  A similar situation obtains for our linguistic classification.  Human nouns are viewed as basic, so that they too provide a point of departure for the analysis of the other classes.  A surprising result of this analysis is that some of the features of the mythical, collective, and institutional categories turn out to be uncannily similar to attributes from the creature, group, and person theories, respectively.  Let us consider some of these similarities that emerge between notions of corporate personality and properties of linguistic categorization.
The creature theory treats the corporation as an artificial entity whose legal rights arise through the act of incorporation.  In language, mythical nouns are similar.  They too refer to artificial entities, whose physical, mental, and social traits are bestowed on them in their creation.  As for nouns such as "corporation," there are several linguistic arguments demonstrating that they do not belong to this class.  First, mythical nouns, because they depict animate entities, can have physical characteristics literally attributed to them, but institutional nouns cannot.  [*607]  Whenever verbs expressing physiological processes occur with institutional nouns, the sentences must be interpreted metaphorically or metonymically.  Second, the entities denoted by mythical nouns may have restricted mental capacity, so that the nouns referring to such entities would not occur with all cognitive verbs.  Institutional nouns, on the other hand, take the full gamut of cognitive verbs.
The group theory treats the corporation as a group of persons joined together for a common purpose.  In language, collective nouns are the words that denote aggregates of similar type individuals.  Nouns such as "corporation" are not in this category either.  First, a singular collective noun can trigger either singular or plural number agreement depending on whether it refers to the group or to its members, but an institutional noun does not allow dual number; it denotes uniquely the corporate entity.  Second, because collectives designate persons, any physiological, cognitive, or activity verb that can be applied appropriately to the individuals can refer as well to the group as a unit.  Institutional nouns, on the other hand, do not exhibit literal interpretations with physiological verbs, nor with the full range of activity verbs that occur with collective nouns.
The linguistic investigation leads to the conclusion that nouns such as "corporation" occupy their own special class.  Institutional nouns have unique properties.  First, although physiological verbs, in their literal senses, are inappropriate with them, cognitive verbs reign supreme.  So far as language is concerned, institutions do not have bodies -- they indeed are incorporeal and intangible -- but they certainly do have minds.  They think and they feel and they say.  Next, there are many activity verbs that are compatible with, and literally applicable to, institutional nouns, so that, linguistically, the institutions are viewed as competent to perform the designated acts.  To be sure, language does not regard institutions as fully human, but it does impute important human characteristics to them -- mentalities and the ability to pursue social activities.  As a consequence, language treats the ensuing thoughts and actions as belonging to the institutions themselves -- and not to the hidden members.  This perspective from language turns out to be most congenial to the person theory of corporate personality.
At the beginning of this section, we contrasted the views of  [*608]  Dewey and of Machen in regard to corporate personality.  n106 Dewey claimed that "person" was a purely legal term, in the sense that the law could have it mean whatever it deemed appropriate.  In reference to corporations, the word "person" had no more in common with human beings than a dry wine had with dry solids.  Machen took the position that corporations did bear an analogy to persons, and that by calling the corporation a "person" the resemblance was made explicit.  The linguistic evidence is on the side of Machen.
Machen noted that the law treats the corporation as if it were "a rational being capable of feeling and volition."  n107 To be rational is to have a mind or intelligence, to be capable of cognition.  The feelings and volitions that Machen mentions are types of cognitive states, and in the linguistic treatment of institutional nouns we have seen that it is precisely the cognitive verbs that can be attributed literally and liberally to these entities.  We are also in a better position to understand Machen's other statement that, in the appropriate circumstances, we can imagine corporations to be guilty of fraud or of malice.  n108 Verbal expressions pertaining to fraud or malice in our analysis would be included among activity verbs, and many of these, too, are compatible with institutional nouns, provided that we view the institutions as competent to perform the designated acts.  Recall the discussion about corporations' casting ballots.  n109 Although today corporations are not permitted to vote in political elections, nonetheless one can conceive of a change in the law that would enable corporations to vote.  In an analogous way we could create situations where it would be linguistically felicitous to impute fraud or malice or other criminal states of mind to a corporate body.
Machen astutely observed that the first jurist to utter that "a corporation is a person" was using a metaphor, because the word "person" did not (and for most people still does not) include entities other than humans in its literal senses.  Whenever corporations are personified in language (for example, when they "gobble up" smaller companies), this too is metaphor.  But opposed  [*609]  to metaphorical language stands the literal language in the usage of cognitive verbs and many activity verbs.  The law may have discovered the utility of the metaphor -- "the corporation is a person" -- but it did not invent the linguistic imagery resulting from the assignment to institutions of cognition and other human abilities.  The law has been able to exploit to its advantage and to maximize for its needs conceptualizations that are deeply embedded within the structure of language.

Legal Topics: 

For related research and practice materials, see the following legal topics:
Civil ProcedureJurisdictionDiversity JurisdictionCitizenshipBusiness EntitiesCivil ProcedureAppealsAppellate JurisdictionState Court ReviewConstitutional LawEqual ProtectionScope of Protection

 FOOTNOTES:

n1  Maitland observed:
Not all the legal propositions that are true of a man will be true of a corporation.  For example, it can neither marry nor be given in marriage; but in a vast number of cases you can make a legal statement about x and y which will hold good whether these symbols stand for two men or for two corporations, or for a corporation and a man.
F. MAITLAND, Moral Personality and Legal Personality, in 3 COLLECTED PAPERS 307 (1911).

n2  The reference work, 34 WORDS AND PHRASES 335-38 (West 1956 & Supp. 1986), under the heading "Person" and the subheading "Private Corporation," lists nearly a hundred court cases and several score of state statutes where the word "person" expressly includes corporations.

n3  The citation from the Rolls of Parliament appears under the entry "Person" in 7 OXFORD ENGLISH DICTIONARY 724 (1961).

n4  COMMENTARIES ON THE LAWS OF ENGLAND 1765-69 (cited in 7 OXFORD ENGLISH DICTIONARY, supra note 3, at 724).  Consider also the following somewhat more recent characterization of a legal person: "Whenever society, in the administration of justice, sees fit to disregard the individual members of an organization for a particular purpose, and for that purpose to look upon the organization as a unit, the organization to that extent or for that purpose becomes a legal person." Smith, Legal Personality, 23 YALE L.J. 283, 289 (1928).

n5  The number of studies on the nature of legal personality is astounding.  For a manageable bibliography of nineteenth-century foreign treatises, see Machen, Corporate Personality, 24 HARV. L. REV. 253, 254 n.3 (1911).

n6  See, e.g., Southern Ry. Co. v. Greene, 216 U.S. 400 (1910); Pembina Mining Co. v. Pennsylvania, 125 U.S. 181 (1888); Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1868); Marshall v. Baltimore & Ohio R.R. Co., 57 U.S. (16 How.) 314 (1853); Louisville, Cincinnati & Charleston R.R. Co. v. Letson, 43 U.S. (2 How.) 497 (1844); Bank of the United States v. Deveaux, 9 U.S. (5 Cranch) 61 (1809).

n7  See Machen, supra note 5, at 254 n.3.

n8  I refer to the three views on the nature of corporate personality as the "creature," "group," and "person" theories.  Other authors have used other names.  For example, Machen calls the first one the "fiction" theory, and Horwitz refers to the third one as the "real entity" theory.  See Machen, supra note 5; Horwitz, infra note 16.

n9  An excellent summary of Savigny's views is found in G. HEIMAN, OTTO GIERKE: ASSOCIATION AND LAW 27-33 (1977).

n10  Chief Justice Marshall stated: "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.  Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it. . . ." Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518, 636 (1819). Marshall's characterization has become one of the classic definitions of the corporation as a "creature."

n11  G. HEIMAN, supra note 9, at 30-31.

n12  See DE VAREILLES-SOMMIERES, LES PERSONNES MORALES (1902); see also Machen, supra note 5, at 257-58.

n13  Morawetz characterized the group theory in a similar manner:
Although a corporation is frequently spoken of as a person or unit . . . the existence of a corporation independently of its shareholders is a fiction; and . . . the rights and duties of an incorporated association are in reality the rights and duties of the persons who compose it, and not of an imaginary being.
V. MORAWETZ, A TREATISE ON THE LAW OF PRIVATE CORPORATIONS 2 (2d ed. 1886).

n14  Maitland, Introduction to O. GIERKE, POLITICAL THEORIES OF THE MIDDLE AGE at xviii-xliii (1900); see G. HEIMAN, supra note 9.

n15  Heiman noted:
The association, or group, is a living entity characterized by the relationship between the unity of the whole and the multitude of its parts. . . .  Every group has a real and independent communal life, a conscious will, and an ability to act that are distinct from the lives and wills of its individual members.
G. HEIMAN, supra note 9, at 7.

n16  The discussion here of the evolution of American corporations within the context of the three theories of corporate personality is a summary of the views of Morton Horwitz.  See Horwitz, Santa Clara Revisited: The Development of Corporate Theory, 88 W. VA. L. REV. 173 (1985). Horwitz argues for the utility of these theories in elucidating the issues surrounding corporate growth and in understanding changing attitudes about the nature of corporations.

n17  See, e.g., Southern Ry. Co. v. Greene, 216 U.S. 400 (1910); Pembina Mining Co. v. Pennsylvania, 125 U.S. 181 (1888); Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1868); Marshall v. Baltimore & Ohio R.R. Co., 57 U.S. (16 How.) 314 (1853); Louisville, C. & C.R.R. Co. v. Letson, 43 U.S. (2 How.) 497 (1844); Bank of the United States v. Deveaux, 9 U.S. (5 Cranch) 61 (1809).

n18  Bank of the United States v. Deveaux, 9 U.S. (5 Cranch) 61 (1809).

n19  Id.

n20  Louisville, C. & C.R.R. Co. v. Letson, 43 U.S. (2 How.) 497 (1844).

n21  Marshall v. Baltimore & Ohio R.R. Co., 57 U.S. (16 How.) 314 (1853).

n22  Paul v. Virginia, 75 U.S. (8 Wall.) 168 (1868).

n23  Pembina Mining Co. v. Pennsylvania, 125 U.S. 181 (1888).

n24  U.S. CONST. art. III, § 2, cl.1.

n25  Id.

n26  See, e.g., Judiciary Act of 1789, ch. 20, 1 Stat. 73, 76-78.

n27  Act of Feb. 21, 1793 § 5, 18 U.S.C. § 3231 (1982) (original version at ch. 11, 1 Stat. 322 (1793)).

n28  Act of Feb. 15, 1819, 28 U.S.C. § 1338 (1982) (original version at ch. 19, 3 Stat. 481 (1819)).

n29  In the Constitution, class (7) appears earlier in the list.  I have placed it last for expository purposes only.

n30  Chief Justice Marshall aptly stated the rationale for federal jurisdiction:
However true the fact may be, that the tribunals of the states will administer justice as impartially as those of the nation, to parties of every description, it is not less true that the constitution itself either entertains apprehensions on this subject, or views with such indulgence the possible fears and apprehensions of suitors, that it has established national tribunals for the decision of controversies . . . between citizens of different states.
Bank of the United States v. Deveaux, 9 U.S. (5 Cranch) 61, 87 (1809).

n31  U.S. CONST. art. III, § 2, cl.1.

n32  The drafters of the Constitution were not unaware of corporations.  Although not so common or extensive as they are today, nonetheless they were fairly numerous.  Note, in particular, the existence then of trading companies, banks, railroads, and canal and toll bridge companies.  For an excellent survey of the nature and kinds of colonial corporations, see Henderson, The Position of Foreign Corporations in American Constitutional Law, in 2 HARV. STUDIES IN JURISPRUDENCE 1 (1918).

n33  One commentator has argued that the Supreme Court, by including corporations within the federal jurisdiction of article III, usurped powers never granted it by the Constitution.  See McGovney, A Supreme Court Fiction: Corporations in the Diverse Citizenship Jurisdiction of the Federal Courts, 56 HARV. L. REV. 853 (1943). My concern is not so much with the propriety of the Court's actions or with their motives in reaching particular decisions.  Rather it is with how those decisions reflect shifting attitudes about the nature of corporate personality.

n34  9 U.S. (5 Cranch) 61 (1809). The Supreme Court actually reviewed three different cases having to do with corporations and their admission into federal courts: Deveaux, 9 U.S. (5 Cranch) 61; Hope Ins. Co. v. Boardman, 9 U.S. (5 Cranch) 57 (1809); and Maryland Ins. Co. v. Woods, 10 U.S. (6 Cranch) 29 (1809). These cases were argued and considered together.

n35  The clause under consideration applies only to United States citizens.  Obviously, there is diversity of citizenship between citizens of the United States and foreign citizens.  The latter situation is covered by that section of article III which refers to "[controversies] between a State, or the Citizens thereof, and foreign States, Citizens or Subjects." U.S. CONST. art. III, § 2, cl.1.  Similar problems arise here in regard to the status of corporations.

n36  Deveaux, 9 U.S. (5 Cranch) at 88.

n37  Id. at 86. In Deveaux, the Supreme Court does comment on a few British cases, where for taxation purposes corporations were considered as "occupiers" of land.  However, the Court rejects these as precedent for treatment as citizens.  Id. at 88-89.

n38  Id. at 86-87.

n39  Id. at 87.

n40  The Deveaux ruling effectively treats a suit involving a corporation as though it were by or against the shareholders as partners.  See McGovney, supra note 33, at 868.

n41  Deveaux, 9 U.S. (5 Cranch) at 91.

n42  7 U.S. (3 Cranch) 267 (1806).

n43  43 U.S. (2 How.) 497 (1844).

n44  Id. at 554.

n45  Id. at 555.

n46  Id. at 558.

n47  Deveaux, 9 U.S. (5 Cranch) at 61, 86, 88.

n48  Letson, 43 U.S. (2 How.) at 497, 555, 558.

n49  For discussions on the structure of illocutionary acts, see generally J. AUSTIN, HOW TO DO THINGS WITH WORDS (1962); and J. SEARLE, SPEECH ACTS (1969).

n50  Letson, 43 U.S. (2 How.) at 558.

n51  Marshall v. Baltimore & Ohio R.R. Co., 57 U.S. (16 How.) 314, 347-54 (1853) (Campbell, J., dissenting); Northern Ind. R.R. Co. v. Michigan Cent. R.R. Co., 56 U.S. (15 How.) 233, 247-51 (1853) (Catron, J., dissenting); Rundle v. Delaware & Raritan Canal Co., 55 U.S. (14 How.) 80, 95-102 (1852) (Daniel, J., dissenting).

n52  Rundle v. Delaware & Raritan Canal Co., 55 U.S. (14 How.) 80, 109 (1852) (Daniel, J., dissenting).

n53  Id. at 101.

n54  Id.

n55  Id. at 98.

n56  57 U.S. (16 How.) 314 (1853).

n57  Id. at 327 (citation omitted).

n58  Id. at 327-28.

n59  Id. at 325.

n60  Id. at 328.

n61  L. FULLER, LEGAL FICTIONS 40-41 (1967) (originally published at 25 U. Ill. L. Rev. 363, 513, 877 (1930-31)).

n62  Henderson, supra note 32, at 62.

n63  In the case of Ohio & Mississippi Railroad Co. v. Wheeler, heard six years after Marshall, the averment described the plaintiffs as: "The President and Directors of the Ohio and Mississippi Railroad Company, a corporation created by the laws of the States of Indiana and Ohio, and having its principal place of business in Cincinnati, in the State of Ohio, a citizen of the State of Ohio." Ohio & Miss. R.R. Co. v. Wheeler, 66 U.S. (1 Black) 286, 287 (1861). The corporation is referred to as a citizen of Ohio.  The railroad may have had good reason for this bold assertion.  The defendant was from Indiana.  The railroad company had been chartered in both Ohio and Indiana, but it had its main place of business in the former state.  If it had been a citizen of Ohio only, then the presumed citizenship of the members, in accordance with the Marshall procedure, would also have been of Ohio, and hence would have been different from that of the defendant.  The Court thought otherwise.  Because of the railroad's dual incorporation, its members were presumed to be citizens of both states.  This situation created overlap of citizenship with the defendant in violation of the Strawbridge principle; consequently, there was no federal jurisdiction.  What I find of interest here, though, is that in the averment, the corporation was referred to as a citizen, and the Court (which during this historical period was usually fairly sticky about the wording of averments) did not comment on the use of this word there.

n64  28 U.S.C. § 1332(c) (1982).

n65  Recall also that the person theory was most favorable to the economic changes in corporate structure that were occurring throughout the nineteenth century.  See Horwitz, supra note 16.

n66  38 U.S. (13 Pet.) 519 (1839).

n67  Id. at 587.

n68  Henderson, supra note 32, at 183.

n69  75 U.S. (8 Wall.) 168 (1868).

n70  U.S. CONST. art. IV, § 2, cl.1.

n71  Paul, 75 U.S. (8 Wall.) at 177.

n72  U.S. CONST. amend. XIV, § 1.

n73  Id.

n74  125 U.S. 181 (1888).

n75  Id. at 182.

n76  Id. at 187.

n77  Id. at 187-88.

n78  Id. at 189.

n79  Id.

n80  Id.

n81  Id. at 188-89.

n82  Id. at 187.

n83  Two years before Pembina, in the case of Santa Clara County v. Southern Pac. R.R. Co., 118 U.S. 394 (1886), the Supreme Court had made its first pronouncement on the relevance to corporations of the equal protection clause of the fourteenth amendment:
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 the opinion that it does.
Id. at 396. Curiously enough, there is no further elaboration of this landmark decision.  Nothing in these words nor elsewhere in the opinion gives any hint as to which theory of corporate personality is implicit in the decision.  The Court's statement that the equal protection provision "applies to these corporations" is similar in spirit to the wording in Pembina.  Santa Clara is often cited as evidence for the person theory.  Horwitz, however, maintains that at the time of Santa Clara, the Court's thinking was well entrenched within the conceptual structure of the group theory, and that the person theory did not surface until at least a decade later.  See Horwitz, supra note 16.  My interpretation of Pembina and of Greene (to be considered next) support Horwitz's observations.

n84  216 U.S. 400 (1910).

n85  Id. at 412.

n86  Id.

n87  Id.

n88  Id. at 412-13.

n89  Pembina, 125 U.S. at 188-89.

n90  Id. at 189.

n91  The Supreme Court has considered whether corporations have other constitutional rights.  In Hale v. Henkel, 201 U.S. 43 (1906), it was decided that the provision of the fifth amendment protecting individuals against self-incrimination does not apply to corporations, so that agents of a corporation must testify on corporate matters.  On the other hand, the provision of the fourth amendment against unreasonable search and seizure does apply to protect the papers and records of corporations.  In First Nat'l Bank v. Bellotti, 435 U.S. 765 (1978), it was determined that corporations have the right to expend funds in order to influence the vote on referenda, even on issues not materially affecting their business.  The Court refused to examine whether corporations have first amendment rights of freedom of speech, rights that are coextensive with those of natural persons.  The Court cleverly sidestepped this issue by focusing, instead, on the question of the "inherent worth of the speech," deciding that certain speech per se comes under the protection of the fifth amendment.

n92  Corporations are never people, but they can be persons.  That is, it is an interesting lexical curiosity that "people," as one of the plural forms of "person," refers uniquely to real persons.

n93  Dewey, The Historic Background of Corporate Legal Personalty, 35 YALE L.J. 655 (1926).

n94  Id. at 656.

n95  See Machen, supra note 5.

n96  Id. at 263.

n97  Id. at 348.

n98  Note Cohen's humorous allusion to the mythical aspect of the corporation: "Nobody has ever seen a corporation.  What right have we to believe in corporations if we don't believe in angels?  To be sure, some of us have seen corporate funds, corporate transactions, etc. (just as some of us have seen angelic deeds, angelic countenances, etc.)." Cohen, Transcendental Nonsense and the Functional Approach, 35 COLUM. L. REV. 809, 811 (1935).

n99  Sentences (2b) and (2c) become acceptable in stories or nursery rhymes where human behavior is attributed to animals or even inanimate objects.

n100  Cognitive verbs generally require complement or subordinate clauses, e.g., hear that . . .; know that . . .; tell X that . . .; etc. Verbs not followed by that-clauses are assigned to one of the other classes -- e.g., hear noise (physiological); tell a story (activity).

n101  Nouns that denote institutions frequently have locative meanings.  Compare sentences (ia) and (ib).
(i) a.  Helen sent her son to Harvard for his legal education.  (locative)
b.  Helen sent a check to Harvard for its fundraiser.  (institutional)
Sentence (ia) refers to Harvard as a place; (ib) as an institutional entity.  This distinction has grammatical reflexes.  The sentences of (ii) illustrate that a locative adverbial (i.e., there) is appropriate with the locative sense, while the sentences of (iii) show that an indirect object without to (i.e., Harvard) is felicitous with the institutional meaning.
(ii) a.  Helen sent her son there for his legal education.
b.  Helen sent a check there for its fundraiser.
(iii) a.  Helen sent Harvard her son for his legal education.
b.  Helen sent Harvard a check for its fundraiser.

n102  Sentences such as (iv), where a plural pronoun refers back to a singular institutional noun, are not uncommon.
(iv) IBM announced that they were coming out with a new computer.
There are peculiarities of usage in current (colloquial) English in regard to the pronoun "they" with singular nouns.  It is found particularly where the sex of the person is either not known or else purposely concealed.
(v) a.  Does everyone have their work finished?
b.  A friend of mine would like to know whether they can get permission to visit the rare book room.
c.  *My friend Harry would like to know whether they can get permission to visit the rare book room.
The appearance of the pronoun "they" in (iv) is, in my view, similar to the occurrences in (v).  Note, though, that this particular use of a plural pronoun, where there is a singular antecedent, is found only with human (and institutional) nouns.  Here then is additional evidence that grammar attributes human characteristics to institutions.

n103  Metonomy and metaphor, with institutional nouns, affect different parts of the sentences.  In metonomy, the institutional noun is used figuratively; in metaphor, it is the verb that takes on a figurative meaning.

n104  A random sampling of the Wall Street Journal on November 7, 1985, revealed that nearly all articles about institutions contained opening sentences with cognitive or activity verbs.  For example: "Muse Air Corp. reported that traffic increased 31.8% in October . . ."; "Viacom International, Inc. is negotiating to buy 50% of MGM's movie production facility . . ."; "The government estimated that cocaine use increased 11% in the U.S. last year. . . ."; "Eastman Kodak said it will abandon the instant photography business." Wall St. J., Nov. 7, 1985, at 4, 5, 6, 14.

n105  D. NILSEN & A. NILSEN, LANGUAGE PLAY: AN INTRODUCTION TO LINGUISTICS 159 (1978).

n106  See supra text accompanying notes 94-96.

n107  Machen, supra note 5, at 263.

n108  Id. at 348.

n109  See supra text accompanying notes 104-05.