from THE OLIVER WENDELL HOLMES DEVISE HISTORY OF THE SUPREME COURT OF THE UNITED STATES, VOL. VII, RECONSTRUCTION AND REUNION 1864-88, PART TWO, by Charles Fairman (NY & London, 1987). I have omitted all but two footnotes and incorporated those in the text. K. Mickey
SOME DECISIONS ON CORPORATIONS
"I suppose ... that neither the framers of the Constitution nor the framers of the Judiciary Act had corporations in view." So ex-Justice Benjamin R Curtis began in a lecture to his class in Federal Jurisdiction at the Harvard Law School in 1872-73. Yet from necessity, served by the use of fictions, it had come to be settled that " A suit by or against a corporation in it corporate name may be presumed to be a suit by or against citizens of the State which created the corporate body, and no averment or denial to the contrary is admissible for the purpose of withdrawing the suit from the jurisdiction of a court of the United States.
With equal truth one may add that the framers of the Fourteenth Amendment did not have corporations in view. That indispensable institution had to be fitted into the Amendment whose immediate purpose was to establish and protect the new class of freedmen in their rights as citizens. How far corporation would be entitled to protection under the Amendment was on of those question left "to the gradual process of judicial inclusion and exclusion." Whe Chief Justice Waite said in Union Pacific R.R. v. United States, the Sinking Fund Case, that the United States "equally with the States ... are prohibited from depriving persons or corporations of property without due process of law," he expressed shat seemed implicit in the Amendment.
A test came in California, which had adopted a new constiution in 1879, designed to reduce the power of railroad interests. Property owned by individuals was to be taxed upon its value, minus the amount of any mortgage or other incumbrance, which was to be taxed to the holder. For a railroad, however, the mortgage which was to be included in the amount to be taxed. (They were so heavily mortgaged that, were it otherwise, they would largely have excaped this levy.) Furthermore, the franchise, roadway, roadbed, and rolling stock of a railroad operating in more than one county would be assed at actual value, and apportioned by mileage to the municipal units, to be fixed by the Board of Equalization, without notice or hearing.
In April 1882 County of San Mateo v. Southern Pacific R.R. was brought in a state court for a year's taxes . . . .
When the case came to trial before (Justice) Field and Circuit Judge Sawyer, counsel for the defendant railroad argued that the discrimination in the mode of assesment offended the equal protection clause, while the absence of notice and hearing was a denial of due process.
Judgement for the defendant came on September 25, 1882. Because of the great importance of the constitutional question, decision of companion cases was stayed; it was pointed out that a writ of error, in the San Mateo case, if filed immediately, might be heard at the coming term of the Court.
That was done; the case was received on October 13, promptly advanced, and given a hearing on De4cember 19-21, 1882.
An unusual feature among the elaborate arguments was that by Roscoe Conkling for the railroad. He produced a copy of the "Journal of the joint committee of the Fifteen " at the First Session of the 39th Congress wihere the Fourteenth Amendment was framed, and gave a novel twist to his account. The Amendment had not been designed exclusively for the benefit of freedmen. Individuals and joint-stock companies, he said, had appealed to Congress for protection from invidious and discriminating state and local taxes. The Amendment gave security "to all persons in every State." "The great ordinance [shoul] never be dwarfed into a mere remedy for a single wrong"; "it operates upon association of indivuals," that was to say , upon corporations. He closed by repeating Waite's affirmation in the Sinking Fund Case, quoted above.
The performance was contrived and misleading; to Field, "It was a great argument . . . . The written pages want the fire of the speaker which warmed and illuminated everything that was said." Years later, Conkling's seeming disclosure of a secret purpose of the Committee led some historians for a time to accept the "Conspiracy Theory" of the Amendment. [Accute and penetrating discussion of this, the "corporate personality," and the influence of Justice Field figured in most of the articles brought together in Howard Jay Graham's "Everyman's Constitution" (Madison: State Historical Society of Wisconsin, 1962) The text of Conkling's argument is set out in an Appendix at 595-610.]
Notwithstanding the major effort of counsel, no decision was forthcoming: as recorded in the Chief Justice's Docket Book, on January 29, 1883, the San Mateo case was postponed to a later term.
Meanwhile in California suits were brought by the State and by Santa Clara and Sacramento counties against several railroads to collect taxes. . . . .
Reverting now to the pending San Mateo case, the railroad company had paid that county's claim, and the parties submitted to the Supreme Court that the case brought by Santa Clara County against the same railroad would present all issues involved, and that their case should be dismissed. On December 21, 1885 it was so ordered.
Shortly thereafter, on January 26, 18886, County of Santa Clara and companion cases were reached for argument. At the outset the Chief Justice made an announcement to the effect that
The Court does not wish to hear argument on the question whether the provision in the
Fourteenth Amendment ... which forbids a State to deny any person within its jurisdiction the equal
protection of the laws, applied to these Corporation. We are all of opinion that it does.
Dr. Magrath's "Waite" gives the text of the exchange between the Reporter and the Chief Justice leading to this announcement..
The Court had had ample time to mature its view since the argument in San Mateo in December 1882, and evidently saw no need to go through the exercise again. Moreover, it was immaterial for the dispostion of Santa Clara. As Justice Harlan developed in his opion for the Court, plantiff's demand was for an entire tax laid upon different classes of property, not distinct and seperable, and in part beyond the authority of the state Board of Equalization. The assesment was invalid under local law.
Justice Field concurred, but regretted that the Court had not deemed it consistent with its duty to decide the important constitutional question of equal protection.
Much has been said about the unusual way in which the conclusion of the consitutional status of corporations was announced. The report of the decision in Missouri Pacific Ry. v. Humes [115 U.S. 512] makes the announcement seem less notable.
A Missouri statute ...(provided) that for injury to animals the company would be liable to double damages..... Counsel for the company argued that the railroad corporation was a person with the Fourteenth Amendment, and that double damages to make a donation denied due process and equal protection. .... The Minutes record what transpired:
The argument of these cases was commenced by Mr. A.B. Browne of counsel for
the plantiff in error.
The Court announced that it did not desire to hear further argument in these cases.
Justice Field delivered the Court's opinion. He quoted Miller's remarks in Davidson v. New Orleans on "some strange misconception of the scope" of the Due Process Clause, and the wisdom of "the gradual process of judicial inclusion and exlusion." After the lapse of eight years there might well be "increased surprise" at these cases. It was the duty of the State to redress private wrongs, and Missouri's statute was notable beneficent. The legislature might impose double damages, and there was no valid objection that the sufferer instead of the State received them.
How did the Court decide to cut off further argument? The records are silent, but quite like the Chief Justice polled the Justices by passing a paper along the bench.