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Corporation

Corporation

A corporation is a legal entity (distinct from a natural person) that often has similar rights in law to those of a natural person. Civil law systems may refer to corporations as "moral persons;" they may also go by the name "AS" (anonymous society) or something similar, depending on language (see below). In colloquial usage, "corporation" usually refers to a commercial entity set up in accordance with a governmental framework. Churches (mainly in US, but not so much in other countries, where Churches have a different status), interest groups (both can form as not-for-profit corporations or can exist as voluntary associations), cities and townships (often chartered as public corporations), among others, may also have historically lengthy corporate identities.

Legal status

The law typically views a corporation as a fictional person, a legal person, or a moral person (as opposed to a natural person); United States law recognises this as corporate personhood. Under such a doctrine (obviously a legal fiction), a corporation enjoys many of the rights and obligations of individual citizens, such as the ability to own property, sign binding contracts, pay taxes, have certain constitutional rights, and otherwise participate in society. (Note that corporations do not possess all the rights appertaining to individuals: in most jurisdictions, for example, a corporation cannot vote.) In common law countries, the classic statement of this principle is found in Lennard's Carrying Co Ltd v Asiatic Petroleum Co Ltd [1915], where Lord Haldane said: :"My Lords, a corporation is an abstraction. It has no mind of its own any more than it has a body of its own; its active and directing will must consequently be sought in the person of somebody who is really the directing mind and will of the corporation, the very ego and centre of the personality of the corporation." The most salient features of incorporation include: #Limited Liability. Unlike in a partnership, stockholders of a corporation hold no liability for the corporation's debts and obligations: see leading case in common law, Salomon v. Salomon & Co.. As a result their "limited" potential losses cannot exceed the amount which they paid for the stock. Not only does this allow corporations to engage in risky enterprises, but limited liability also forms the basis for trading in corporate stock. Without the limitation on the amount that an investor can lose, the time and effort required to determine whether the stock could wipe the investor out would render the stock market very illiquid (as one can observe in the very illiquid market for partnership interests). A lender can, however, require a personal guarantee on a loan to a corporation, thus introducing personal liability. #Perpetual Lifetime. The assets and structure of the corporation exist beyond the lifetime of any of its shareholders, officers or directors. This allows for stability of capital, which thus becomes available for investment in projects of a larger size and over a longer term than if the corporate assets remained subject to dissolution and distribution. This feature also had great importance in the medieval period, when land donated to the Church (a corporation) would not generate the feudal fees that a lord could claim upon a landholder's death. In this regard, see Statute of Mortmain. #Profit Maximization. In Anglo-American jurisdictions, business corporations are generally required to serve the best interests of the shareholders, a rule that courts have generally interpreted to mean the maximization of share value, and thus profits. Corporate directors are prohibited by corporate law from sacrificing profits to serve some other interest. Originally this included such areas as environmental protection, or the improvement of the welfare of the community. For example, when Henry Ford cut dividends and reduced car prices in order to increase the number of people who could afford to buy his cars, his brother-in-law, Mr. Dodge, a shareholder, sued him for having harmed profitability: Dodge v. Ford Motor Company, 170 N.W 688 (Mich.S.C. 1919). Mr. Dodge succeeded and went on to form his own car company with the proceeds of the suit. However, modern law by statutes and court decisions holds that a corporation does have an implied authority to make charitable contributions to society.

Ownership and control

Humans and other legal entities (such as trusts and other corporations) can hold shares. When no stockholders exist, a corporation may exist as a "non-stock corporation", a "membership corporation", or similar — this second type of corporation counts as a not-for-profit corporation. In either category, the corporation comprises a collective of individuals with a distinct legal status and with special privileges not vouchsafed to ordinary unincorporated businesses, to voluntary associations, or to groups of individuals. Typically, a board of directors governs a corporation on the stockholders' behalf. The board has a fiduciary duty to look after the interests of the corporation. The corporate officers such as the CEO, president, treasurer, and other titled officers are chosen by the board to manage the affairs of the corporation. Corporations can also be controlled (in part) by creditors such as banks. In return for lending money to the corporation, creditors can demand a control interest analogous to that of a shareholder, including one or more seats on the board of directors. Creditors are not said to "own" the corporation as shareholders do, but can outweigh the shareholders in practice, especially if the corporation is experiencing financial difficulties and cannot survive without credit. Shareholders in a corporation are said to have a "residual interest." Should the corporation end its existence, the shareholders are the last to receive its assets, following creditors and others with interests in the corporation. This can make investment in a corporation risky; however, the risk is outweighed by the corporation's limited liability, which ensures that the shareholder will only be liable for the amount they invested.

Formation

Historically, corporations were created by special charter of state governments. Today, corporations are usually registered with a state, and become regulated by the laws enacted by that state. Registration is the main prerequisite to the corporation's assumption of limited liability. As part of this registration, it must designate the principal address of the corporation (where to contact it in the event of legal process), and often an agent or other legal representative of the corporation. Generally, a corporation files articles of incorporation with the government, laying out the general nature of the corporation, the amount of stock it is authorized to issue, and the names and addresses of directors. Once the articles are approved, the corporation's directors meet to create bylaws that govern the internal functions of the corporation, such as meeting procedures and officer positions. The law of the state in which a corporation operates will regulate most of its internal activities, as well as its finances. If a corporation operates outside its home state, it is often required to register with other governments as a foreign corporation, and is almost always subject to laws of its host state pertaining to employment, crimes, contracts, civil actions, and the like.

Naming

Corporations generally have a distinct name. Historically, corporations were named after their membership: for instance, "The President and Fellows of Harvard College." Nowadays, corporations in most jurisdictions have a distinct name that does not need to make reference to their membership. In Canada, this possibility is taken to its logical extreme: many smaller Canadian corporations have no names at all, merely numbers (e.g., "Ontario 123-4567 Limited"). In most countries, corporate names include the term "Corporation", or an abbreviation that denotes the corporate status of the entity. See Types of corporations for a full list. These terms, known as words of limitation, obviously vary by jurisdiction and language. Their use puts all persons on constructive notice that they have to deal with an entity whose liability remains limited, in the sense that it does not reach back to the persons who constitute the entity; one can only collect from whatever assets the entity still controls at the time one obtains a judgment against it. Certain jurisdictions do not allow the use of the word "company" alone to denote corporate status, since the word "company" may refer to a partnership or to a sole proprietorship, or even, archaically, to a group of not necessarily related people (for example, those staying in a tavern).

Unresolved issues

The nature of the corporation continues to evolve, both through existing corporations pushing new ideas and structures, and governments regulating them in response to new situations. A current question is that of diffused responsibility: for example, if the corporation is found liable for a death, then how should the blame and punishment for this be allocated across the shareholders, directors, management and staff of the corporation? The present law diffuses this responsibility. One may think that the owners of the business - the shareholders - should be ultimately responsible for such circumstances, but the modern corporation may have many millions of small-scale shareholders who know nothing about its business activities. Worse still, traders - especially hedge funds - may rapidly turn over their partial ownership of a corporation many times a day. One suggestion is that the directors should be passed the burden of moral and legal responsibility as part of their job of representing the shareholders. This is currently an active area of debate.

Origins

Etymology

The word "corporation" derives from the Latin corpus (body), representing a "body of people"; that is, a group of people authorized to act as an individual (Oxford English Dictionary). The word universitas also used to refer to a group of people but now refers specifically to a group of scholars (see University). In the United Kingdom and Republic of Ireland, the term corporation was also used for the local government body in charge of a borough. This style was replaced in most cases with the term council in the United Kingdom in 1973, and in the Republic of Ireland in 2001. The sole exception is the Corporation of London which retains the title.

Pre-modern corporations

Corporations have been present in some forms as far back as Ancient Rome. Although devoid of some of the core characteristics by which corporations are known today, they nonetheless were enterprises, sanctioned by the state, with a form of shareholders who invested money for a specific purpose. With the collapse of the Roman Empire, the rise of Christianity and the influx of Germanic tribes, the Roman conception of the corporation merged with other views. Germanic tribes, for example, maintained that a group entity in and of itself could have a separate identity from that of its members. These influences came together in the body of canon law built around the conception of the church as corporate structure in the Middle Ages. Different theories of the church as corporate body were favored by different individuals but all agreed on one key component: that the church was more than just its members and could maintain an existence perpetually, regardless of the death of any individual member. This, together with discussion as to the relationship between the head of a corporation (such as the Pope) and its members, contributed not only to the development of modern corporations and corporate theory but also set the stage for many ideas that would come to fruition during the enlightenment. Kenneth Pomeranz, an economic historian, argues that the need to perform pseudo-governmental operations (such as the waging of war) accounts for the development of this economic structure in Europe but not in China or in the Middle East. Older corporate entities gained incorporation as "the person/people of xx". This reflected the people who made up the "body" and also emphasised their legal identity. The law classifies a corporation either as a corporation sole (one person) or as a corporation aggregate (any other number). Examples include (the link gives the legal name; the nickname appears in brackets with the nature of the corporation)
- The Governor and Company of the Bank of England (Bank of England — corporation aggregate)
- The Chancellor Masters and Scholars of the University of Cambridge (Cambridge University — corporation aggregate)
- The President and Fellows of Harvard College (Harvard College — corporation aggregate)
- Her Majesty the Queen in Right of New Zealand (New Zealand Government — corporation sole)
- The Archbishop of Canterbury (corporation sole)
- The Dean, Chapter and Students of the Cathedral Church of Christ in Oxford of the Foundation of King Henry VIII (Christ Church, Oxford — corporation aggregate) Using strict definitions, universities and colleges count as corporations since they merely comprise groups of people.

Development of modern commercial corporations

college, dating from 7 November 1623, for the amount of 2,400 florins]] Early corporations of the commercial sort were formed under frameworks set up by governments of states to undertake tasks which appeared too risky or too expensive for individuals or governments to embark upon. The alleged oldest commercial corporation in the world, the Stora Kopparberg mining community in Falun, Sweden, reportedly obtained a charter from King Magnus Eriksson in 1347. Many European nations chartered corporations to lead colonial ventures, such as the Dutch East India Company, and these corporations came to play a large part in the history of corporate colonialism. In the United States, government chartering began to fall out of vogue in the mid-1800s. Corporate law at the time was very restrictive and very closely regulated by the states. Forming a corporation usually required an act of legislature. Investors generally had to be given an equal say in corporate governance, and the corporation's activities were tightly restricted to its express purposes. Many private firms in the 19th century avoided the corporate model for these reasons (Andrew Carnegie formed his steel operation as a limited partnership, and John D. Rockefeller set up Standard Oil as a trust). Eventually, state governments began to realize the economic value of providing more permissive corporate laws. New Jersey was the first state to adopt an "enabling" corporate law, with the goal of attracting more business to the state. Delaware followed, and soon became known as the most corporation-friendly state in the country; even today, most major public corporations are set up under Delaware law. The 20th century saw a proliferation of enabling law across the world, which helped to drive economic booms in many countries before and after World War I. After World War II, and especially starting in the 1980s, many countries with large state-owned corporations moved toward privatization, the selling of publicly-owned services and enterprises to private, normally corporate, ownership. Deregulation - reducing the public-interest regulation of corporate activity - often accompanied privatization as part of an ideologically laissez-faire policy. Another major postwar shift was toward conglomerates, in which large corporations purchased smaller corporations to expand their industrial base. Japanese firms developed a horizontal conglomeration model, the keiretsu, which was later duplicated in other countries as well. While corporate efficiency (and profitability) skyrocketed, small shareholder control was diminished and directors of corporations assumed greater control over business, contributing in part to the hostile takeover movement of the 1980s and the accounting scandals that brought down Enron and WorldCom following the turn of the century. More recent corporate developments include downsizing, contracting-out or out-sourcing, off-shoring and scoping down activities to core business, as information technology, global trade regimes, and cheap fossil fuels enable corporations to reduce labour costs, transportation costs and transaction costs, and thereby maximize profits. For a history of corporations that is “pro-corporate”, see John Micklethwait and Adrian Wooldridge, The Company: a Short History of a Revolutionary Idea (New York: Modern Library, 2003). For a history of corporations that is “critical”, see Joel Bakan, The Corporation. The pathological pursuit of profit and power (Toronto: Viking Canada, 2004).

Types of corporations

For-profit and non-profit

Main article: non-profit organization In modern economic systems, the corporate conventions of governance commonly appear in a wide variety of business and non-profit activities. Though the laws governing these creatures of statute often differ, the courts often interpret provisions of the law that apply to profit-making enterprises in the same manner (or in a similar manner) when applying principles to non-profit organizations — as the underlying structures of these two types of entity often resemble each other.

Closely-held and public

The institution most often referenced when the word "corporation" is used, as in the title of the movie The Corporation, is a public or publicly traded corporation, the shares of which are traded on a public market (e.g., the New York Stock Exchange or Nasdaq) designed specifically for the buying and selling of shares of stock of corporations by and to the general public. Most of the largest businesses in the world are publicly traded corporations. However, the majority of corporations are said to be closely held, privately held or close corporations, meaning that no ready market exists for the trading of ownership interests. Many such corporations are owned and managed by a small group of businesspeople or companies, although the size of such a corporation can be as vast as the largest public corporations. The affairs of publicly traded and closely held corporations are similar in many respects. The main difference in most countries is that publicly traded corporations have an additional burden of complying with securities laws, which (especially in the U.S.) grant further rights to stockholders to protect them from fraud or unfairness in connection with the sale and purchase of stock. The publicly traded corporation must usually follow much more stringent disclosure requirements, and sometimes additional procedural obligations in connection with major transactions (e.g. mergers) or events (e.g. elections of directors).

Multinational corporations

Following on the success of the corporate model at a national level, many corporations have become transnational or multinational corporations: growing beyond national boundaries to attain sometimes remarkable positions of power and influence in the process of globalising. The typical "transnational" or "multinational" may fit into a web of overlapping ownerships and directorships, with multiple branches and lines in different regions, many such sub-groupings comprising corporations in their own right. Growth by expansion may favour national or regional branches; growth by acquisition or merger can result in a plethora of groupings scattered around and/or spanning the globe, with structures and names which do not always make clear the structures of ownership and interaction. In the spread of corporations across multiple continents, the importance of corporate culture has grown as a unifying factor and a counterweight to local national sensibilities and cultural awareness.

National features

There are various types of corporations throughout the world.

United States

In the United States, several corporate forms exist; the name of "corporation" generally applies to a business, run for profit, to which one of the states of the United States has granted a corporate charter. American corporations often charter as a Delaware Corporation in Delaware, which charges no tax on activities outside the state and has courts experienced in commercial law. Corporations set up for privacy or asset protection often charter in Nevada, which allows setting them up with no record of who owns them. The federal government of the United States usually does not grant corporate charters, except for some special instances such as Amtrak and Freddie Mac and banks and credit unions which opt not to receive charters from their home states. Historically, most U.S. states issued charters for fixed lengths of time (for example, a manufacturing corporation might receive a charter good for 40 years), and only by an act of the legislature. In theory, a limited charter forced corporations to remain accountable to government (that is, to the community) for the special privileges granted to them. Investors protested that it actually led to unhealthy amounts of political payoffs and graft. Most states now charter unlimited-term corporations for a small fee, and possibly for a yearly tax. Legally, corporations are accorded some corporate personhood, i.e. Constitutional rights similar to those held by persons. The U.S. Supreme Court ruled on this question in the 1886 case Santa Clara County v. Southern Pacific Railroad. Many countries around the world now have corporate laws based upon state laws from the United States. For example, corporations in Japan are organized under a variant of the corporate law of Illinois, and corporations in Saudi Arabia follow corporate laws copied from New York. The oldest corporation in the United States, and the oldest in North America, is the President and Fellows of Harvard College (also known as the Harvard Corporation), chartered in 1650.

Canada

In Canada both the federal government and the provinces have corporate statutes, and thus a corporation may have a provincial or a federal charter. Many older corporations in Canada stem from Acts of Parliament passed before the introduction of general corporation law. The oldest corporation in Canada, and second oldest in North America, is the Hudson's Bay Company, chartered in 1670. Federally recognized corporations are regulated by the Canada Business Corporations Act

German-speaking countries

Germany, Austria and Switzerland recognize two forms of corporation: the Aktiengesellschaft (AG), analogous to public corporations in the English-speaking world, and the Gesellschaft mit beschränkter Haftung (GmbH), similar to (and an inspiration for) the modern limited liability company.

Corporate taxation

In many countries, including the United States and United Kingdom, corporate profits are taxed at a corporate tax rate, and dividends paid to shareholders are taxed at a separate rate. Such a system is sometimes referred to as "double taxation," because any profits distributed to shareholders will eventually be taxed twice. One solution to this (as in the case of UK tax system) is for the recipient of the dividend to be entitled to a tax credit which addresses the fact that the profits represented by the dividend have already been taxed. The company profit being passed on is therefore effectively only taxed at the rate of tax paid by the eventual recipient of the dividend. Where a double taxation system exists, the additional tax burden is often an incentive for smaller businesses to organize in the form of a partnership, limited liability company, or other type of entity that is not separately taxed. Such entities are often called "pass-through entities." In the United States, business corporations owe taxes according to two basic categories. A "C corporation" must pay corporate taxes, while "S corporations" pay no corporate taxes but instead pass profits and losses directly to their owners (the stockholders) who declare such profits and losses as part of their personal taxable income. An S corporation must generally have no more than 100 stockholders, who must be natural persons (not other corporations or entities), must reside in the United States, and must consent to the classification; moreover, the S corporation can only issue a single class of stock. As a result of these restrictions, all publicly traded corporations and many larger close corporations have C corporation status. Certain kinds of investment companies are also exempt from corporate income taxes, provided they distribute almost all of their income to shareholders in the form of dividends or capital gains distributions.

Other commercial entities

Several other forms of business entity exist under the laws of various countries. These include:
- Partnership
- Limited partnership (LP)
- Limited liability partnership (LLP)
- Limited liability company (LLC)
- Sole proprietorship

Quotes

- Corporations have neither bodies to be punished, nor souls to be condemned, they therefore do as they like. —Lord Thurlow
- An ingenious device for obtaining individual profit without individual responsibility. —"Corporation" as defined by Ambrose Bierce in The Devil's Dictionary
- The opinion of the Court, after mature deliberation, is that this [a corporate charter] is a contract, the obligation of which cannot be impaired without violating the Constitution of the United States. —Chief Justice John Marshall, Dartmouth College v. Woodward (1819).

External links

- [http://www.econlib.org/library/Enc/Corporations.html Corporations] — article by Robert Hessen
- [http://www.company-formation-glossary.co.uk Company Formation Glossary]
- [http://www.ukcorporator.co.uk/guidance/G59.php Standard UK Company Formation Configurations]
- [http://www.gangsofamerica.com/ Gangs of America by Ted Nace] — A free book on historical and legal bases of Corporations Category:Business law Category:Corporations law Category:Legal entities Category:Types of companies ko:주식회사 ja:株式会社

Legal entity

A legal entity is a legal construct through which the law allows a group of natural persons to act as if it were an individual for certain purposes. The most common purposes are lawsuits, property ownership, and contracts. This allows for easy conduct of business by having ownership, lawsuits, and agreements under the name of the legal entity instead of the several names of the people making up the entity. A legal entity is not necessarily distinct from the natural persons of which it is composed. Most legal entities are simply amalgamations of the persons that make it up for convenience's sake. A legal entity that does have a separate existence from its members is called a corporation. This distinction gives the corporation its unique perpetual succession privilege and is also the source of the limited liability of corporate members. Some other legal entities also enjoy limited liability of members, but not on account of separate existence. Some examples of legal entities include:
- associations
- banks
- collectives
- cooperatives (co-ops)
- corporations
- estates
- flow-through entities (FTEs)
- limited liability companies
- municipalities
- partnerships
- political parties
- political action committees (PACs)
- states
- trade unions
- trusts
- persons
- natural persons

Law

:This article is about law in society. For other possible meanings, see law (disambiguation). Law (a loanword from Old Norse lag), in politics and jurisprudence, is a set of rules or norms of conduct which mandate, proscribe or permit specified relationships among people and organizations, provide methods for ensuring the impartial treatment of such people, and provide punishments of/for those who do not follow the established rules of conduct. Law is typically administered through a system of courts, in which judges hear disputes between parties and apply a set of rules in order to provide an outcome that is just and fair. The manner in which law is administered is known as a legal system, which typically has developed through tradition in each country. Legal practitioners, most often, must be professionally trained in the law before they are permitted to advocate for a party in a court of law, draft legal documents, or give legal advice.

Legal traditions

There are generally four broad legal traditions that are practiced in the world today.

Civil law

The Civilian system of law is a codified law that sets out a comprehensive system of rules that are applied and interpreted by judges. It is by and large the most commonly practiced system of law in the world, with almost 60 % of the world's population living in a country ruled on the civilian system. The most important difference to common law is that normally, only legislative enactments are considered to be legally binding, but not precedent cases. However, as a practical matter, courts normally follow their previous decisions. Furthermore, in some civil law systems (e.g. in Germany), the writings of legal scholars have considerable influence on the courts. In most jurisdictions the core areas of private law are codified in the form of a civil code, but in some, like Scotland it remains uncodified. The civil law system has its origins in Roman law, which was adopted by scholars and courts from the late middle ages onwards. Most modern systems go back to the 19th century codification movement. The civil codes of many, particularly Latin countries and former French and Spanish colonies closely trail the Code de Napoléon in some fashion. However, this is not true for most Central and Eastern European, Scandinavian and East Asian countries. Notably, the German BGB was developed from Roman law with reference to German legal tradition. The importance of the Code Napoléon should also not be overemphasized as it covers only the core areas of private law, while other codes and statutes govern fields such as corporate law, administrative law, tax law and constitutional law.

Common law

The Common law is an Anglo-Saxon legal tradition, based on unwritten laws developed through judicial decisions that create binding precedent. The common law system is currently in practice in Australia, Canada (excluding Quebec), United Kingdom, and the United States (excluding Louisiana). In addition to these countries several others have adapted the common law system into a mixed system. For example, India and Nigera operate largely on a common law system but incorporate a good deal of customary law and religious law.

Customary law

Customary law are systems of law that has evolved largely on their own within a given country and have been adapted to meet the needs of the particular culture. Note that customary law may also be relevant within jurisdictions following another legal tradition in fields or subfields of law where no legislative enactment exists. For example, in Austria, scholars of private law often claim that customary law continues to exist, whereas public law scholars dispute this claim. (In any case, it is hard to find any practically relevant examples.)

Religious law

Many countries base their system of law on religious tenants. The most dominant system of this form of law is Muslim law (or "Sharia") which is a codified law that is found within the Koran. These laws deal primarily with the personal rights and dispute resolution between individuals. It is used in some Middle Eastern nations; such as in the Iran and Saudi Arabia. On a smaller level there are still regions of the world that practice canon law, which is followed by Catholics and Anglicans, and a similar legal system is used by the Eastern Orthodox Church. The same can be said for Jewish law (halakha or halacha), which is followed by Orthodox and Conservative Jews, in substantially different forms.

Bodies of law

In the broadest sense, bodies of law can be subdivided on the basis of who the parties to an action are. It is frequent that practiced fields of law overlap into several of these bodies of law.

Private law

The area of private law in a legal system concerns law that oversees disputes between private individuals. This area is, to a large extent, the most comprehensive area of law, dealing with all non-criminal harm one person does to another.

Public law

The area of public law, in a general sense, is the law in a given legal system that concerns disputes between the government and private individuals residing within the country. The state can bring actions against people for criminal acts, as well as breach of regulatory laws. Equally, individuals can bring actions against the government for harm it has done. This includes grounds on the basis of a breach of regulations, legislate on matters beyond their competence, or violation of an individuals rights. These last two points are often protected under a countries’ constitution.

Procedural law

Procedural law concerns the areas of law that regulate how all actions are dealt with. This includes who can have access to the court system, how complaints are submitted, and what are the rights of the parties involved. Procedural law is often known as "adjective" law as it is the law that concern how other laws are to be applied. Typically, this is broadly covered by a government’s civil and criminal procedure rules. But equally this includes the law of evidence which determines what means are used to prove facts, as well as, the law regarding remedies.

International law

International law governs the relations between states, or between citizens of different states, or international organizations. Its two primary sources are customary law and treaties.

Philosophy of law

Philosophy of law is a branch of philosophy and jurisprudence which studies basic questions about law and legal systems, such as "what is the law?", "what are the criteria for legal validity?", "what is the relationship between law and morality?", and many other similar questions. In the western tradition there are several schools of thought on the philosophical basis of law. First, there is natural law, which attempts to describe law as an inherent quality in humans that is derived from natures. Second, there is the positivism which believes that law is a purely human-made construct that society uses to maintain social order. Third, there is legal realism which believes that law is an arbitrary set of rules that are largely established through the tastes and preferences of judges.

Anthropology of law

:See main discussion at Honour Law has an anthropological dimension. It has been recognized from Montesquieu to the present that law is shaped by the kind of society in which it is practised. One continuum into which various societies can be placed contrasts the "culture of law" with the "culture of honour". In order to have a culture of law, people must dwell in a society where a government exists whose authority is hard to evade and generally recognised as legitimate. People take their grievances before the government and its agents, who arbitrate disputes and enforce penalties. This behaviour is contrasted with the culture of honour, where respect for persons and groups stems from fear of the revenge they may exact if their person, property, or prerogatives are not respected. Cultures of law must be maintained. They can be eroded by declining respect for the law, achieved either by weak government unable to wield its authority, or by burdensome restrictions that attempt to forbid behaviour prevalent in the culture or in some subculture of the society. When a culture of law declines, there is a possibility that an culture of honor will arise in its place.
History

Practice of law
Practice of law is typically overseen by either a government organization or independent regulating body such as a bar association or barrister society. To practice law – i.e. appear in front of a judge on behalf of someone, draft legal documents, etc. – the practitioner must be certified by the regulating body. This usually entails a two or three year program at a university’s faculty of law or a law school, followed by an entrance examination (eg. bar admissions). Once accredited, a legal practitioners will often work in law firm, as well as in government, a private corporation, or even work as sole practitioner. A significant component to the practice of law in the common law tradition involves legal research in order to determine the current state of the law. This usually entails exploring case reporters, legal periodicals, and legislation.
See also

- Law topics overview
- List of areas of law
- List of legal topics
- List of legal terms
- List of jurists
- List of legal abbreviations
- List of case law lists
- List of law firms
Further reading

- Cheyenne Way: Conflict & Case Law in Primitive Jurisprudence, Karl N. Llewellyn and E. Adamson Hoebel, University of Oklahoma Press, 1983, trade paperback, 374 pages, ISBN 0806118555
- The Bilingual LSP Dictionary. Principles and Practice for Legal language, Sandro Nielsen, Gunter Narr Verlag 1994.
- [http://browse.addall.com/Browse/Author/2088479-1 Other books by Karl N. Llewellyn]
- David, René, and John E. C. Brierley. Major Legal Systems in the World Today: An Introduction to the Comparative Study of Law. 3d ed. London: Stevens, 1985 (ISBN 0420473408).
External links

- [http://www.legalmatch.com LegalMatch] Legal Resource
- [http://ausicl.com The Australian Institute of Comparative Legal Systems]
- [http://www.lpig.org Law and Policy Institutions]
- [http://www.llbee.com/news.php?p=news Laws External Education- Legal News By Subject]
- [http://www.4lawschool.com 4LawSchool- Legal Reference]
- [http://ww3.definitions-legal.com:8567/ Law, Legal Definitions & Reference]
- [http://www.ericdigests.org/1996-3/law.htm Essentials of Law-Related Education. ERIC Digest.]
- [http://www.law.cornell.edu LII - Topical overviews, US Supreme Court decisions, US Code (Acts of Congress)]
- [http://www.worldlii.org WorldLII - The World Legal Information Institute]
- [http://www.lawmoose.com LawMoose Legal Reference Library]
- [http://legallinks.jenkinslaw.org Legal Research Links]
- [http://www.findlaw.com FindLaw]
- [http://ausicl.com The Australian Institute of Comparative Legal Systems]
- [http://www.nolo.com/glossary.cfm Everybody's Legal Glossary] - From Nolo
- [http://www.alllaw.com/ AllLaw]
- [http://legal.wikicities.com/ WikiCities Legal Site]
- Stanford Encyclopedia of Philosophy:
- [http://plato.stanford.edu/entries/law-ideology/ Law and Ideology]
- [http://plato.stanford.edu/entries/law-language/ Law and Language]
- [http://en.jurispedia.org/ The shared law] in Jurispedia
- [http://www.avocatura.com Romanian Law]
- [http://www.thedailylaw.com Daily Law news]
- [http://members.fortunecity.com/victorcauchi/lex/lexindex.htm Laws of Malta] Chapter summaries and a general Glossary of definitions.
- [http://LawyerIntl.com LawyerIntl.com] Legal Resource and Law Dictionary
- [http://LawGuru.com LawGuru.com] Legal Portal
- [http://forumprawne.org Prawo i porady prawne] - web discussion board about Polish law Category:Core issues in ethics ja:法 (法学) simple:Law th:กฎหมาย

Civil law (legal system)

:For alternate uses of "civil law", see civil law. Civil law is a codified system of law that sets out a comprehensive system of rules that are applied and interpreted by judges. It has its origins in Roman law. However, modern systems are descendants of the 19th century codification movement, during which the most important codes (most prominently the Napoleonic Code) came into existence. The civilian system is by and large the most widely practiced system of law in the world.
Overview
Civil or civilian law is a legal tradition which is the basis of the law in the majority of countries of the world, especially in continental Europe, but also in Quebec (Canada), Louisiana (USA), Japan, Latin America, and most former colonies of continental European countries. The Scottish legal system is usually considered to be a mixed system in that Scots law has a basis in Roman law, combining features of both uncodified Civil law dating back to the Corpus Juris Civilis and common law with medieval sources, further influenced by English law after the Union of 1707. In the United States, civil law is formally the basis of the law of Louisiana (as circumscribed by federal law and the U.S. Constitution), although in western and southwestern parts of the U.S., laws in such diverse areas as divorce and water rights show the influence of their Iberian civil-law heritage, being based on distinctly different principles from the laws of the northeastern states colonized by settlers with English common-law roots.
History
The civil law is based on Roman law, especially the Corpus Juris Civilis of Emperor Justinian, as later developed through the Middle Ages by mediæval legal scholars. Originally civil law was one common legal system in much of Europe, but with the development of nationalism in the 17th century Nordic countries and around the time of the French Revolution, it became fractured into separate national systems. This change was brought about by the development of separate national codes. The French Napoleonic Code and the German and Swiss codes were the most influential ones. Around this time civil law incorporated many ideas associated with the Enlightenment. Because Germany was a rising power in the late 19th century when many Asian nations were introducing civil law, the German Civil Code has been the basis for the legal systems of Japan and South Korea. In China, the German Civil Code was introduced in the later years of the Qing Dynasty and formed the basis of the law of the Republic of China which remains in force in Taiwan. Some authors consider that civil law later served as the foundation for socialist law used in Communist countries, which in this view would basically be civil law with the addition of Marxist-Leninist ideas.
Civil vs Common law
Civil law is primarily contrasted against common law, which is the legal system developed among Anglo-Saxon peoples, especially in England. The original difference is that, historically, common law was law developed by custom, beginning before there were any written laws and continuing to be applied by courts after there were written laws, too, whereas civil law develops out of the Roman law of Justinian's Corpus Juris Civilis proceeding from broad legal principles and the interpretation of doctrinal writings rather than the application of facts to legal fictions. In later times, civil law became codified as droit coutumier or customary law that were local compilations of legal principles recognized as normative. Sparked by the age of enlightenment, attempts to codify private law began during the second half of the 18th century (see civil code), but civil codes with a lasting influence were promulgated only after the French Revolution, in jurisdictions such as France (with its Napoleonic Code), Austria (see ABGB), Quebec (see Civil Code of Quebec), Spain, the Netherlands and Germany (see BGB). However, codification is by no means a defining characteristic of a civil law system, as e.g. the civil law systems of Scandinavian countries remain largely uncodified, whereas common law jurisdictions have frequently codified parts of their laws, e.g. in the U.S. Uniform Commercial Code. There are also mixed systems, such as the laws of Scotland, Namibia and South Africa. Thus, the difference between civil law and common law lies less in the mere fact of codification, but in the methodological approach to codes and statutes. In civil law countries, legislation is seen as the primary source of law. By default, courts thus base their judgments on the provisions of codes and statutes, from which solutions in particular cases are to be derived. Courts thus have to reason extensively on the basis of general principles of the code, or by drawing analogies from statutory provisions to fill lacunae. By contrast, in the common law system, cases are the primary source of law, while statutes are only seen as incursions into the common law and thus interpreted narrowly. The underlying principle of separation of powers is seen somewhat differently in civil law and common law countries. In some common law countries, especially the United States, judges are seen as balancing the power of the other branches of government. By contrast, the original idea of separation of powers in France was to assign different roles to legislation and to judges, with the latter only applying the law (the judge as la bouche de la loi). Today, it is widely recognized that this is unworkable in practice. Case law (or, more properly, jurisprudence), plays a considerable role in virtually all civil law countries, even though the development of "judge-made law" through the rule of stare decisis is not formally recognized. As a practical matter, the dichotomy should thus not be overemphasized. It should not be overlooked that there are considerable differences between the legal methodologies of various civil law countries. For example, it is often said that common law opinions are much longer and contain elaborate reasoning, whereas legal opinions in civil law countries are usually very short and formal in nature. This is in principle true in France, where judges cite only legislation, but not prior case law. (However, this does not mean that judges do not consider it when drafting opinions.) By contrast, court opinions in German-speaking countries can be as long as American ones, and normally discuss prior cases and academic writing extensively. There are, however, certain sociological differences. Civil law judges are usually trained and promoted separately from attorneys, whereas common law judges are usually selected from accomplished and reputable attorneys. Also, the influence of academic writing by law professors on case law tends to be much greater in civil law countries.
Criminal procedure
Civil and common law system also differ considerably in criminal procedure. In general, the judge in a civil law system plays a more active role in determining the facts of the case. Most civil law countries investigate major crimes using a so-called inquisitorial system. Also, civil law systems rely much more on written argument than oral argument. It is a common but incorrect belief that civil law systems do not offer the presumption of innocence, when in fact they do.
Subgroups
The term "civil law" as applied to a legal tradition actually originates in English-speaking countries, where it was used to lump all non-English legal traditions together and contrast them to the English common law. However, since continental European traditions are by no means uniform, scholars of comparative law and economists promoting the legal origins theory usually subdivide civil law into three distinct groups:
- French civil law: in France, the Benelux countries, Spain and former colonies of those countries;
- German civil law: in Germany, Austria, Switzerland, Greece, Japan, South Korea and the Republic of China (Taiwan);
- Scandinavian civil law: in Denmark, Sweden, Finland, Norway and Iceland. Portugal and Italy have evolved from French to German influence, as their 19th century civil codes were close to the Napoleonic Code and their 20th century civil codes are much closer to the German BGB. Legal culture and law schools have also come near to the German system. The law in these countries is often said to be of a hybrid nature. The Dutch law or at least the Dutch civil code cannot be easily placed in one of the mentioned groups either, and it has itself influenced the modern private law of other countries. The present Russian civil code is in part a translation of the Dutch one.
Economic implications
According to the legal origins theory promoted by some economists, civil law countries tend to emphasize social stability, while common law countries focus on the rights of an individual. In this theory, this has a considerable impact of different countries' financial development, but it is not necessarily obvious to all that there is a difference between American, British and Australian development on one side and Norwegian, German and Italian development on the other.
See also

- Civil code
Bibliography

- MacQueen, Hector L. "[http://www.ejcl.org/44/art44-1.html Scots Law and the Road to the New Ius Commune]." Electronic Journal of Comparative Law 4, no. 4 (December 2000). Civil law

Government

A government is the body that has the power to make and enforce laws within an organization or group. In its broadest sense, "to govern" means to administer or supervise, whether over an area of land, a set group of people, or a collection of assets. The word government is derived the Greek Κυβερνήτης (kubernites), which means "steersman", "governor", "pilot" or "rudder".

Definitions

One approach is to define government as the decision-making arm of the state, and define the latter on the basis of the control it has over violence and the use of force within its territory. Specifically, the state (and by extension the government) has been considered by some to be the entity that holds a monopoly on the legitimate use of force within a territory. This view has been taken by the political economist Max Weber and subsequent political philosophers. The exact meaning of it depends on what is understood by “legitimate”. If we use the term in an ethical sense, then this definition would suggest that an organisation might be considered a state by its supporters but not by its detractors. An alternative definition is to take "legitimate" violence to be simply that which has active or tacit acceptance by the vast majority of the population. In this view, the presence of insurrection or civil war against an entity would jeopardise its claim to be a state, provided the insurrection enjoyed significant popular support. Similarly, an entity that shared military or police power with independent militias and bandits could be considered to have a monopoly on “legitimate” violence but to be failing to enforce it, reducing its claim to statehood. In practice, such situations are often described as "failed states". Government can also be defined as the political means of creating and enforcing laws; typically via a bureaucratic hierarchy. Under this definition, a purely despotic organization which controls a territory without defining laws would not be considered a government. Another alternative is to define a government as an organisation that attempts to maintain control of a territory, where "control" involves activities such as collecting taxes, controlling entry and exit to the state, preventing encroachment of territory by neighbouring states and preventing the establishment of alternative governments within the country. In Commonwealth English, the word "Government" can also be used to refer only to the executive branch, in this context being a synonym for the word "administration" in American English (e.g. the Blair Government, the Bush Administration). In countries using the Westminster system, the Government (or party in Government) will also usually control the legislature. The French use of the word gouvernement covers both meanings, whereas Canadian French generally uses it to mean the executive branch. The German word Regierung refers only to government as the executive branch; the wider meaning of the word, government as a system, can be translated as Staatsgewalt.

Forms of government

Various forms of government have been implemented. A government in a developed state is likely to have various sub-organisations known as offices, departments, or agencies, which are headed by politically appointed officials, often called ministers or secretaries. Ministers may in theory act as advisors to the head of state, but in practice have a certain amount of direct power in specific areas. In most modern democracies, the elected legislative assembly has the power to dismiss the government, but in those states that have a separate head of government and head of state, the head of state generally has great latitude in appointing a new one.

Theories

There are a wide range of theories about the reasons for establishing governments. The four major ones are briefly described below. Note that they do not always fully oppose each other - it is possible for a person to subscribe to a combination of ideas from two or more of these theories.

Greed and oppression

Many political philosophies that are opposed to the existence of a government (such as Anarchism, and to a lesser extent Marxism), as well as others, emphasize the historical roots of governments - the fact that governments, along with private property, originated from the authority of warlords and petty despots who took, by force, certain patches of land as their own (and began exercising authority over the people living on that land). Thus, it is argued that governments exist to enforce the will of the strong and oppress the weak.

Order and tradition

The various forms of conservatism, by contrast, generally see the government as a positive force that brings order out of chaos, establishes laws to end the "war of all against all", encourages moral virtue while punishing vice, and respects tradition. Sometimes, in this view, the government is seen as something ordained by a higher power, as in the divine right of kings, which human beings have a duty to obey.

Natural rights

Natural rights are the basis for the theory of government shared by most branches of liberalism (including libertarianism). In this view, human beings are born with certain natural rights, and governments are established strictly for the purpose of protecting those rights. What the natural rights actually are is a matter of dispute among liberals; indeed, each branch of liberalism has its own set of rights that it considers to be natural, and these rights are sometimes mutually exclusive with the rights supported by other liberals.

Social contract

One of the most influential theories of government in the past two hundred years has been the social contract, on which modern democracy and most forms of socialism are founded. The social contract theory holds that governments are created by the people in order to provide for collective needs (such as safety from crime) that cannot be properly satisfied using purely individual means. Governments thus exist for the purpose of serving the needs and wishes of the people, and their relationship with the people is clearly stipulated in a "social contract" (a constitution and a set of laws) which both the government and the people must abide by. If a majority is unhappy, it may change the social contract. If a minority is unhappy, it may persuade the majority to change the contract, or it may opt out of it by emigration or secession.

Operations

Governments concern themselves with regulating and administering many areas of human activity, such as trade, education, medicine, entertainment, and war.

Enforcement of power

Governments use a variety of methods to maintain the established order, such as police and military forces, (particularly under despotism, see also police state), making agreements with other states, and maintaining support within the state. Typical methods of maintaining support and legitimacy include providing the infrastructure for administration, justice, transport, communication, social welfare etc., claiming support from deities, providing benefits to elites, holding elections for important posts within the state, limiting the power of the state through laws and constitutions (see also Bill of Rights) and appealing to nationalism. Different political ideologies hold different ideas on what the government should or should not do.

Territory

The modern standard unit of territory is a country. In addition to the meaning used above, the word state can refer either to a government or to its territory. Within a territory, subnational entities may have local governments which do not have the full power of a national government (for example, they will generally lack the authority to declare war or carry out diplomatic negotiations).

Scale of government

Main articles: government ownership, government spending The scale to which government should exist and operate in the world is a matter of debate. Government spending in developed countries varies considerably but generally makes up between about 30% and 70% of their GDP.

Not-for-profit corporation

A Not-for-profit corporation is a corporation created by statute, government or judicial authority that does not issue stock. It is created with a specific purpose, educational, charitable or related to other enumerated purposes, it may be a foundation, a charity or other type of non-profit organization. Such a corporation is subject to the general laws of corporations as adapted. In some cases it may also be a public corporation. In many countries these entities are subject to exemption from various tax laws, in certain circumstances. Regarding the more general group of organizatons created for non-remunitary purposes see: Non-profit organization. Regarding US tax law applying to these organizations see: intermediate sanctions, unrelated business activities. Examples of not-for-profit organizations that have been formed in the past include the Electricity Supply Commission of South Africa (Eskom) and the New Zealand Electricity Department (NZED). Both of these organizations were set up to develop the electricity generation and electric power transmission needs of the respective countries by statute (The Electricity Act in each country). One of the problems experienced by such corporations is their inability to fund growth from profits in the way that conventional businesses can. In the case of Eskom, the dilemma was solved by establishing a capital development fund, contributions to which were deemed to be costs and the investment of the fund was restricted to the loan stock (bonds) of Eskom. In New Zealand, the pricing of electricity was regulated to allow for the collection of a capital contribution. Ultimately the respective governments amended the legislation to bring the organisations into the normal commercial fold. More generally, the term not-for-profit corporation may include any non-profit organization, since these organizations are generally incorporated (often as Societies, Associations, Trusts, etc.).

Public corporation

A public company is a company owned by the public. There are two uses of this term.
- A company that is owned by stockholders who are members of the general public and traded publicly. Ownership is open to anyone that has the money and inclination to buy shares in the company. It is differentiated from privately held companies where the shares are held by a small group of individuals often members of one or a small group of families or otherwise related individuals (or other companies). For a discussion of the British and Irish variant of this type of company, see public limited company.
- A government-owned corporation. This meaning of a "public company" comes from the fact that government debt is sometimes referred to as "public debt" (however there are no "public bonds"), government finance is sometimes called "public finance", and so on.

Corporate personhood

Corporate personhood is a term used to describe the legal fiction used within United States law that a corporation has a limited number or subset of the same constitutional rights as a human being. The choice of the word "person" in "personhood" arises from the way the 14th Amendment to the United States Constitution was worded and from earlier legal usage of the word "person." Corporations as legal entities have always been able to perform commercial activities, similarly to a person acting as a sole proprietor, such as entering into contracts or owning property. Therefore corporations have always had some limited amount of "personhood" that allowed corporations to conduct business while shielding stockholders from financial risk to personal assets which were not invested in the corporation. The stronger concept of corporate personhood is sometimes traced to the 1886 U.S. Supreme Court case Santa Clara County v. Southern Pacific Railroad Company (118 U.S. 394). Corporations, being state charted entities, were and are regulated by the state in which they were created (incorporated) and the state(s) in which they operate. Much of contract law is actually state law and English Common Law. This is why most legal agreements have a clause in them saying under which state's laws and jurisdiction the agreement will be litigated if such litigation becomes necessary. With Santa Clara County v. Southern Pacific Railroad Company, corporations gained some degree of protection from arbitrary state action.

History of corporate personhood

The history of corporate law in the United States can be directly tied to the ebb and flow of the debate first enunciated between Alexander Hamilton and Thomas Jefferson over how centralized the government of the United States should be, how much power the member states should have over their own affairs, and how much say citizens and citizen organizations should have in public affairs. While both Hamilton and Jefferson participated in the creation of the more centralized United States out of the original confederation by the Federalist Party, they had very different ideals as to what the new creation should be. Hamilton believed in a strong central government which he believed necessary for an industrialized nation while Jefferson believed in a de-centralized, more agrarian nation (see Jeffersonian democracy). When Hamilton as Secretary of Treasury created a national bank for the new country (see First Bank of the United States), Jefferson was much against the idea. Later President Andrew Jackson did his best to emasculate the Second Bank of the United States (see Jacksonian democracy). The Federal Constitution of 1788 did not mention corporations, thereby leaving the chartering of corporations to the states since the Constitution did not explicitly say otherwise. In the late 1700s and early 1800s corporations began to be chartered by the states. Corporations already existed in the new nation, but these were primarily educational corporations or institutions chartered by the British crown which continued to exist after the new nation was created from the Confederation. Due to experience as British Colonies and the accompanying corporate colonialism from British corporations chartered by the crown to do business in North America, new corporations were greeted with mixed feelings. Thomas Jefferson said, "I hope we shall crush in its birth the aristocracy of our moneyed corporations which dare already to challenge our government in a trial of strength, and bid defiance to the laws of our country." As with banks, so with other corporations, especially perhaps colleges, the degree of permissible interference was controversial from the earliest days of the nation. In 1790, John Marshall, a private attorney and a veteran of the Continental Army, represented the board of the College of William and Mary, in litigation that required him to defend that corporation's right to reorganize itself and in the process remove professors, The Rev John Bracken v. The Visitors of Wm & Mary College (7 Va. 573; 1790 Supreme Court of Virginia). The Supreme Court of Virginia ruled that the original crown charter provided the authority for the Visitors to make changes including the reorganization. Thomas Jefferson claimed in his autobiography that he had a hand in the reorganization when he was elected a Visitor of William and Mary after being appointed the Governor of the Commonwealth in June of 1779. His main reason for the reorganization was to move the college from a curriculum rooted in theology to a curriculum rooted in science, fine arts, and languages. In 1818, the United States Supreme Court heard arguments in another such matter, Dartmouth College v. Woodward 17 U.S. 518 1819. Daniel Webster was the advocate for Dartmouth. He concluded his argument in the following emotional fashion, directly addressed to that same John Marshall, now chief justice. Webster equated the property rights of the donors and their trustees with the cause of literature and science, in short, with civilization itself. :"Sir, you may destroy this little institution; it is weak; it is in your hands! I know it is one of the lesser lights in the literary horizon of our country. You may put it out. But if you do, you must carry through your work! You must extinguish, one after another, all those great lights of science which, for more than a century, have thrown their radiance over our land. It is, Sir, as I have said, a small college. And yet, there are those who love it." At this point, the Chief Justice is said to have become teary. The following year, he read from the bench the court's decision in that matter. The key paragraph in the decision is as follows: "The opinion of the Court, after mature deliberation, is that this corporate charter is a contract, the obligation of which cannot be impaired without violating the Constitution of the United States. This opinion appears to us to be equally supported by reason, and by the former decisions of this Court." A public outcry ensued. State courts and legislatures, supported by the people, declared that state governments had an absolute right to amend or repeal a corporate charter. (Richard L Grossman and Frank T. Adams, Taking Care of Business, Citizenship and the Charter of Incorporation (Cambridge: Charter, Ink., 1993), p. 11-12). Seven years after the Dartmouth College opinion, the Supreme Court decided Society for the Preservation of the Gospel in Foreign Parts v. Town of Pawlet, (1823) in which an English corporation dedicated to missionary work, with land in the U.S., sought to protect its rights to that land under colonial-era grants against an effort by the state of Vermont to revoke the grants. Justice Joseph Story, writing for the court, explicitly extended the same protections to corporation-owned property as it would have to property owned by natural persons. The notion of corporate personhood, then, has roots in the early history of the republic. Still, as the 19th century matured, manufacturing in the U.S., became more complex as the British Industrial Revolution generated new inventions and business processes which US industry copied. U.S. industry was largely protected by tariffs from British and other foreign competition. The favored form for large businesses became the corporation. And as these corporations came to dominate business life, they also began to dominate America's politicians, lawyers, courts and culture. The Civil War accelerated the growth of manufacturing and the power of the men who owned the large corporations. The systematic bribing of Congressmen was instituted by Mark Hanna, sugar trust magnate Henry Havemeyer, and Senator Nelson Aldrich and their associates. (Jonathan Shepard Fast and Luzviminda Bartolome Francisco, Conspiracy For Empire, Big Business, Corruption and the Politics of Imperialism in America, 1876-1907 (Quezon City, Foundation for Nationalist Studies, 1985), p. 92-97). Beginning in the 1870s corporate lawyers became bolder about using the Webster/Marshall theory of corporations as persons, arguing that as such they were entitled to some of the legal protections against arbitrary state action accorded also to natural persons. It should be understood that the term "artificial person" was in long use, prior to the Dartmouth College decision, and was in principle distinct from any contention that corporations have the rights of natural persons. "Artificial person" was used because there were certain resemblances, in law, between a natural person and corporations. Both could be parties in a lawsuit; both could be taxed; both could be constrained by law. In fact the corporations had been called artificial persons by courts in England as early as the 16th century because lawyers for the corporations had asserted they could not be convicted under the English laws of the time because the laws were worded "No person shall..." In the late 1800s railroads were the most powerful corporations in the country. Most of the nation's farmers were dependent on them to haul their produce; even the manufacturing corporations were at their mercy when they needed coal, iron ore, finished iron, or any other materials transported. In four cases that reached the Supreme Court (94 U.S. 155, 94 U.S. 164, 94 U.S. 179, 94 U.S. 180 (1877)) railroads tried to argue that the 14th Amendment prevented states from regulating the maximum rates they could charge. These cases did not rely on just an interpretation of the 14th Amendment as most also tied in the Interstate Commerce clause as well. In each case the Court refused to render an opinion as to whether the 14th Amendment applied to corporations instead couching their decision on the Interstate Commerce clause. Similarly, in 1877, in Munn v. Illinois 94 U.S. 113 1876, the Supreme Court decided that the 14th Amendment did not prevent the State of Illinois from regulating charges for use of a business's grain elevators, ignoring the question of whether Munn & Scott was a person. In Santa Clara County v. Southern Pacific Railroad Company (118 U.S. 394 (1886)), at the lower court levels the question of whether corporations were persons had been argued, and these arguments were submitted in writing to the Court. However, before oral argument took place, Chief Justice Waite announced: "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." Was the 14th Amendment about corporations? One of the 1886 judges, Samuel F. Miller, had not thought so in 1872, only 6 years after the Amendment had become law, when the court was "called upon for the first time to give construction to these articles." In the Slaughterhouse Cases 83 U.S. 36 1872, Miller delivered the majority opinion and discussed the Thirteenth Amendment and the Fifteenth Amendment as well as the Fourteenth as follows: :The most cursory glance at these articles discloses a unity of purpose, when taken in connection with the history of the times, which cannot fail to have an important bearing on any question of doubt concerning their true meaning. Nor can such doubts, when any reasonably exist, be safely and rationally solved without a reference to that history, for in it is found the occasion and the necessity for recurring again to the great source of power in this country, the people of the States, for additional guarantees of human rights, additional powers to the Federal government; additional restraints upon those of the States. Fortunately, that history is fresh within the memory of us all, and its leading features, as they bear upon the matter before us, free from doubt. :... :We repeat, then, in the light of this recapitulation of events, almost too recent to be called history, but which are familiar to us all, and on the most casual examination of the language of these amendments, no one can fail to be impressed with the one pervading purpose found in them all, lying at the foundation of each, and without which none of them would have been even suggested; we mean the freedom of the slave race, the security and firm establishment of that freedom, and the protection of the newly made freeman and citizen from the oppressions of those who had formerly exercised unlimited dominion over him. (Graham, Howard Jay, Everyman's Constitution, State Historical Society of Wisconsin, 1968. See also Graham, Howard Jay, "The Conspiracy Theory of the Fourteenth Amendment," The Yale Law Journal, Vol. 47: 341, 1938) :It has been argued that the men who wrote the 14th Amendment specifically meant for the word person to be a loophole which you could drive a giant corporation through. Apparently in one of the railroad cases an attorney who had been on the committee that drafted the amendment waved a paper before the court claiming that it documented such; but the paper was not entered as evidence, nor apparently was it shown to anyone, nor was it saved. However, careful research has shown that, John A. Bingham the member of Congress who is known to have been chiefly responsible for the phraseology of Section One when it was drafted by the Joint Committee in 1866, had, during the previous decade and as early as 1856-1859, employed not one but all three of the same clauses and concepts he later used in Section One. More important still, Bingham employed these guarantees specifically and in a context which suggested that free Negroes and mulattoes rather than corporations and business enterprise unquestionably were the persons' to which he then referred. Later, in Northwestern Nat Life Ins. Co. v. Riggs 203 U.S. 243 1906, having accepted that corporations are a type of people, the court still ruled that the 14th Amendment was not a bar to many state laws that effectively limited a corporations right to contract business as it pleases. Two Supreme Court judges, Hugo Black and William O. Douglas, later rendered opinions attacking the doctrine of corporate personhood. Quoted here is most of Justice Black's opinion: :But it is contended that the due process clause of the Fourteenth Amendment prohibits California from determining what terms and conditions should be imposed upon this Connecticut corporation to promote the welfare of the people of California. :I do not believe the word "person" in the Fourteenth Amendment includes corporations. "The doctrine of stare decisis, however appropriate and even necessary at times, has only a limited application in the field of constitutional law." This Court has many times changed its interpretations of the Constitution when the conclusion was reached that an improper construction had been adopted. Only recently the case of West Coast Hotel Company v. Parrish, 300 U.S. 379, 57 S.Ct. 578, 108 A.L.R. 1330 1931, expressly overruled a previous interpretation of the Fourteenth Amendment which had long blocked state minimum wage legislation. When a statute is declared by this Court to be unconstitutional, the decision until reversed stands as a barrier against the adoption of similar legislation. A constitutional interpretation that is wrong should not stand. I believe this Court should now overrule previous decisions which interpreted the Fourteenth Amendment to include corporations. :Neither the history nor the language of the Fourteenth Amendment justifies the belief that corporations are included within its protection (303 U.S. 77, 86). The historical purpose of the Fourteenth Amendment was clearly set forth when first considered by this Court in the Slaughter House Cases, 16 Wall. 36, decided April, 1873-less than five years after the proclamation of its adoption. Mr. Justice Miller, speaking for the Court, said: ::Among the first acts of legislation adopted by several of the States in the legislative bodies which claimed to be in their normal relations with the Federal government, were laws which imposed upon the colored race onerous disabilities and burdens, and curtailed their rights in the pursuit of life, liberty, and property to such an extent that their freedom was of little value, while they had lost the protection which they had received from their former owners from motives both of interest and humanity. ::These circumstances, whatever of falsehood or misconception may have been mingled with their presentation, forced ... the conviction that something more was necessary in the way of constitutional protection to the unfortunate race who had suffered so much. (Congressional leaders) accordingly passed through Congress the proposition for the fourteenth amendment, and ... declined to treat as restored to their full participation in the government of the Union the States which had been in insurrection, until they ratified that article by a formal vote of their legislative bodies. (16 Wall. 36, at page 70.) :Certainly, when the Fourteenth Amendment was submitted for approval, the people were not told that the states of the South were to be denied their normal relationship with the Federal Government unless they ratified an amendment granting new and revolutionary rights to corporations. This Court, when the Slaughter House Cases were decided in 1873, had apparently discovered no such purpose. The records of the time can be searched in vain for evidence that this amendment was adopted for the benefit of corporations. It is true (303 U.S. 77, 87) that in 1882, twelve years after its adoption, and ten years after the Slaughter House Cases, supra, an argument was made in this Court that a journal of the joint Congressional Committee which framed the amendment, secret and undisclosed up to that date, indicated the committee's desire to protect corporations by the use of the word "person." Four years later, in 1886, this Court in the case of Santa Clara County v. Southern Pacific Railroad, 118 U.S. 394, 6 S.Ct. 1132, decided for the first time that the word "person" in the amendment did in some instances include corporations. A secret purpose on the part of the members of the committee, even if such be the fact, however, would not be sufficient to justify any such construction. The history of the amendment proves that the people were told that its purpose was to protect weak and helpless human beings and were not told that it was intended to remove corporations in any fashion from the control of state governments. The Fourteenth Amendment followed the freedom of a race from slavery. Justice Swayne said in the Slaughter Houses Cases, supra, that: "By "any person" was meant all persons within the jurisdiction of the State. No distinction is intimated on account of race or color." Corporations have neither race nor color. He knew the amendment was intended to protect the life, liberty, and property of human beings. :The language of the amendment itself does not support the theory that it was passed for the benefit of corporations. :The first clause of section 1 of the amendment reads: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside." Certainly a corporation cannot be naturalized and "persons" here is not broad enough to include "corporations." :The first clause of the second sentence of section 1 reads: "No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States." While efforts have been made to persuade this Court to allow corporations to claim the protection of his clause, these efforts have not been successful. :The next clause of the second sentence reads: "Nor shall any State deprive any person of life, liberty, or property, without due process of law." It has not been decided that this clause prohibits a state from depriving a corporation of "life." This Court has expressly held that "the liberty guaranteed by the 14th Amendment against deprivation without due process of law is the liberty of natural, not artificial persons." Thus, the words "life" and "liberty" do not apply to corporations, and of course they could not have been so intended to apply. However, the decisions of this Court which the majority follow hold that corporations are included in this clause in so far as the word "property" is concerned. In other words, this clause is construed to mean as follows: ::Nor shall any State deprive any human being of life, liberty or property without due process of law; nor shall any State deprive any corporation of property without due process of law. :The last clause of this second sentence of section 1 reads: "Nor deny to any person within its jurisdiction the equal protection of the laws." As used here, "person" has been construed to include corporations. (303 U.S. 77, 89) Both Congress and the people were familiar with the meaning of the word "corporation" at the time the Fourteenth Amendment was submitted and adopted. The judicial inclusion of the word "corporation" in the Fourteenth Amendment has had a revolutionary effect on our form of government. The states did not adopt the amendment with knowledge of its sweeping meaning under its present construction. No section of the amendment gave notice to the people that, if adopted, it would subject every state law and municipal ordinance, affecting corporations, (and all administrative actions under them) to censorship of the United States courts. No word in all this amendment gave any hint that its adoption would deprive the states of their long-recognized power to regulate corporations. :The second section of the amendment informed the people that representatives would be apportioned among the several states "according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed." No citizen could gather the impression here that while the word "persons" in the second section applied to human beings, the word "persons" in the first section in some instances applied to corporations. Section 3 of the amendment said that "no person shall be a Senator or Representative in Congress," (who "engaged in insurrection"). There was no intimation here that the word "person" in the first section in some instances included corporations. :This amendment sought to prevent discrimination by the states against classes or races. We are aware of this from words spoken in this Court within five years after its adoption, when the people and the courts were personally familiar with the historical background of the amendment. "We doubt very much whether any action of a State not directed by way of discrimination against (303 U.S. 77, 90) the negroes as a class, or on account of their race, will ever be held to come within the purview of this provision." Yet, of the cases in this Court in which the Fourteenth Amendment was applied during the first fifty years after its adoption, less than one-half of 1% invoked it in protection of the negro race, and more than 50% asked that its benefits be extended to corporations. :If the people of this nation wish to deprive the states of their sovereign rights to determine what is a fair and just tax upon corporations doing a purely local business within their own state boundaries, there is a way provided by the Constitution to accomplish this purpose. That way does not lie along the course of judicial amendment to that fundamental charter. An amendment having that purpose could be submitted by Congress as provided by the Constitution. I do not believe that the Fourteenth Amendment had that purpose, nor that the people believed it had that purpose, nor that it should be construed as having that purpose. B Hugo Black, dissenting, Connecticut General Life Insurance Company v. Johnson (303 U.S. 77, 1938) Justice Black was not alone in his questioning of the legitimacy of corporate personhood. Justice Douglas, dissenting in Wheeling Steel Corp. v. Glander 337 U.S. 562 1949, gave an opinion similar to, but shorter than, the one quoted above, to which Justice Black concurred.

Twenty-first century developments

The understanding of corporate personhood in the United States may be changing as a result of developments in bankruptcy law and mass tort litigation. Near the end of the 20th century, several major corporations entered chapter 11, i.e. judicial protection from creditors, on the basis of their liability for harm done or allegedly done to actual or potential plaintiffs by asbestos. Owens-Corning, an insulation manufacturer, was perhaps the most high-profile of these. Owens-Corning was, formally speaking, not one corporation but several, and it has maintained in the bankruptcy proceedings that the several corporations must be treated separately in any court-directed re-organization. In 2004, a federal district court ordered the substantive consolidation of the different corporations that operate under the Owens-Cornings name for purposes of re-organization. This is still a hotly disputed matter, and that order was overturned on appeal, but it may prove a landmark in the willingness of courts to pierce the corporate veil.

External links

- [http://www.knowmore.org/index.php/The_Corporate_Personhood_Debate Knowmore.org Corporate Personhood Entry]
- [http://www.reclaimdemocracy.org/personhood ReclaimDemocracy.org] has a large library of resources on the t

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