Corporarate Personality

In 2011 I posted on several occasions and from several perspectives on the question of the moral or personal nature of a corporate entity. If you're interested in my previous musings, look here, here, and here. Most scholars of corporations describe them as nothing more than a confluence of contracts (among shareholders, between shareholders and directors, and between the corporate entity and its contract counterparties). Building on the insights of Nicholas Wolterstorff, I concluded that corporations were slightly more than derivative of their human creators; sufficient, as it turns out, to ground moral (and not merely legal) obligations (see here). In short, corporations were sufficiently "persons," to acquire moral rights (and moral duties).

But Charles Reid has a very interesting--if somewhat oblique--insight into corporate "personality" in Tales Legal Fictions Tell (abstract here). Reid writes about the nearly forgotten notion of coverture, the English common law doctrine by which a husband and wife upon marriage became a single legal "personality." Coupled with a "plain meaning" reading of the New Testament, coverture entailed that a wife had virtually no legal rights and was disabled from owning property and entering into contracts. In brief, the legal fiction of coverture "held that a wife's legal personality merged with that of her husband's at the time of marriage and that thereafter the husband alone had the legal capacity to act in the name of the couple." 

As could be expected from his previous works, Reid deftly and extensively describes the history of legal fiction of coverture, how it was ameliorated by the English law of equity, how it was reified by Blackstone, how it took on an expanded life in antebellum America, and how the fiction eventually faded into desuetude or outright repeal in America over the course of the 19th century. But the fiction of husband-only legal personhood is not my immediate concern. I'm interested in Reid's extension of the sorts of arguments eventually deployed against the fiction of coverture to contemporary understandings of corporate personality.

Reid briefly traces the history of the corporation from the Middle Ages through the 19th century and summarizes the results as follows: "the corporate personality becomes the device by which political assemblies act in a binding fashion, obligating the citizenry to follow rules and ordinances they may not have personally assented to, and in fact may object to strenuously." Corporations are collective and real means of social control.

Today, of course, corporations have a rather different flavor. They exist in perpetuity, provide limited liability to their shareholders, and function to turn a profit. Reid quickly--too quickly in my view--examines the constitutional history of the corporation in America that began with recognition of sufficient corporate "personhood" to sue and has proceeded most recently to include the First Amendment right of political expression in Citizens United v. FCC.. The legal fiction of corporate personhood has triumphed over reality. A corporation may be deemed a "person" for some purposes without succumbing to the notion that it is a person for all purposes. As Reid writes, "It is possible to see Citizens United as a kind of Blackstonian moment -- that instant in time when the logic and imagery of the legal fiction becomes so seductive that it blinds jurists to all of the carefully-crafted exceptions and compromises that allowed the fiction to tolerably carry on its functions."

Reid's concluding comparison of coverture and corporations raises more questions than it answers. Nonetheless, I hope it leads others in the world of corporate law scholarship to look deeper than often is the case. The current shallows of corporate jurisprudence (not by the way, corporate theory, which is quite well-developed) can stand some improvement.