December 5, 2021

Are Corporations People?

Are Corporations People? A purplish tinted picture of Wall Street

Santa Clara County v. Southern Pacific Railroad was a tax case between the railroads and the state of California. Two railroad companies were refusing to pay taxes under new rules set forth during the California Constitutional Convention of 1879.  In order to recoup lost revenue Santa Clara county brought the case in front of the Supreme Court. This is where the railroad companies sought to use a peculiar defense that ended up altering the balance between corporations and the state. They wanted to argue that the railroad companies should be warranted protection under the section 1 equal protection clause of the 14th Amendment. Essentially, they were seeking to confirm that corporations were indeed people. The 14th Amendment was ratified during the era of reconstruction, after the Civil War, to protect citizens from discrimination and to make sure all people had the same equal rights. 

Before opening arguments even began Chief Justice Waite emphatically stated that the court believes that corporations are protected under the 14th Amendment. Nevertheless, the argument was not allowed to be used during the actual court case and as such was never debated on its constitutional merit.

The case itself was an obscure one that had little effect on the evolution of the constitution. However, the headnote is what changed the course of history. A headnote is a brief summary written by the court reporter that outlines the main arguments of the case. The court reporter, J.C. Davis (a former railroad official), wrote, “The defendant Corporations are persons within the intent of the clause in section 1 of the 14th Amendment to the Constitution of the United States, which forbids a state to deny any person within its jurisdiction the equal protection of the laws.” Although the argument was never used in the case the headnote was never corrected and corporate personhood was inadvertently awarded constitutional validity by the Supreme Court.