Fictions, Concessions & Genossenschaft
Kaimi’s post about corporations and constitutional rights has provoked a response from Will Baude, who points out that at the time that the Fourteenth Amendment was passed it is not as though considering corporations as persons was beyond the pale. My own response to this issue (aside from a hearty “What Will said!”) is — in the best tradition of legal academia — self citation. Consider the following gem from “Corporations and Autonomy Theories of Contract,” forthcoming in the next issue of the Denver University Law Review:
There are three basic theories about the nature of corporations: the real theory, the concession theory, and the fiction theory. The real theory claims that corporations are the legal expression of organic groups or other supra individual entities and should be understood as having a will and an existence that cannot be reduced to the sum of their collective parts. The concession theory claims that the corporation is a creation of the state that exercises delegated authority to serve the purposes of the government, even when that purpose is “private” business. The fiction theory claims that the corporation is nothing more than a collection of individuals and that the language of corporations is little more than a useful shorthand referring to a complex set of individual rights and obligations.
It seems to me that it is only under the concession theory of corporations that thinking of them as right-holders becomes difficult. Even under this theory, however, if one thinks that rights have a utilitarian basis, then there is no a priori objection to corporations having rights. Certainly, if we subscribe to the fiction theory, then it seems to me that denying corporations rights is to work an injustice against actual human beings on the basis of a mere conceptual shorthand.
Of these three options, I dare say that the real theory sounds the oddest to modern ears. There was a time, however, when it represented the cutting-edge of Anglo-American legal thought. Back in those days (circa 1900) instead of doing cool, interdisciplinary work really hip legal intellectuals imported concepts from German jurisprudence. (Germany invented the research university in the the 19th century and by 1900 it occupied a position of academic prominence analogous to the United States today.) Ernst Freund summarized the real theory at the time, stating:
Above the existence of the individual there is the existence of the species, and the corporation is nothing but the legal expression of this fact, which appears as a reality in the physical person, so the higher will of the species is embodied in numerous and various forms of as-sociation, and as a result we find, beside the individual, entities of a higher order endowed with volition and acting capacity. And where the law recognizes such embodied will as a person, we have a juristic person or a corporation.
Obviously, this has a Germanic and Hegelian feel to it, and as one would expect you can push the idea back to a Teutonic root:
Nineteenth century German jurists were eager to find authentically German legal traditions in contrast to the foreign influences of the Roman law. Otto Gierke became the proponent of this approach in the context of corporate law. According to Gierke, the indigenous, pre Roman German law had a thick notion of corporate existence, what Gierke called Genossenshaft. In contrast to the thin, Roman theory that a corporation was nothing more than a legal fiction, Gierke argued that historically German law recognized the organic existence of the group. Corporations, he argued, are the legal manifestation of communities possessed of a collective spirit. Hence, the acts of a corporation are not the mere aggregation of the individual acts of its members, but rather should be understood as being qualitatively different. Gierke’s treatise became influential in common law countries by virtue of a translation by Frederick Maitland. Maitland and others argued that in numerous instances the common law acknowledged the real existence of collectives and treated their actions as what they were—the choices of organic groups, even when the groups were not formally incorporated. They took this as evidence that in practice the common law, whatever the rhetoric of its judges and lawyers, contained elements of the real theory.
Of course even today we have elements of Genossenschaft in our law, most notably the doctrine of corporation by prescription, which holds that a community — such as a town or a school — that for a long period of time has acted as a corporation without a charter will be treated as a corporate entity without one.