Juristic person

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A juristic person is an artificial entity through which the law allows a group of natural persons to act as if it were a single composite individual for certain purposes. This legal fiction does not mean these entities are human beings, but rather means that the law recognizes them and allows them to act as natural persons for some purposes--most commonly lawsuits, property ownership, and contracts. The concept goes by many names, including corporate personhood.^[1] A juristic person is sometimes called a legal person, artificial person, or legal entity (although the last term is sometimes understood to include natural persons as well). Although the concept of a juristic person is more central to Western law, particularly common law and civil law countries, it is also found in virtually every legal system.

Some countries, including Germany, France, and Spain, have treated juristic persons as real, natural persons.^[2] In England and the United States, the use of this terminology does not mean that artificial legal entities are considered human beings. It's simply a "technical legal meaning" where "a 'person' is any subject of legal rights and duties."^[3] Because artificial entities have legal rights and duties, they are considered persons. To distinguish them from natural persons, we call them juristic persons.

Contents 1 Examples 2 Creation and history of the doctrine 3 Limitations 4 Extension of Basic Rights to Juristic Persons 4.1 United States 4.2 China 5 Controversies about "Corporate Personhood" 5.1 Semantics 5.2 Constitutional Protections 5.3 References 6 Footnotes

[edit] Examples

Legal personality is given to any organization which is a subject of legal rights and duties. Some examples of juristic persons include:

• collectives
• companies
• cooperatives (co-ops)
• corporations
• corporations sole
• estates of deceased persons
• European economic interest groupings (EEIGs)
• flow-through entities (FTEs)
• limited liability companies
• municipalities
• natural persons
• partnerships
• political parties
• political action committees (PACs)
• sovereigns
• states
• temples, in some legal systems, have separate legal personality^[4]
• trade unions
• trusts
• unincorporated associations
• ship or vessel

While almost all countries recognize some form of legal personality, no single country recognizes every form in the above list. Some of these examples may overlap or not be recognized as a juristic person. For example, in many jurisdictions, banks are not separate entities, but merely companies or partnerships which hold the requisite banking license. Similarly, trade unions and political parties are often legally unincorporated associations.

[edit] Creation and history of the doctrine

In the common law tradition, only a person could sue or be sued. This was not a problem in the era before the Industrial Revolution, when the typical business venture was either a sole proprietorship or partnership—the owners were simply liable for the debts of the business. A feature of the corporation, however, is that the owners/shareholders enjoyed limited liability—the owners were not liable for the debts of the company. Thus, when a corporation breached a contract or broke a law, there was no remedy. Because limited liability protected the owners and the corporation wasn't a legal person subject to the law. There was no accountability for corporate wrong-doing.

To resolve the issue, legal scholars proposed a solution—-a corporation could instead be considered a person, and could therefore be recognized and held subject to the law.^[5] English courts adopted this legal fiction, calling corporations artificial persons, as early as the 16th century.^[6] The United States Supreme Court first acknowledged it in Trustees of Dartmouth College v. Woodward (1819). In that case, Justice Story wrote that a corporation “is, in short, an artificial person, existing in contemplation of law, and endowed with certain powers and franchises which, though they must be exercised through the medium of its natural members, are yet considered as subsisting in the corporation itself, as distinctly as if it were a real personage.”

This ensured that creditors would be able to seek relief in the courts should the corporation default on its obligations, encouraging banks to extend credit to the corporation. This simple fiction enabled corporations to acquire wealth, expand, and become the preferred organizational form for businesses of all sizes.

This understanding wasn't just adopted by the courts, it was also adopted by legislatures.^[7] Thus, legislators intentionally used the word "person" to include both natural persons and juristic persons. This understanding has more or less continued, and was reaffirmed by the U.S. Supreme Court as recently as 2003 in Cook County, Ill. v. U.S. ex rel. Chandler.

An organization's corporate personhood also has been construted to make it a citizen, resident, or domicilliary of a state (usually for purposes of personal jurisdiction). In Louisville, C. & C.R. Co. v. Letson, 2 How. 497, 558, 11 L.Ed. 353 (1844), the U.S. Supreme Court held that a corporation is “capable of being treated as a citizen of [the State which created it], as much as a natural person.” Ten years later, they reaffirmed the result of Letson, though on the somewhat different theory that “those who use the corporate name, and exercise the faculties conferred by it,” should be presumed conclusively to be citizens of the corporation's State of incorporation. Marshall v. Baltimore & Ohio R. Co., 16 How. 314, 329, 14 L.Ed. 953 (1854). These concepts have been superseded by statute, since U.S. jurisdictional statutes specifically address the domicile of corporations.

[edit] Limitations

There are limitations to the legal recognition of artificial persons. Legal entities cannot marry, they usually cannot vote or hold public office,^[8] and in most jurisdictions there are certain positions which they cannot occupy.^[9] The extent to which a legal entity can commit a crime varies from country to country. Certain countries prohibit a legal entity from holding human rights; other countries permit artificial persons to enjoy certain protections from the state that are traditionally described as human rights.^[10]

[edit] Extension of Basic Rights to Juristic Persons

[edit] United States

In part based on the principle that juristic persons are simply organizations of human individuals, and in part based on the history of statutory interpretation of the word "person," the U.S. Supreme Court has repeatedly held that certain constitutional rights protect juristic persons (like corporations and other organizations). Santa Clara County v. Southern Pacific Railroad is sometimes cited for this finding, because the court reporter's comments included a statement the Chief Justice made during oral arguments, telling the attorneys that "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 any person within its jurisdiction the equal protection of the laws, applies to these corporations. We are all of the opinion that it does." Later opinions turned this dicta into law.^[11] For example, because of the First Amendment, Congress can't make a law restricting the free speech of a political action group or dictating the coverage of a local newspaper.^[12] Because of the Due Process Clause, a state government can't take the property of a corporation without using due process of law and providing just compensation. These protections apply to all legal entities, not just corporations.

In 2006, Google relied upon Due Process rights to fight a government seizure of the search queries of millions of its users. Because the Fourth Amendment's prohibition against unreasonable searches and seizures has been extended to corporations like Google, the company was able to protect the privacy of its users.^[13]

[edit] China

Under the Chinese Civil Code, "[j]uristic persons are organs which possess the capacity for civil rights and the capacity for civil activity, and in accordance with the law, independently enjoy civil rights and undertake civil obligations." This essentially extends full basic rights and protections to any recognized artificial legal entities in China.^[14]

[edit] Controversies about "Corporate Personhood"

Corporate personhood has come under criticism recently, as courts have extended other rights to the corporation beyond those necessary to ensure their liability for debts. Other commentators argue that corporate personhood is not a fiction anymore—it simply means that for some legal purposes, "person" has now a wider meaning than it has in non-legal uses. Some groups and individuals (including the Green Party^[15]) have objected to "corporate personhood." The use of this term is incorrect. These opponents usually do not actually want to abolish the theory that allows corporations to be governed by the law, be subjected to taxes, sue and be sued, and otherwise be treated as a legal entity. Rather, their objections actually focus on two issues: semantics and constitutional protections.

[edit] Semantics

Some opponents of "corporate personhood" object to a corporation, particularly a for-profit corporation, being called a person. Their ideology focuses on the distinction between an individual and what they consider a "soulless corporation." Thus, some opponents of "corporate personhood" don't actually want to change the theory, they just want to change the terms used. This would involve some weighty statutory revision, since legislatures for centuries have used the word "person" to include legal entities other than natural persons. However, the trend is already moving in this direction. In recent years, legislatures have begun to use other terms like "legal entity" when drafting their laws. Likewise, legal scholarship has moved toward that terminology as well.

[edit] Constitutional Protections

In part as a matter of interpretation of the word "person" in the Fourteenth Amendment, U.S. courts have extended certain constitutional protections to legal entities. Opponents of "corporate personhood" don't necessarily want to eliminate legal entities, but do want to strip them of some of these rights through constitutional amendment.^[16] Often, this is motivated by a desire to restrict the political speech and donations of corporations, interest groups, lobbyists, and political parties. Social commentator Thom Hartmann is among those that share this view.^[17] Because juristic persons have limited "free speech" rights, legislation meant to eliminate corporate campaign contributions has been repeatedly struck down by various courts.^[18] Those who believe juristic persons should have the protection of the U.S. Constitution point out that they are just organizations of people, and that these people shouldn't be deprived of their human rights when they join with others to act collectively. Without protection for corporations, a government could seize a school's property without due process or just compensation, racial discrimination against primarily black organizations would be allowed, and media organizations would not have the freedom to collect and publish honest news. On these grounds, the American Civil Liberties Union has defended juristic persons against attacks on their free speech rights.^[19]

[edit] References

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• Julius Binder, Das Problem der juristischen Persönlichkeit, (1907)
• P. W. Duff, Personality in Roman Private Law, (1938)
• C. A. Cooke, Corporation, Trust and Company: A Legal History, (1950)
• Simeon Guterman, The Principle of the Personality of Law in the Germanic Kingdoms of Western Europe from the Fifth to the Eleventh Century (1990)
• Frederick Hallis, Corporate Personality: A Study in Jurisprudence (1930)
• Raymond Saleilles, De La Personalité Juridique: Histoire et Théories, (1922)
• Alan Watson, The Law of Persons in the Later Roman Republic. (1967)

[edit] Footnotes

1. ^ This concept is separate from and should not be confused with limited liability or the joint stock principle. See, e.g., [1]. Also note that basic rights (like the rights to free speech and due process of law) do not necessarily follow from corporate personhood.
2. ^ The Juristic Person. I, George F. Deiser , University of Pennsylvania Law Review and American Law Register, Vol. 57, No. 3, Volume 48 New Series. (Dec., 1908), pp. 131-142. Stable URL: http://links.jstor.org/sici?sici=0749-9833%28190812%2957%3A3%3C131%3ATJPI%3E2.0.CO%3B2-3
3. ^ John Chipman Gray, The Nature and Sources of the Law (Roland Gray ed., MacMillan 1921)
4. ^ Williams v The Shipping Corporation of India (US District Court, Eastern District Virginia), 10 March 1980, 63 ILR 363
5. ^ See, e.g., 2 J. Bouvier, A Law Dictionary 332 (6th ed. 1856) (def. 2: The term “person” “is also used to denote a corporation which is an artificial person”); 1 S. Kyd, A Treatise on the Law of Corporations 13 (1793) (“A corporation then, or a body politic, or body incorporate, is a collection of many individuals, united into one body, ... and vested, by the policy of the law, with the capacity of acting, in several respects, as an individual, particularly of taking and granting property, of contracting obligations, and of suing and being sued ...”).
6. ^ [2]
7. ^ 2 Inst. 736.; 1 Mod. Rep. 164; 1 Woodes. Rep. 195; 1 Bl. Comm. 176. In U.S. v. Amedy, the Court stated, "That corporations are, in law, for civil purposes, deemed persons, is unquestionable. And the citation from 2 Inst. 736 establishes, that they are so deemed within the purview of penal statutes."
8. ^ In Hong Kong, artificial persons are granted the right to vote in functional constituencies elections.
9. ^ These restrictions vary from country to country. Some countries do not permit a corporate entity to be a director or a liquidator while others do.
10. ^ Most commonly in the area of taxation and in relation to search warrants.
11. ^ See, e.g., Noble v. Union River Logging
12. ^ First Nat. Bank of Boston v. Bellotti
13. ^ [3]
14. ^ Gary J. Dernelle. "DIRECT FOREIGN INVESTMENT AND CONTRACTUAL RELATIONS IN THE PEOPLE'S REPUBLIC OF CHINA." DePaul Business Law Journal, Spring/Summer 1994. (6 DePaul Bus. L.J. 331)
15. ^ Green Party USA Platform
16. ^ For example, the organization ReclaimDemocracy.org has such a proposal on their website
17. ^ Thom Hartmann's website
18. ^ See, e.g., Nike v. Kasky (2002)
19. ^ ACLU website on corporate free speech