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The Curious Exclusion of Corporations from the Privileges and The Curious Exclusion of Corporations from the Privileges and
Immunites Clause of Article IV Immunites Clause of Article IV
Stewart Jay
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THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
FROM
THE
PRIVILEGES
AND
IMMUNITIES
CLAUSE
OF
ARTICLE
IV
Stewart
Jay
*
I.
INTRODUCTION
In 1869,
the
U.S.
Supreme
Court
held
in
Paul
v.
Virginia
that
a
corporation
was
not
a
"citizen"
for
purposes
of
the
Privileges
and
Immunities
Clause
of
Article
IV
of
the
U.S.
Constitution.
1
In
so
concluding,
the
Court
agreed
with
dicta
in
its
earlier
cases
2
and
numerous
state
court
rulings.
3
Corporations
were
"the
mere
creation
of
local
law,
[and]
can
have
no
legal
existence
beyond
the
limits
of
the
*
Professor
of
Law
and
Pendleton
Miller
Chair
in
Law,
University
of
Washington
School
of
Law.
All
grammatical
uses
in
quoted
early
documents
have
been
left
in
their
original
form
without
a
"sic"
to
indicate
a
departure
from
modem
use.
1.
75
U.S.
(8
Wall.)
168,
177-78,
182
(1869).
The
Privileges
and
Immunities
Clause
provides:
"The
Citizens
of
each
State
shall
be
entitled
to
all
Privileges
and
Immunities
of
Citizens
in
the
several
States."
U.S.
CONST.
art.
IV,
§
2.
2.
See,
e.g.,
Bank
of
Augusta
v.
Earle,
38
U.S.
(13
Pet.)
519, 587
(1839)
("The
only
rights
[a
corporation]
can
claim
are
the
rights
which
are
given
to
it in
that
character,
and not
the
rights
which
belong
to
its
members
as
citizens
of
a
state
...
").
For
more
on
Bank
of
Augusta,
see
infra
notes
46-48.
3.
See,
e.g.,
Ducat
v.
City
of
Chicago,
48
Ill.
172,
180-81
(1868),
aff'd,
77
U.S.
(10
Wall.)
410,
415
(1871)
(holding
corporations
entering
another
state
to
do
business
are
not
"citizens"
under
Article
IV);
Phoenix
Ins.
Co.
v.
Commonwealth,
68
Ky.
(5
Bush)
68,
78-80
(1868)
(same);
Commonwealth
v.
Milton,
51
Ky.
(12
B.
Mon.)
212,
216
(1851);
Tatem
v.
Wright,
23
N.J.L.
429,
442
(1852)
(opinion
of
Potts,
J.)
("Corporations
are
not
citizens
within
the
meaning
of
the
clause
referred
to.");
id.
at
446
(opinion
of
Elmer,
J.)
(asserting
that
the
"citizen"
in
Article
IV,
Section
2
means
"a
natural
person");
Bard
v.
Poole,
12
N.Y.
495,
504
(1855)
(stating
that
"corporations
are
not
citizens
in
the
sense
of'
Article
IV,
Section
2);
People
v.
Imlay,
20
Barb.
68,
80
(N.Y.
Gen.
Term
1855)
(declaring
that
"[a]n
incorporated
company
is
not
a
citizen,
within
the
meaning
of'
Article
IV,
Section
2);
Wheeden
v.
Camden
&
Amboy
R.R.,
1
Grant
420,
423
(Pa.
1856)
(stating
that
it
was
"impossible"
for
"a
corporation
[to]
be
a
citizen");
Slaughter
v.
Commonwealth,
54
Va.
(13
Gratt.)
767,
771-73
(1856).
1
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LAW
REVIEW
sovereignty
where
created,"
4
Justice
Stephen
J.
Field
wrote
for
the
Court.
If
another
state
allowed
them
to
do
business
inside
its
borders,
"such
assent
may
be
granted
upon
such
terms
and
conditions
as
those
States
may
think
proper
to
impose."
5
States
could
even
"exclude
the
foreign
corporation
entirely,"
6
"unless
such
prohibition
is
so
conditioned
as
to
violate
some
provision
of
the Federal
Constitution
' 7
other
than the
Privileges
and
Immunities
Clause.
As
far
as
the
clause
was
concerned,
"[t]he
whole
matter
rests
in
their
discretion,"
Field
underscored.'
The
Court
has
never
retreated
from
these
conclusions,
9
and
4.
Paul,
75
U.S.
(8
Wall.)
at
181.
The
exclusion
of
corporations
from
Article
IV
was
subsequently
expanded
to
include
a
range
of
organizations,
including
investment
trusts:
Whether
a
given
association
is called
a
corporation,
partnership,
or
trust,
is
not
the
essential
factor
in
determining
the
powers
of
a
state
concerning
it.
The
real
nature
of
the
organization
must
be
considered.
If
clothed
with
the
ordinary
functions
and attributes
of
a
corporation,
it
is
subject
to
similar
treatment.
Hemphill
v.
Orloff,
277
U.S.
537,
550
(1928).
5.
Paul,
75
U.S.
(8
Wall.)
at
181;
see
Lafayette
Ins.
Co.
v.
French,
59
U.S.
(18
How.)
404,
407
(1856)
("A
corporation
created
by
Indiana
can
transact
business
in
Ohio
only
with
the
consent,
express
or
implied,
of
the latter
State. This
consent may
be
accompanied
by
such
conditions
as
Ohio
may
think
fit
to
impose
....")
(citation
omitted);
see
also
St.
Clair
v.
Cox,
106
U.S.
350, 356
(1882)
(citing
Lafayette
Ins.
Co.,
59
U.S.
(18
How.)
at 407);
Fire
Dep't
of
Milwaukee
v.
Helfenstein,
16
Wis.
142,
145
(1862)
(maintaining
that
a
state
may
impose such
restrictions
and conditions
"as
it
sees
fit"
on
nonresident
corporations).
6.
Paul,
75
U.S.
(8
Wall.)
at
181;
see
S.
Ry.
Co.
v.
Greene,
216
U.S. 400,
413
(1910)
(citing
W. Union
Tel.
Co.
v.
Kansas,
216 U.S.
1
(1910))
(noting
the line
of
cases that
"sustained
the
right
of
the
State to
exclude
a
foreign
corporation
from
its
borders
and
to
impose
conditions
upon
the
entry
of
such
corporations
into
the
State
for
the
purpose
of
carrying
on
business
therein");
Attorney
Gen.
v.
Bay
State
Mining
Co.,
99
Mass.
148,
153
(1868)
("The
state
may
deny
to
foreign
corporations
the
right
to
transact
their
business,
hold
property,
or
exercise
any
corporate
function
whatever
within
its
limits.
Or
it
may
permit
them
to
exercise
such
privileges
upon
terms
prescribed
by
law
.... );
Imlay,
20
Barb.
at
69, 80-81
(holding
that
agent
of
foreign
insurance
corporation
could
be
forbidden
to
do
business
in
state).
7.
Sec.
Mut.
Life Ins.
Co.
v.
Prewitt,
202
U.S.
246,
249
(1906).
Although
a
state
could
impose
"such
conditions
as
[it]
may
think
fit"
on
an
out-of-state
corporation,
they
could
not
be
"repugnant
to
the
constitution
or laws
of
the
United
States,
or
inconsistent
with those
rules
of
public
law
which
secure
the
jurisdiction
and
authority
of
each State
from
encroachment
by
all
others,
or
that
principle
of
natural
justice
which
forbids
condemnation
without
opportunity
for
defence."
Lafayette
Ins.
Co.,
59
U.S.
(18
How.)
at
407.
For
example,
a
state could
not condition
an
out-of-
state
corporation's
license
to
do
business
on
not
removing
cases
to
federal
court.
Barron
v.
Burnside,
121
U.S.
186,
198,
200
(1887)
(stating
that
"state
legislation
cannot confer
jurisdiction
upon
the
Federal
courts, nor
limit
or restrict
the
authority
given
to
them by
Congress
in
pursuance
of
the Constitution");
Ins.
Co.
v.
Morse,
87
U.S.
(20 Wall.)
445,
453
(1874)
("The
jurisdiction
of
the
Federal
courts...
depends
upon
and
is
regulated
by
the
laws
of
the
United
States.
State
legislation
cannot
confer
jurisdiction
upon
the
Federal
courts, nor
can
it
limit
or
restrict
the
authority
given
by
Congress
in
pursuance
of
the
Constitution.").
8.
Paul,
75
U.S.
(8
Wall.)
at
181.
9.
See,
e.g.,
Hemphill,
277
U.S.
at
548
("It
is
settled
doctrine
that
a
corporation
organized
under
the
laws
of
one
state
may
not
carry
on
local
business
within
another
without
the
latter's
permission
....
A corporation
is
not
a
mere
collection
of
individuals
capable
of
claiming
all
benefits
assured
them
by
section
2,
article
IV,
of
the
Constitution.");
Blake
v.
McClung,
172
U.S.
[Vol.
44:79
2
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
commentators
have
accepted the
exclusion
of
corporations
from
the
clause
without
protest."°
Denying
corporations
the
protection
of
the
Privileges and
Immunities
Clause
effectively authorized
all
types
of
state
discriminations
against companies chartered
under
the
laws
of
other
jurisdictions.
Virginia's
highest
court
held,
in
1856,
that
the
legislature
could "forbid foreign
corporations
from
engaging
in
any
pursuit
within
the
state;
and,
of
consequence,
to
grant
permission
to
engage therein
only
upon
terms"
that
it
imposed.
1
'
Or
as
the
Supreme
Court
bluntly
stated
in
1888,
"the
power
of
the
State
to
discriminate
between
her
own
domestic
corporations
and
those
of
other
States,
desirous
of
transacting
business
within
her
jurisdiction,
was clearly
established."'
2
Consequently,
in
Blake
v.
McClung,
individuals
won
protection under
the
Privileges
and
Immunities
Clause,
but
corporations
with identical
claims
lost.'
3
It is
hardly surprising
that states
used their
discretionary authority
over
foreign
corporations
to
engage
in
such
overt
discriminations
until
they were
found
to
violate
the
Dormant
Commerce
Clause'
4
and
the
239,
259
(1898)
(holding
that
"a
corporation
is
not
a
citizen
within
the
meaning
of
[Article
IV,
Section 2]");
Norfolk
&
W.
R.R.
v.
Pennsylvania,
136
U.S.
114,
118
(1890)
("[C]orporations
are
not
citizens, within
the
meaning
of
clause
1,
see
2,
of
art.
IV
....
");
Pembina Consol.
Silver Mining
&
Milling
Co.
v.
Pennsylvania,
125
U.S.
181,
187-88
(1888)
("[C]orporations
are
not
citizens
within
the
meaning
of
[Article
IV,
Section
2,
which]
...
applies
only
to
natural
persons,
members
of
the
body
politic
owing
allegiance
to
the
State,
not to
artificial
persons
created
by
the
legislature,
and
possessing
only
such attributes
as
the
legislature has
prescribed
....
");
Ducat
v.
Chicago,
77
U.S.
(10
Wall.)
410,
415
(1871)
("The power
of
the
State
to
discriminate
between
her
own
domestic
corporations
and
those
of
other
States,
desirous
of
transacting
business
within
her
jurisdiction,
is
clearly
established
.... ).
10.
See,
e.g.,
THOMAS
M.
COOLEY,
THE
GENERAL PRINCIPLES
OF
CONSTITUTIONAL
LAW
IN
THE
UNITED
STATES
OF
AMERICA
188
(Boston,
Little,
Brown
&
Co.
1880)
("And
the
term
citizens,
as
here
used,
applies
only
to
natural
persons,
members
of
the
body politic, owing
allegiance
to the
State, and
not
to
corporations,
which
are
artificial persons
created
by
the
legislature,
and
possessing
only the
attributes
which the
legislature
has
prescribed.").
One
leading
modem treatise
merely
mentions
the
doctrine
in
a
footnote.
See
LAURENCE
H.
TRIBE,
AMERICAN
CONSTITUTIONAL
LAW
544
n.92 (2d
ed.
1988).
11.
Slaughter
v.
Commonwealth,
54
Va.
(13
Gratt.)
767,
773
(1856);
see
Caldwell
v.
Armour,
43
A.
517, 518
(Del. Super.
Ct.
1899)
("Corporations
are
the
creatures
of
the
local
law,
and
have
no
right
of
recognition
in
other
states without
their
assent,
and
upon
such
terms
as
they
may impose.");
Tatem
v.
Wright,
23
N.J.L.
429,
441
(1852)
(opinion
of
Potts,
J.)
(noting
that
if
states
can
exclude
all
foreign
corporations,
they
can
permit
them
"upon terms"
as
they
wish-in
this
instance,
a
special
tax);
id.
at
447
(opinion
of
Elmer,
J.)
("[A]n
incorporation has
no
right
to
go beyond
the
limits
of
the
sovereignty
which created
it,
and
if
it does,
must
submit
to
such terms
as
other
sovereignties
see
fit
to
impose.").
12.
Pembina
Consol.
Silver Mining,
125
U.S.
at
188.
13.
172
U.S.
at
258-59;
see
infra
text
accompanying notes
22-23.
14.
The Commerce
Clause
of
the
U.S.
Constitution
states:
"The
Congress
shall
have
Power
....
To
regulate
Commerce
with
foreign
Nations,
and
among
the
several
States
....
U.S.
CONST.
art.
I, §
8,
cl.
3.
The
"Dormant
Commerce
Clause"
is
the theory
that
Congress's
power
to
2015]
3
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HOFSTRA
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Equal
Protection
Clause,
both
of
which
were
held
to
protect
corporations.
5
One
of
the
Court's
major
justifications
for
recognizing
the
Dormant
Commerce
Clause
was
that
out-of-state
businesses
were not
in
a
position
to
defend
themselves
in
state
political processes
on
a
level
playing
field
with
their
local
counterparts.
16
The
same
rationale
lies
behind
the
Privileges
and
Immunities
Clause,
regardless
of
whether
the
businesses
being
protected
are
corporations,
partnerships,
or
sole
proprietorships.
7
There
are
many examples
of
such
discriminations
against
corporations
chartered
in
other
states
that
were
sustained
by
courts
before
the Court
enlisted
the
Dormant
Commerce
Clause
and
the
Fourteenth
Amendment
to
stop
them.
States exacted
licensing
fees
or
imposed
special
taxes
on
foreign
corporations
for
the
"privilege"
of
doing
business
in
the
jurisdiction.
8
Most notably,
they
taxed
foreign
regulate
interstate
commerce implies
a
restriction
on
the states,
preventing
legislatures
from
passing
statutes
inhibiting interstate
commerce.
See
Martin
H.
Redish
&
Shane
V.
Nugent,
The
Dormant
Commerce
Clause
and
the
Constitutional
Balance
of
Federalism,
1987
DUKE
L.J.
569,
570
("The
Court
has
[invalidated
a
state
regulation
as
a
violation
of
the
commerce
clause]
when
it
has
found
that
such
regulation
either
discriminates
against
out-of-state
interests
or
unduly
burdens
the
free
flow
of
commerce among
the
states.").
The
Court
held
that
state
taxes
and
regulations
discriminating
against interstate
business transactions
violated
the
Dormant Commerce
Clause.
See,
e.g.,
W.
Union
Tel.
Co.
v.
Kansas,
216
U.S.
1,
47-48
(1910)
(holding
that
state
tax
violated
the
Dormant Commerce
Clause
in
requiring
that
"as
a
condition
of
its
being
allowed
to
do
intrastate
business
in
Kansas,"
a
company
must
pay
a
tax
based
"on
all
its
property,
business
and
interests
everywhere, including
both
its
interstate
and intrastate
business
and
property"); Pittsburg
&
S.
Coal
Co.
v.
Bates,
156
U.S.
577,
588
(1895)
(holding
the Dormant
Commerce
Clause prohibits
state laws
that
"will
impose any discriminating
burden
or
tax
upon
the
citizens
or
products
of
other
States
coming
or
brought
within
its
jurisdiction");
Norfolk &
W.
R.R.,
136
U.S.
at
115,
120
(holding
the
state
violated
the
Dormant
Commerce Clause
by
passing
a
law
requiring
foreign
corporations
to
either
invest
capital
in
the
state
or
pay
an
annual
license
fee);
Welton
v.
Missouri,
91
U.S.
275,
280
(1875)
(stating
that
"the
very
object"
of
the
Commerce
Clause
was
to
combat discriminating
state
legislation).
15.
U.S.
CONST.
amend.
XIV,
§
1;
Metro. Life
Ins.
Co.
v.
Ward,
470
U.S.
869,
874-75,
883
(1985)
(holding
that
higher
taxes
on
out-of-state
corporations
violated
the
Equal
Protection
Clause,
noting
the
"somewhat
checkered
history"
on
the
applicability
of
that
clause
to state
taxes
that
discriminated
against out-of-state
businesses);
Hanover
Fire
Ins.
Co.
v.
Harding,
272
U.S.
494,
516-17
(1926)
(holding
that
state
law
violated
the
Equal
Protection
Clause by imposing
a tax on
the
net
receipts
of
foreign
insurers
that
domestic
companies
did
not
have
to
pay).
Compare
Lincoln
Nat'l
Life
Ins.
v.
Read,
325
U.S.
673,
677
(1945)
(holding
tax
on
foreign
corporations
for
"privilege"
of
doing
business
in
state
was
not
a
violation
of
the
Equal
Protection
Clause),
with
S.
Ry.
Co.
v.
Greene,
216
U.S.
401,
416-17
(1910)
(holding
that higher
state
tax
on
foreign railroad
than on
local
carriers
violated
the
Equal
Protection
Clause).
16.
See
infra
text accompanying
note
96.
17.
See
Austin
v.
New
Hampshire,
420
U.S.
656,
662
(1975)
(stating that
the
Privileges and
Immunities
Clause
"implicates
...
the
structural
balance
essential
to
the
concept
of
federalism,"
by
addressing
the
fact
that
"nonresidents
are
not
represented
in
the
...
legislative
halls"
outside
their
own
states).
18.
See,
e.g.,
Pembina Consol.
Silver Mining
& Milling
Co.
v.
Pennsylvania,
125
U.S.
181,
185-86,
190
(1888)
(holding
that
out-of-state
corporations
that
did
not
invest capital
in
state
could
[Vol.
44:79
4
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
corporations
at
higher
rates
than
they
did
comparable domestic
businesses.
9
States
were allowed
to
limit
the
business
activities
of
foreign
corporations
"to
particular
localities;
or
they
[might]
exact
such
security
for
the
performance
of
its
contracts
with
their
citizens
as
in
their
judgment
[would]
best
promote
the
public
interests.
'2°
Foreign
corporations
generally
were
permitted
to
own
property
or
sue
in
the
courts
of
states
outside their
place
of
incorporation,
but
only
by
comity.
21
They could
be
forbidden altogether
to employ
the
state's
courts
to
vindicate
their
legal
claims, and
consequently
states
were
able
to
impose
terms
for
allowing
access
that
favored
their
own
citizens.
2
'
For
instance,
out-of-state
corporations
could
be
subordinated
to
state
citizens
in
distributing
the
assets
of
an
insolvent company,
23
or
be
required
to
appoint
an
agent
to receive
service
of
process.
24
Likewise,
as
a
condition
of
maintaining
offices
in
the
state,
foreign
corporations
could
be
obliged
to
invest
a
minimum
amount
of
capital
there.
25
This
Article
examines
the
rationales
that
courts
have
given
for
excluding
corporations
from
protection
by
the
Privileges
and Immunities
be
obliged
to
pay
a
tax
computed
as a
percentage
of
the
company's
authorized
capital
stock);
Commonwealth
v.
Milton,
51
Ky.
(12
B.
Mon.)
212,
228-30
(1851)
(allowing
special
licensing
and
higher
taxes
for foreign
corporations);
Tatem
v.
Wright,
23
N.J.L.
429,
440-42
(1852)
(opinion
of
Potts,
J.)
(upholding
tax
on
agents
of
foreign
insurance
companies).
19.
See
Ducat
v.
Chicago,
77
U.S.
(10
Wall.)
410,
415
(1871)
(holding
that
out-of-state
corporations
may
be
taxed
at different
rates
than
domestic corporations
of
the
same character);
State
v.
Lathrop,
61
La.
(10 La.
Ann.) 398,
402
(1855)
(upholding
a
tax
on
foreign
insurance
companies
of
twice
the amount
imposed
on domestic
companies);
Tatem,
23
N.J.L.
at
440, 442
(opinion
of
Potts,
J.)
(sustaining
"a
special
tax"
of
two
and
one-half
percent
on
gross
premiums for
insurance
received
by
"non-resident
individuals
or
companies
not
incorporated
by
the
laws
of
the
state").
20.
Pembina
Consol.
Silver
Mining,
125
U.S.
at
185
(quoting Paul
v.
Virginia,
75
U.S.
(8
Wall.)
168,
181
(1869)).
21.
See
N.Y.
Dry
Dock
v.
Hicks,
18
F.
Cas.
151,
153
(C.C.D.
Mich.
1850)
(No.
10,204)
(declaring
that states could
not
deprive
foreign
corporations
"the comity
of
collecting
their debts
by
suits
in
other
states,
and
of
holding property
therein
received
as
security
for
their
debts,
or
in
payment
of
them").
22.
See
Hemphill
v.
Orloff,
277
U.S.
537,
543-44,
548, 550-51
(1928)
(holding
that
a
foreign
corporation could
not
sue
in
state
court
to
collect
on
a
promissory
note
because
it
had
not
complied
with
aspects
of
state
corporation
law);
Bothwell
v.
Buckbee,
Mears
Co.,
275
U.S.
274,
275-77
(1927)
(holding that
out-of-state
insurance
company
could
not
sue
in state
court
to
enforce
insurance
contract
without
complying
with
its
licensing
requirements);
Fire
Dep't
of
N.Y.
v.
Noble,
3
E.D.
Smith
440,
450-51 (N.Y.
Ct.
Coin.
Pl.
1854)
("[T]he
state might prohibit
foreign
corporations
from
bringing
actions
in
our
courts.").
23.
Blake
v.
McClung,
172
U.S.
239,
259,
261
(1898)
(holding
that
an
out-of-state
corporation
could be denied
the
"right
to
participate
upon
terms
of
equality
with
Tennessee
creditors
in
the
distribution
of
the
assets"
of
debtors).
24.
See
Lafayette
Ins.
v.
French,
59
U.S.
(18
How.)
404,
407-08
(1856)
(holding
that
a
state
could
require
a
foreign
corporation
to
appoint
agent to
receive
service
of
process).
25.
See
Norfolk
&
W.
R.R.
v.
Pennsylvania,
136
U.S.
114,
118
(1890)
(stating
that a
Pennsylvania
law
did not violate
Article
IV,
Section
2,
by
requiring
foreign
corporations
to
invest
capital
in
the state
or
pay
an
annual
license
fee).
2015]
5
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LA
WREVIEW
Clause.
26
It
also
will
ask
why
the
Supreme
Court
would
make
that
determination
while
finding
that
corporations
were
"citizens"
for
purposes
of
federal
judicial
jurisdiction,
as
well
as
"persons"
under
the
Equal
Protection
and
the
Due
Process
Clauses
(and
a
huge
number
of
statutes).
In
retrospect,
it
would
have
been
more
logical
to
recognize
Article
IV as
a
vehicle
for
shielding
out-of-state
corporations
from
discrimination.
This
conclusion
does
not
mean
the
present
Court should,
much
less
would,
abandon
almost
a
century
and a
half
of
precedent
and
begin
including
corporations
under
the
Privileges and
Immunities
Clause.
Rather,
this
Article
is
about
a
forgotten avenue
of
constitutional
history.
Walking that
lane
shows
how
the
meaning
of
citizenship
and
attitudes
about
corporations
have changed
significantly
since
the
beginning
of
the American
republic.
II.
THE
RATIONALES
FOR
EXCLUDING
CORPORATIONS
FROM
THE
PRIVILEGES
AND
IMMUNITIES
CLAUSE
Nineteenth-century
courts
produced
several
overlapping rationales
to
justify
concluding
that
corporations
were
not
citizens
under
Article
IV.
The
most
basic
argument
was
essentialist-that
the
word
"citizen"
inherently
could
only
apply
to
a
human.
Many
courts
agreed
with
William
Blackstone's
characterization
of
corporations
as
"artificial
persons."
27
Chief
Justice
John
Marshall
declared, in
1809,
that
a
corporation
was
an
"invisible,
intangible,
and
artificial
being,
[a]
mere
legal entity,
a
corporation
aggregate,"
that "certainly
[was]
not
a
citizen."
28
Ten
years later,
he
used
similar
language
to
describe
corporations
in
Dartmouth
College
v.
Woodward.
29
A
New Jersey
Supreme
Court
justice,
in
1852,
wrote
that
"[i]n
the
very
nature
of
things,
the
citizen
referred
to
[in
Article
IV]
is
a
natural
person,
a
human
being
having
rights..,
as
a
member
of
a
free
government,
and
not
a
26.
See
infra
Part
II.
27.
1
WILLIAM
BLACKSTONE,
COMMENTARIES
*455;
see
Bank
of
Augusta
v.
Earle,
38
U.S.
(13
Pet.)
519,
586
(1839)
(stating
that
a
corporation
was
an
"artificial
being");
Slaughter
v.
Commonwealth,
54
Va.
(13
Gratt.)
767, 772
(1856)
(stating that
corporations
were
"artificial
persons");
THE
LAW
OF
CORPORATIONS:
CONTAINING
THE
LAWS
AND
CUSTOMS
OF
ALL
THE
CORPORATIONS
AND
INFERIOR
COURTS
OF
RECORD
IN
ENGLAND
1-2
(London,
Assigns
of
Richard
and Edward
Atkins
1702)
[hereinafter
LAW
OF
CORPORATIONS]
("A
Corporation
or
Incorporation
is
a
Body
framed
by
Policy
or
Fiction
of
law,
and
it's
therefore
called
a
Body
Politick;
and
it's
called
an
Incorporation
or
Body
Incorporate,
because
the Persons
are
made
into
a
Body
which
endureth
in
perpetual
Succession;
and
are
of
Capacity
to
grant,
sue
or
be
sued,
and
the
like.").
28.
Bank
of
the
U.S.
v.
Deveaux,
9
U.S.
(5
Cranch)
61,
86
(1809).
Marshall
was
discussing
whether
a
corporation
was
a
citizen
for
the purpose
of
Article
III
diversity
jurisdiction.
Id.
29. Dartmouth
Coll.
v.
Woodward,
17
U.S.
(4
Wheat.)
518,
636
(1819)
(describing
a
corporation
as
"an
artificial
being,
invisible,
intangible,
and
existing only
in
contemplation
of
law").
[Vol.
44:79
6
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
mere
artificial
person,
the
creature
of
a
special
charter,
having
no
rights
but
such
as
are
thereby
granted."
3
The
Pennsylvania
Supreme
Court
asserted,
in
1856,
that
the
Framers
of
the
Constitution,
"doubtless,
by
design,
and
on
good reasons,"
left corporations
"out
of
the federative
system
altogether."
3
They
"well
understood,"
the court
continued,
that
"citizen"
meant
"a
human
being-a
natural
person,
capable
of
acting,
contracting,
suing
and
being
sued
without
legislative
aids."
32
The
judges
who
originated
the
idea
of
leaving
corporations
outside
the clause
relied heavily
on
the fact
that
corporations
could not,
by
their
nature,
exercise
some
of
the
major attributes
of
citizenship,
which
implied
to
them
that
it
was
impossible
for
these
entities
to
be
"citizens."
A
person
was
able
to
move
from
state
to
state
at
will,
but
this
was
not
so
for
a
corporation.
Chief
Justice Roger
B.
Taney
pointed
out,
in
1839,
that
a
corporation
"can have
no
legal
existence
out
of
the
boundaries
of
the
sovereignty
by
which
it is
created
....
It
must
dwell
in
the
place
of
its
creation,
and
cannot
migrate
to
another sovereignty.
'33
"[L]oco-
motion"
was
one
of
the
natural
rights
of
persons
recognized
by
Blackstone,
34
but
corporations
could
not
exercise
the corollary
privilege
of
subjects
"to
pass through,
or
to reside
in
any
other
state."
35
A
corporation
also
had
a
quality that
no human
could
obtain-it
was
"but
one
person
in
law,
a
person
that
never
dies,"
Blackstone
noted,
36
even
though
he
acknowledged
that
there
were
several
ways
for
a
corporation
to
be
dissolved,
including
"[b]y
act
of
parliament,
which
is
boundless
in its
operations."
37
In
addition,
corporations
were
able
to
own
property
in
perpetuity,
whereas,
alas,
humans
could
not
take
it
with
them
in
the
end.
38
Chief
Justice Taney
wrote
for
the
Court,
in
the
1839
decision
Bank
ofAugusta
v.
Earle,
that "corporations
of
one
state
are
permitted
to make
contracts
in
another"
only
as a
matter
of
comity,
"the
voluntary
act
of
the
30.
Tatem
v.
Wright,
23
N.J.L.
429,446
(1852)
(opinion
of
Elmer,
J.).
31.
Wheeden
v.
Camden
&
AmboyR.R.,
1
Grant
420,
423-24
(Pa. 1856).
32.
Id.
at 424.
33.
Bank
ofAugusta
v.
Earle,
38
U.S.
(13
Pet.) 519,
588
(1839).
34.
BLACKSTONE,
supra
note
27, at
*130-31.
35.
Corfield
v.
Coryell,
6
F.
Cas.
546,
552
(C.C.E.D.
Pa.
1823)
(No.
3,230).
Other courts
also
held that
the
Privileges
and
Immunities
Clause
guaranteed
the
right
of
interstate
travel.
See,
e.g.,
In
re Archy,
9
Cal.
147,
164
(1858)
(holding
that Article
rV,
Section
2
protects
the right
of
every
citizen
of
the United
States
to pass
freely
through
every
other
state with
his
property
of
every
description,
including
slaves);
Julia
v.
McKinney,
3
Mo.
270,
272
(1833)
(stating
that
it
is
undoubtedly
the
"right
of
every
citizen
of
the
United
States
to
pass
freely
through
every
other
State
with
his
property
of
every
description,
including
negro
slaves").
36.
BLACKSTONE,
supra
note
27, at
*456.
37.
Id.
at
*473.
38. See
id.
at
*456
(stating that
corporations
could
own
property indefinitely).
2015]
7
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
THE CURIOUS EXCLUSION
OF
CORPORATIONS
individual
owners
of
the
corporation
could
not
demand
"the
privileges
of
citizens
in
the several states,
and
at
the
same
time"
expect
to
be
"exempt...
from
the
liabilities
which
the
exercise
of
such
privileges
would
bring
upon
individuals
who
were
citizens
of
the
state.,
48
Some
courts stressed
the
sheer novelty
of
the claim
that
corporations
should
be
considered
citizens
under
the
clause.
The
mere
fact
that
they
had
never been
so
treated
seemed
a
good
reason
to reject
the
possibility.
A Kentucky
court,
in
1851,
noted
that
the
seminal
federal
case interpreting
the
Privileges
and
Immunities
Clause,
Corfield
v.
Coryell,
49
made no
"reference
to
corporations or corporate
rights,
or
to
any
peculiar privileges,
or
to
the
right
of
a
corporation
to make
contracts,
or
acquire
property,
or
do
any
corporate
act
beyond
the limits
of
the
State
which
creates
it."
5
Once
stare decisis
kicked
in,
the
issue
was
never
seriously
re-examined,
and
eventually, corporations
stopped
trying
to
change
the
minds
of
the
judges
and
turned
to
other
parts
of
the
Constitution
for
relief
from
discriminatory legislation.
III.
THE
ILLOGIC
OF
EXCLUDING
CORPORATIONS
FROM
THE
PRIVILEGES
AND
IMMUNITIES
CLAUSE
Many
of
these arguments against including
corporations within
the
purview
of
the
Privileges and Immunities
Clause
are
superficially
plausible,
but
they
all
have
fundamental
flaws.
To
begin
with,
keep
in
mind
that
the
issue
is
not
whether
a
person's
ability
to
form
a
corporation
is
a
privilege
of
citizenship,
but
rather whether
corporations,
once
formed,
should
be
treated
as
citizens
for
purposes
of
the
Privileges
and
Immunities
Clause.
Further,
the
clause
only
requires
a state
to
treat
citizens
of
other
states
in
the
same
way
they
would their
own
citizens,
and
a
state
might
not treat
its
own
citizens
equally.
5
'
As the
Minnesota
Supreme
Court
said
in
1862,
the
clause did
not
extend "absolute
equality
of
rights
and
privileges
with
every
citizen
of
each
state
of
the Union,
but
all
such
privileges and immunities
in
any
state
as are,
by
the
Constitution
and
laws
thereof,
secured, or
extended,
to
her
own
people
of
the
same
48.
Id.
49.
6
F.
Cas.
546
(C.C.E.D.
Pa.
1823)
(No. 3230).
50.
Milton,
51
Ky.
(12
B.
Mon.)
at 220.
51.
Detroit
v.
Osborne,
135
U.S.
492,
498 (1890)
(holding
that
when
the
citizen
of
one
state
goes
into
another,
that
person
is
"entitled...
to
all the
privileges and
immunities
of
citizens
of
that
State;
but, under
that
Constitution,
he
can
claim
no more,"
and
that
the
person
"walks
the
streets
and
high
ways
in
that
State
entitled
to
the same
rights and
protection, but
none
other,
than
those
accorded
by
its
laws
to
its own
citizens");
Costin
v.
Washington,
6
F.
Cas.
612,
613-14
(C.C.D.C.
1821)
(No.
3,266)
("A citizen
of
one
state, coming
into
another
state,
can
claim
only
those
privileges
and
immunities
which
belong to
citizens
of
the
latter
state,
in
like
circumstances.").
2015]
9
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LA
W
REVIEW
class,
and otherwise
similarly
situated."
52
For
example, many
decisions
prior
to
the
Civil
War
held that
even when
free
blacks
were considered
citizens
by
a
state,
in
other
states
they
were entitled
to
no
more
than
the
discriminatory
treatment
those
jurisdictions
afforded
their
own
freemen
(which
could
include
not
being
allowed
to
reside
in
the
state
once
freed).
5
3
If
corporations
were
counted
as
citizens
under
the clause
when
doing
business
in
states
outside
their
place
of
incorporation,
they
would
only
be
entitled
to
the
same
treatment
those
other
states
afforded
their
own
corporations.
The
reason
is
simple:
were
states
obliged
to treat
foreign
corporations
like
individual citizens
for
purposes
of
the
clause,
rather
than
domestic
corporations,
their
police powers
would
be
seriously
undermined.
The
courts that fretted over including
corporations
within the
clause because they
would
be
entitled
to
all
the
rights
of
individual
citizens did not
see
this obvious
limitation.
The
heart
of
the
argument
against bringing
corporations within
the
ambit
of
the
clause
centered
on
the
idea
that,
as
artificial
persons,
they
could
act
only under
the
terms
of
their
legislatively-controlled
charters,
and
then
solely
within
the borders
of
their
states,
unless another
state
allowed
them
to
operate
there
by
comity.
A
corporation
required
"the
permission,
express
or
implied,
of
the
sovereign
in
whose
territory
the
corporation attempts
to
operate."
54
Natural persons
who were
citizens
of
other
states
did not
require
such
approval."
This
line
of
thinking
assumed
the
conclusion
it
was
trying
to
prove.
If
corporations
were
considered
citizens
for purposes
of
the
clause
in
the
first
place,
states
could
not
exclude
them
or
discriminate
against
their
business
activities
any
more
than
they
could
natural
persons.
The whole
idea
that
corporations somehow
do
not
exist
outside
their
states
of
52.
Davis
v.
Pierse,
7
Minn.
13,
21
(1862).
53.
Chancellor
James Kent
noted that
free
blacks
were
allowed
to vote
in
some
states,
but
in
other
states,
they were
subject
to
"such disabilities
as
the
laws
of
the states
respectively
may
deem
it
expedient
to
prescribe
to
free
persons
of
colour."
2
JAMES
KENT,
COMMENTARIES
ON
AMERICAN
LAw
258
n.b
(New
York,
5th ed.
1844)
(detailing
special restrictions
on
free
blacks,
including
bonding
requirements).
54.
Milton,
51
Ky.
(12
B.
Mon.)
at
219;
see
Bard
v.
Poole,
12
N.Y.
495,
504
(1855)
(stating
that
laws
of
the
state
creating
a
corporation have
"no
extra-territorial operation");
People
v.
Imlay,
20
Barb.
68,
80
(N.Y.
Gen.
Term
1855)
(stating
that
a
corporation
is
"a
creation
of
the
state
which
incorporates
it,"
that
this
state
"has no
power to
legislate
for
other states,
or
to
give
to
the
artificial
bodies
which
it
creates
powers
to
act in
other
states,"
and that "[s]uch
companies
act
in
other
states
than
those
which incorporate
them,
only
by
the
comity
of
such other
states").
55.
The
right
of
a person
to
travel
throughout
the
British
Empire was
a
privilege
of
subjects.
See
David S.
Bogen,
The
Privileges
and
Immunities
Clause
of
Article
IV,
37
CASE
W.
RES.
L.
REV.
794, 817
(1987);
David
R.
Upham, Note,
Corfield
v.
Coryell
and
the
Privileges
and
Immunities
of
American
Citizenship,
83
TEX.
L.
REv.
1483,
1493 (2005).
[Vol.
44:79
10
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS EXCLUSION
OF
CORPORATIONS
incorporation
is
based
on
nineteenth-century
formalism-the
very
sort
that
lay
behind
the now
discredited
theory
of
territorial
jurisdiction
in
Pennoyer
v.
Neff.
6
Obviously
there
is
nothing
physically
impossible
about
corporations
doing
business outside
their
state
of
inception.
For,
as
a
federal
circuit
court
pointed
out
in
1850,
"nothing
in
their
organization...
should
deprive
them"
of
the
ability
to exercise
the same
types
of
powers
available
to
individuals,
such
as
holding
property
and
suing
for
debt
collection.
7
When
corporations
do
business
outside
their
home
states, the
laws
of
the
foreign
jurisdiction
apply
to
their
operations,
which
is
no
different
than
when
individuals
or
partnerships
act
away
from
their
home
states.
58
Modem
corporations
often
have
very
little
actual
presence
in
their
incorporating
states
in
comparison
to
their
operations
elsewhere.
It
is
also
irrelevant
that
all
the privileges
of
corporations
are
the
result
of
state
grace.
The
same
goes
for
flesh
and
blood.
All
"privileges"
were
"creations
of
the
local law,"
a
Kentucky
court
noted,
and
"can
not
by
the
mere
force
of
that
law,
exist
or
be exercised
beyond
its
territorial
jurisdiction."
59
Moreover,
any
privilege
or
immunity
can
be
revoked
by
a
state,
regardless
of
whether
it
advantages
a
natural
person
or
a
corporation.
Humans
may
have natural
rights
that
soulless
corporations
cannot
possess,
such
as
freedom
of
conscience
and
the
right
to
bodily
integrity,
but
these
never
have
been
regarded
as
privileges
of
citizenship.
6
"
Chief
Justice
Taney's
argument
for excluding
corporations
from
the
purview
of
the
clause-that
their
shareholders
could
not
be
personally
liable-proved
too
much. Corporations
have
long
been
treated
by
law
as
citizens
or
persons
for
many
purposes.
61
They enjoy
a
lengthy
list
of
legal
privileges
that
are
the
same
as
those
possessed
by
individual
citizens,
and
did
so
when
Taney
wrote,
including
the
rights
to
own
property
and
to
sue
and
be
sued
in
a
corporate
name.
62
Corporations
56.
95
U.S.
714, 722
(1878)
(holding
that "no
State
can
exercise
direct
jurisdiction
and
authority
over
persons
or
property
without
its
territory");
see
Geoffrey
C.
Hazard,
Jr.,
A
General
Theory
of
State-Court
Jurisdiction,
1965
SuP.
CT.
REV.
241,
271
(stating
that
Pennoyer
"is
an
example
par
excellence
of
what
Karl
Llewellyn
called
the
Formal
Style
in
juristic
reasoning").
57.
N.Y.
Dry
Dock
v.
Hicks,
18
F. Cas.
151,
153
(C.C.D.
Mich.
1850)
(No.
10,204).
58.
Int'l
Shoe
Co.
v.
Washington,
326
U.S.
310,
319
(1945).
59.
Commonwealth
v.
Milton,
51
Ky.
(12
B.
Mon.)
212, 219
(1851).
60.
See
Stewart
Jay,
Origins
of
the
Privileges
and
Immunities
of
State
Citizenship
Under
Article
IV,
45
Loy.
U.
CHI.
L.J.
1,
52-69
(2013)
(describing
the
relationship
between
natural rights
and
privileges
and
immunities
of
citizenship).
61.
See
infra
notes 62-69.
62.
See
Louisville,
Cincinnati
&
Charleston
R.R.
v.
Letson,
43
U.S.
(2
How.)
497,
558
(1844);
BLACKSTONE,
supra
note
27, at
*456;
1
STEWART
KYD,
A
TREATISE
ON
THE
LAW
OF
CORPORATIONS
69-226 (London,
J.
Butterworth
1793)
(describing
corporate
powers,
capacities
and
20151
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THE
CURIOUS EXCLUSION
OF
CORPORATIONS
imaginary
entity,
but
on
men
and
citizens;
and
that
his
contract
was
made
with
them
as
the
legal
representatives
of
numerous
unknown
associates,
or
secret
and
dormant
partners.
6
7
Diversity
jurisdiction
was
created
by the Framers
in
response
to
"apprehensions"
that
state
courts
would
not
"administer
justice
as
impartially
as
those
of
the
nation,
to
parties
of
every
description,"
namely
people from
other
states
and
nations.
68
Exactly
the
same
problem
confronted
corporations,
Marshall
contended:
"Aliens,
or
citizens
of
different
states,
are
not
less
susceptible
of
these
apprehensions,
nor
can
they
be
supposed
to
be less
the
objects
of
constitutional
provision,
because
they
are
allowed
to
sue
by
a
corporate
name.
'69
Even
though
the
corporation
appeared
in
the
action,
"essentially,
the
parties
in
such
a
case" were
the
corporation's
owners.
7 °
Thus,
when
they
were
"aliens,
or
citizens
of
a
different
state from
the opposite
party,"
the
lawsuit
"come[s]
within
the
spirit
and
terms
of
the
jurisdiction
conferred
by
the
constitution
on
the
national tribunals.'
The
very
reason
why
the
Constitution
created diversity
jurisdiction,
the
Court explained,
in
1853,
quoting The
Federalist
No. 80,
was
to
enforce
"the
privileges
and
immunities
of
the
citizens
of
the
several
States.
72
It
is
odd
to
suppose
the Framers
meant
to
allow
corporations
to
invoke
the
diversity
jurisdiction
of
federal
courts
in
order
to
protect
themselves
against
discrimination,
and
then
decide they
had
no
privileges
and
immunities
to
protect.
Most
likely,
they
did not
consider
whether
corporations
were
citizens
for
any
purpose.
73
Nonetheless,
many
years
after
the
ratification
of
the
Constitution,
the
Court
drew
a
bright
line
between
the use
of
"citizen"
in
Article
III
and Article
IV.
Chief
Justice
Taney
remarked,
in 1839,
that
"the
principle"
regarding
corporations
as
citizens
for purposes
of
diversity
jurisdiction
had
"never
been
extended
any
farther."
74
Nor
would
it
ever.
Judges
strained
to explain
why
corporations
that
were
citizens
for
Article
III
purposes
were
not
so
under
Article
IV.
A
Pennsylvania
court,
in
1856,
was
confounded
by the
distinction,
because
"[t]he
received
rules
of
interpretation
would
require
us
to
understand
the
same
word
in
67.
Marshall
v.
Bait.
&
Ohio
R.R.,
57
U.S.
(16
How.)
314,
327
(1854).
68.
Deveaux,
9
U.S.
(5
Cranch)
at 87.
69.
Id
70.
Id.
at
88.
71.
Id.
72.
Marshall,
57
U.S.
(16
How.)
at
326
(quoting
THE
FEDERALIST
No.
80, at 537
(Alexander
Hamilton)
(Jacob
E.
Cooke
ed.,
1961)).
73.
See
infra
notes
124-34
and
accompanying
text.
74.
Bank
of
Augusta
v.
Earle,
38
U.S.
(13
Pet.) 519,
586
(1839).
20151
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HOFSTRA
LAW
REVIEW
the
same
sense,
throughout
the
instrument,
if
not
controlled
in
certain
places
by
the
context.
'75
That
being
so,
"if
the
word
citizen,
when
used
in
the
4th
article,
did not
include
corporations,
how,
it
might
be
asked,
can
it
be
construed
in
the
3d
article
to
embrace
them?
' 76
The
court found
"nothing
in
the
context
of
either
article
to
impart
a
shade
of
meaning
to
the
word,
different
from
the
common
understanding
of
its
sense,"
which
was
that
citizens
were
real people.
v
To
resolve
the
dilemma,
it
correctly
interpreted
the
Court's
decisions
as
holding
that for
diversity
purposes,
"the
members
of
the corporation,
who
were
natural
persons,
and
the
substantial
parties
on
the
record,
were
citizens,"
and,
in
effect,
the
suit
involved
them
personally.
78
The
problem
with
this
resolution,
as
the
Pennsylvania
court
recognized,
was
that
it
entailed
concluding
that
the
corporation's
place
of
citizenship
was
that
of
its "stockholders
or
corporators"
for
purposes
of
determining
diversity.
79
Yet
the
Court
already
had
held
that
a
corporation
was
"entitled,
for
the
purpose
of
suing
and
being
sued,
to
be
deemed
a
citizen
of
that
state"
in
which
it
was
incorporated,
removing
the
relevance
of
the
shareholders'
citizenship.
8
"
This
contradiction
matured
into
a
venerable
legal
fiction
that
law
students
now
learn
as
a
verity.
In
1886,
the
Court
ruled
that
corporations
were
"persons"
under
the
Equal
Protection
Clause.
81
No
explanation
was
given
for
this
conclusion.
Chief
Justice
Morrison
Waite
informed
counsel
that
the
Justices
did
not
"wish
to
hear
argument
on
the
question,"
as
they
were
"all
of
opinion"
that
corporations
were
protected
by
the
Equal
Protection
Clause.
82
Likewise,
the
Court,
in
the
same
era,
applied
the
Due
Process
Clause
to
safeguard
corporations
against
arbitrary
deprivations
of
their
property.
83
75.
Wheeden
v.
Camden
&
Amboy
R.R.,
I
Grant
420,
424
(Pa.
1856).
76.
Id.
77.
Id.
78.
Id.
at
425.
79.
Id.
at
428;
see
also
id.
at 425
(stating
that
"the
court
felt
itself
authorized
to
look
to the
character
of
the
individuals
composing
the
corporation,
for
the
purpose
of
sustaining
a
jurisdiction").
80.
Louisville,
Cincinnati
&
Charleston
R.R.
v.
Letson,
43
U.S.
(2
How.)
497,
555
(1844);
see
also
St.
Louis
&
S.F.
Ry.
v.
James,
161
U.S.
545,
563
(1896)
("[T]he
presumption
of
citizenship
is
one
of
law,
not
to
be
defeated
by
allegation
or
evidence
to
the
contrary.");
Marshall
v.
Bait.
&
Ohio
R.R.,
57
U.S.
(16
How.)
314,
329
(1853)
(holding
"conclusive"
the "presumption"
that
the
state
of
incorporation
was
"the
residence
or citizenship
of
those
who
use
the
corporate
name and
exercise
the
faculties
conferred
by it").
81.
Santa
Clara
Cnty.
v.
S.
Pac.
R.R.,
118
U.S.
394,
396
(1886).
82.
Id.
83.
See
Mo.
Pac. Ry.
v.
Nebraska,
164
U.S.
403,
417
(1896)
("The
taking by
a
State
of
the
private
property
of
one
person
or
corporation,
without
the
owner's
consent,
for
the
private use
of
another,
is
not
due process
of
law, and
is
a
violation
of
the
Fourteenth
...
Amendment
.... ").
[Vol.
44:79
14
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
These
conclusions
must
have
been based
on the view
that
a
corporation
was
the
embodiment
of
individuals
who
possessed
rights.
All
of
this
is
a
fiction.
A
corporation
is
neither
a
"person"
nor
a
"citizen"
in
the
sense
that
those
terms
are
applied
to
individuals.
84
Today,
in fact,
it
is
perhaps
more
natural
to
speak
colloquially
of
a
corporation
as
a
citizen
than
a
person.
Americans
invoke
"corporate
citizenship"
when
urging
companies
to engage
in
responsible
business
practices
and
make
contributions
to
the
communities
in
which
they
operate.
Whether
corporations
are
"persons,"
on the
other
hand,
is
a
matter
of
heated
political
debate.
Rhetoric
aside,
the
undeniable
reality
is
that
real
people
own
corporations.
The
justifications
for
"piercing
the
veil"
of
corporations
in
order
to
include
them
under
diversity
jurisdiction
and
the
Fourteenth
Amendment
apply
with
just
as
much
force
to
the
Privileges
and
Immunities
Clause.
In
all
of
these
contexts,
the
actual
parties
concerned
are
the corporation's
shareholders:
"A corporation
aggregate
is
constituted
of
citizens
who,
for
the
purposes
of
their
charter,
are
authorized
to
act
in
the
name
they
have
assumed,
having
the
rights
generally
which
may
be
exercised
by
an
individual."
85
The
federal
Dictionary
Act
recognizes
this,
at
least
implicitly,
by
providing
that
for
purposes
of
interpreting
statutes,
"the
words
'person'
and
'whoever'
include
corporations,
companies,
associations,
firms,
partnerships,
societies,
and
joint
stock
companies,
as
well
as
individuals.
86
Treating
corporations
as
citizens
under
the
Privileges
and
Immunities
Clause
would
be
much
more
consistent
with
its
original
purpose
than
the
Court's
resolution,
that
states
have
total
discretion
in
limiting
their
rights.
87
It is
illogical
that
owners
of
business
entities
operated
as
corporations
can
have
their
privileges
and immunities
subjected
to
the
whims
of
states
when
they would
have
a
great
many
rights
if
they
operated
them
as
sole
proprietorships
or
partnerships
88
(the
84.
See
Roe
v.
Wade,
410
U.S.
113,
157
(1973)
(reviewing
the
use
of
"person"
in
the
Constitution,
and
finding
that
"in
nearly
all these
instances,
the
use
of
the
word
is
such
that
it
has
application
only
postnatally").
85.
N.Y.
DryDock
v.
Hicks,
18
F.
Cas.
151,
153
(C.C.D.
Mich.
1850)
(No.
10,204).
86.
The
Dictionary
Act,
1
U.S.C.
§ 1
(2012);
see
Burwell
v.
Hobby
Lobby
Stores,
Inc.,
No.
13-354,
slip
op.
at
19
(U.S.
June
30,
2014)
("We
have
no
doubt
that
'person,'
in
a
legal
setting,
often
refers
to
artificial
entities.
The
Dictionary
Act
makes
that
clear."
(quoting
FCC
v.
AT&T
Inc.,
131
S.Ct.
1177,
1182-83
(2011))).
87.
See
supra
notes
1-8
and
accompanying
text.
88.
In 1852,
a
lawyer
arguing
before
the
New Jersey
Supreme
Court
stated
aptly:
[T]he
rights
and
privileges
of
[the
corporation]
are
less
than
those
of
the separate
individuals
who
compose
it.
There
seems
to
be
no
good
reason
why
it
should
be
so
held,
any
more than
in
the
case
of
a
copartnership;
but
on
the
contrary,
that
the
courts
will
take
2015]
15
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LAW
REVIEW
same
is
true
of
non-profit
corporations.)
There
is
a
paradox
in
courts
acknowledging
that
corporations
can
contract,
own
property,
and
sue
and
be
sued,
while
holding
that
the
underlying
rights
involved
are
at
the
mercy
of
state
discretion.
The
discriminatory
state
trade laws
of
the
1780s
that
were the immediate
impetus
for
including
the
clause
in
the
Constitution would
not
have
been
any
less
a
source
of
interstate
tension
if
applied
to
businesses
run
as
corporations.
8 9
Businesses
just
did
not
typically
operate
as
corporations
in
those
days.
Eventually,
the
Court
interpreted
the
Fourteenth
Amendment
and
the
Commerce
Clause
as
outlawing
many
types
of
state
discriminations
against
foreign
corporations.
9
"
But
the Framers
could
not
have
anticipated
these
developments.
It
is
worth considering
that
because
the
Privileges and
Immunities
Clause
was held
not
to
protect
corporations,
even
as
this
form
of
business
became
essential
to
the
American
economy,
these
other
provisions
were
recruited
to
provide
a
constitutional
basis
for
stopping
discrimination
against
companies
with
interstate
operations.
Elimination
of
that clause
as
a
protective
mechanism
for
corporations
left
a
vacuum that
was
filled
by
interpreting
other
parts
of
the
Constitution
in
ways
that
went
well
beyond
what
their
texts
or
drafting
histories
directly
supported.
91
These
alternatives
had
substantial
drawbacks
as
constitutional
interpretations.
For
example,
the
question
of
using
the
Equal
Protection
Clause
as
the
basis
for
striking
state
laws
that
discriminated
against
foreign
companies
drew
a
persuasive
dissent
from
four members
of
the
Court
in
Metropolitan
Life
v.
Ward.
92
Writing
for
the
four,
Justice
notice
that
corporations
are
composed
of
individual
citizens,
and
take
care
to
protect
their
constitutional
rights.
Tatem
v.
Wright,
23
N.J.L.
429,432-33
(1852)
(expressing
defendants'
counsel's
argument).
89.
See
Jay,
supra
note
60,
at
9-15
(describing
how
concerns
over
interstate
trade
discrimination
led
to
inclusion
of
the
Privileges
and
Immunities
Clause
in
the
Constitution).
90.
Id.
at
3.
91.
The
two
clauses
serve
different
ends,
even
if
they
overlap
in
application.
The
Dormant
Commerce
Clause
"protects
the
interstate
market,
not
particular
interstate
firms,
from
prohibitive
or
burdensome
regulations." Exxon
Corp.
v.
Governor
of
Maryland, 437
U.S. 117,
127-28
(1978).
By
contrast,
the
Privileges and
Immunities Clause
bars
state
discrimination
based
on
citizenship
in
another
state.
So
long as
the
law
in
question
equally
burdens
local
citizens
and
Americans
from
out-
of-state,
it
does
not
matter
for
purposes
of
the
clause
that
the
flow
of
commerce
is
thereby
disrupted.
See
Atkinson
v.
Phila.
&
T.R.
Co.,
2
F. Cas.
105,
106,
109
(C.C.E.D.
Pa.
1834)
(No.
615)
(rejecting
a
claim
by a
citizen
of
another
state
that
a
law
authorizing
a
bridge that
obstructed
"free
navigation"
of
the
river
violated
Article
IV
because
it equally
affected
the
state's
citizens); Allen
v.
Sarah,
2
Del.
(2
Harr.)
434,
439
(1838)
(holding
that
the
state
could
ban
exportation
of
slaves
by
both
its
citizens
and
citizens
of
other
states);
Shipper
v.
Pa.
R.R.,
47
Pa.
338,
343-44
(1864)
(holding
that
a
higher
tonnage
tax
on
foreign
versus
domestic
goods
did
not
violate
the
clause
because
the
tax
"denie[d]
to
no
citizen
of
another state
any
privilege
or
immunity
which it
d[id]
not
deny
to
[Pennsylvania's]
own
citizens").
92.
470
U.S.
869,
883 (1985)
(O'Connor,
J.,
dissenting).
[Vol.
44:79
16
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORA
TIONS
Sandra
Day
O'Connor
objected
to
the
departure
from
the
usual
deference
given to states
in
tax
and
economic
regulatory
matters.
93
She
also
pointed out that
if
states
could
not
discriminate
against
out-of-state
companies
by
virtue
of
the
Equal
Protection
Clause,
neither
could
Congress
authorize
them
to
do
so,
which
might
adversely affect
the
ability
"of
the
Federal
Government
to
formulate
economic
policy."
94
As
for
the
Dormant
Commerce
Clause,
its
existence
can
only
be
justified
by
imaginative inferences
from
the
constitutional text
and
a
few
scraps
of
statements
by
the
Framers
and ratifiers,
all
bound
together
by
modem
political
theory.
95
Earlier
it
was
noted
that
a
major
justification
for
the
doctrine
is
the
need
to
protect
out-of-state
businesses
from the
vicissitudes
of
local
political
processes
over
which
they
have
no
influence. Thus, the
Court has
said:
"In
applying
[the
Dormant
Commerce
Clause]
the
Court
has
often
recognized
that
to
the
extent
that
the
burden
of
state
regulation
falls
on
interests
outside
the
state,
it
is
unlikely
to
be
alleviated
by
the operation
of
those political
restraints
normally exerted
when interests
within
the
state are
affected."
96
Precisely
the
same
concern
underlies
the
Privileges
and
Immunities
Clause.
9
7
By
the
same
token, it
is
anomalous
that
for-profit
corporations
have
First
Amendment
rights,
yet
under
Article
IV
they
cannot
claim
the
privileges
and
immunities
possessed
by
individual
owners
of
those
businesses.
98
As the
Court,
in
Burwell
v.
Hobby
Lobby
Stores,
Inc.,
93.
Id.
at
893-902.
94.
Id.
at
901.
Some
commentators
in
the
nineteenth
century
thought
that
the
Privileges
and
Immunities Clause
conferred
"a
personal
right
which
neither
Congress
nor
a
State
can impair."
2
JOHN
RANDOLPH
TUCKER,
THE
CONSTITUTION
OF
THE
UNITED
STATES:
A
CRITICAL DISCUSSION
OF
ITS
GENESIS,
DEVELOPMENT,
AND
INTERPRETATION
530
(Henry
St.
George
Tucker
ed.,
Chicago,
Callaghan
&
Co.
1899).
But
there are
no
reported cases
involving
an
attempt
by
Congress
to
override the
clause.
95.
See
Brannon
P.
Denning,
Confederation-Era
Discrimination
Against
Interstate
Commerce
and
the
Legitimacy
of
the
Dormant
Commerce
Clause
Doctrine,
94
KY.
L.J.
37,
81-99
(2005-2006)
(arguing
that
the
Dormant Commerce
Clause
is
consistent
with
original
intent
of
the
Constitution's
drafters
and
ratifiers).
But
see
Tyler
Pipe
Indus.,
Inc.
v.
Wash.
State
Dep't
of
Revenue,
483
U.S.
232, 260,
263
(1987)
(Scalia,
J.,
dissenting)
(stating
that there
is
a
"lack
of
any
clear theoretical
underpinning
for
judicial
'enforcement'
of
the
Commerce
Clause");
FELIX
FRANKFURTER,
THE
COMMERCE
CLAUSE
UNDER
MARSHALL, TANEY
AND
WAITE
12-14
(1937)
(arguing
that
there
was
"no
expression"
by
the
drafters
and
ratifiers
to
support
the
view
that
"the
mere
grant
of
the
commerce
power
to
Congress
dislodged
state
power").
In
Tyler
Pipe Industries,
Inc.
v.
Washington
State
Department
of
Revenue,
Justice Antonin
Scalia
also noted:
"The
historical
record
provides
no
grounds
for
reading
the
Commerce Clause
to
be
other
than what
it
says-an
authorization
for
Congress
to
regulate
commerce."
483
U.S.
232,
260,
263
(1987)
(Scalia,
J.,
dissenting).
96.
S.
Pac.
Co. v.
Arizona
ex
rel.
Sullivan,
325
U.S.
761,
767
n.2
(1945).
97.
See
supra
notes
16-17
and
accompanying
text.
98.
First
Nat'l
Bank
of
Bos.
v.
Bellotti, 435
U.S.
765,
784
(1978)
("We
thus
find
no
support
in
the
First
or
Fourteenth Amendment,
or
in
the
decisions
of
this
Court,
for
the
proposition
that
2015]
17
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
Congress, Madison
praised
"[t]he
freedom
of
the
press
and
rights
of
conscience"
as
"those
choicest
privileges
of
the
people.'
' 0
6
Of
the
three
clauses-the
Equal
Protection
Clause,
the
Dormant
Commerce
Clause,
and
the
Privileges
and Immunities
Clause-which
is
the
most
logical
basis
for
empowering
courts
to
decide
if
a
state
has
improperly
discriminated
against
a
business
from
another
state?
The
latter clause
was
placed
in
both
the
Articles
of
Confederation
and
then
the
Constitution
in
principal
part
to
prevent
state
discrimination
against
out-of-staters
on
matters
of
trade.
10 7
That
certainly
cannot
be
said
of
the
Equal
Protection
Clause.
And
as
for
the
Commerce
Clause,
the
Framers
indeed
were
concerned
with
creating
a
national common
market, but
they expressly
assigned
that
task
to Congress,
not
the
judiciary.
Applying
the
Privileges
and
Immunities
Clause
to
corporations
would,
of
course,
require interpretation
of
the Constitution
inasmuch
as
the
text
does
not
resolve
the
issue.
Early history also
does
not
support
the
idea
that
the term
"citizens"
in
the
clause was
intended
by
the
Framers
to
include
American
corporations.
Rather,
the
argument
for
expanding
the
clause's
reach
to
corporate entities
is
one
of
logical
consistency
and
public
policy.
The
same
reasons for counting
corporations
as
citizens
for
purposes
of
diversity
jurisdiction,
or
as
persons
under
the
Fourteenth Amendment,
support their
protection
by
the
Privileges
and
Immunities
Clause.
IV.
WHY
DID
COURTS
EXCLUDE
CORPORATIONS
FROM
ARTICLE
IV?
Since
the
mid-nineteenth
century,
courts
consistently
have
interpreted
the
Privileges
and Immunities
Clause
of
Article
IV
as
not
applicable
to
corporations.
8
Considering
all
the
other instances
in
which
corporations
have
been
treated
like
citizens,
and
even
people, the
question
is
why
courts
came
to
this
conclusion."
9
From
the
perspective
of
a
modem
observer,
the
various
explanations
given for
the
exclusion
are
unconvincing.
Yet, that
is
looking
at the
issue
in
hindsight.
The
question
remains
why
the
tape
of
constitutional
history
played
the
way
it
did
in
this
instance.
Why
did
nineteenth-century
judges
seemingly
instinctively,
and
almost
unanimously,
find
corporations
ineligible
for
citizenship under
Article
IV?
106.
1
ANNALS
OF
CONG.
436
(1789)
(Joseph
Gales
ed., 1834)
(statement
of
James
Madison);
see
Jay,
supra
note
60, at
45-46,
45
n.256
(quoting
eighteenth-century
sources
referring
to rights
of
conscience,
press,
and
speech
as
privileges
of
citizens).
107.
See
Jay,
supra
note
60,
at
5-19
(detailing
how
the
Privileges
and
Immunities
Clause
in
the
Articles
and
the
Constitution
were
intended
to
deal
with
interstate trade discrimination).
108.
See
supra
notes
1-4,
9-10
and accompanying text.
109.
See
supra
notes
61-64, 83-85 and
accompanying
text.
2015]
19
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LAWREVIEW
In
the
eighteenth
century,
incorporation
was
far
from
the
typical
business
model."
l0
Corporations
were created
by
special
legislative
enactments."
l
'
There
were
no
general
incorporation
laws
at
the
time-
states
adopted
those
mostly
in
the
mid-
to
late-nineteenth
century."1
2
Initially,
these
new
incorporation
laws
imposed
significant
capital
limitations
on
the
companies,
13
and
restricted
the
"scope
of
a
business
corporation's
powers
and
activity.
'
14
Few
trading corporations
were
chartered
in
American
states
prior
to
the
creation
of
the
Constitution.
1 5
The entire
idea
of
business
corporations,
as
opposed
to
incorporation
of
religious,
charitable,
and
educational
societies,
was
highly
controversial
far into
the
nineteenth
century.
Justice
Louis
D.
Brandeis
explained
why:
Fear
of
the
subjection
of
labor
to capital.
Fear
of
monopoly.
Fear
that
the
absorption
of
capital
by
corporations,
and
their
perpetual
life,
might
bring
evils
similar
to
those
which
attended
mortmain.
There
was
a
sense
of
some
insidious
menace
inherent
in
large
aggregations
of
capital,
particularly
when
held
by
corporations.
116
110.
FLETCHER
CYCLOPEDIA
OF THE
LAW
OF
CORPORATIONS
states:
The
cloud
of
disfavor
under
which corporations
labored
in
America
was
not
dissipated
until
near
the
end
of
the
eighteenth
century,
and
during
the
last
11
years
of
that
period,
the
total
number
of
charters
granted
did
not
exceed
200,
most
of
the
business
of
that
period
being transacted
by
unincorporated
joint
stock
companies
more
in
the
nature
of
limited partnerships.
1
WILLIAM
MEADE
FLETCHER,
FLETCHER
CYCLOPEDIA
OF THE
LAW
OF
CORPORATIONS
§
2,
at
8
(Carol
A.
Jones
ed.,
Thomson
West
rev.
vol.
2006).
111.
Id.
at
7-8.
112.
Id.
at
7-10.
113.
See
Louis
K. Liggett
Co.
v. Lee,
288
U.S.
517,
549
n.4,
550
n.5
(1933)
(Brandeis,
J.,
dissenting)
(listing
the
first
general
incorporation
laws,
from
New
York
in
1846
to
Virginia
in
1902,
and
noting
capital
restrictions);
BLACKSTONE,
supra
note
27, at
*462
(stating
that
"it
is
the
will
of
the
king
that
erects
a
corporation").
114.
Louis
K.
Liggett
Co.,
288
U.S.
at
554-64
(Brandeis,
J.,
dissenting).
115.
FLETCHER
CYCLOPEDIA
OF
THE
LAW
OF
CORPORATIONS
states:
"During
the colonial
period
of
American
history,
there
were
but
six
purely
native-born
business
corporations,
although
English
trading
corporations
operated
on this
continent.
Only
20
were
added
to
this
list during
the
13-year
period
preceding
the
adoption
of
the
federal
Constitution
...."
FLETCHER,
supra
note
110,
§
2,
at
8.
116.
Louis
K.
Liggett
Co.,
288
U.S.
at
548-49
(Brandeis,
J.,
dissenting).
At
the
Constitutional
Convention,
a
proposal
to give
Congress
the
power
to
create
corporations
was
rejected
in
part
due
to
fear
of
corporate
monopolies.
Madison
proposed
that
Congress be
given
power
"[tlo grant
charters
of
incorporation
in
cases
where
the
Public
good
may
require
them,
and
the
authority
of
a
single
State
may
be incompetent."
See
2
THE
RECORDS
OF
THE
FEDERAL
CONVENTION
OF
1787,
at
325
(Max
Farrand
ed.,
1911).
This
proposal
was
referred
to
the
Committee
of
Detail.
See
id.
Subsequently,
in
the
course
of
discussing
whether
to
empower Congress
to
create
corporations
to
operate
post
roads
and
canals,
"[Madison's]
primary
object
was
however
to
secure
an
easy
communication
between the
States."
2
THE
RECORDS
OF
THE
CONSTITUTIONAL
CONVENTION
OF
1787,
at
615
(Max
Farrand
ed., rev.
ed.
1937).
Rufus
King
objected
that
the
"power
[was]
unnecessary,"
and
that
"[t]he
States will be
prejudiced
and
divided
into
parties
by
it."
Id.
at
615-16.
[Vol.
44:79
20
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORA
TIONS
In
chartering
business
corporations,
legislatures
both
limited
their
operations
and
extended
all
sorts
of
privileges
and
immunities
to
them,
including
monopolization
of
certain
markets,
such
as
exclusive
rights
to
operate
toll
bridges,
canals,
and
locks."
17
Most
of
the
resulting
companies had
a
local
focus.
A
great
many incorporations
were
for
religious
societies
(such
as
congregations
in
specific
towns)
and
educational
institutions
(such
as
colleges),
which
thereby
received
a
long
list
of
privileges
and
immunities."
8
Municipalities
were
created
in
the
same
manner,
and
likewise
obtained
extensive
privileges
and
immunities.
For
that
matter,
a
number
of
the
American
colonies
began
as
corporations."
9
As
a
reading
of
colonial
charters
will
show,
they
bestowed
privilege
after
privilege
on
the
colonies.
2
Delegates
at
the
Constitutional
Convention
debated
whether
the
states
still
should
be
regarded
as
"mere
corporations,"'
12
'
"dependent
on the
Gen[eral]
Legislature,
' 22
or
sovereign
governments.
Whatever
the
context,
the
incorporations
focused
on
particular
jurisdictions,
not
interstate
operations.
This
probably
explains
why
no
one
in
the founding
generation
discussed
whether
corporations
were
covered
by
the
Privileges
and
Immunities
Clause-and
likewise,
why
the
issue
did
not
arise
in
debates
over
diversity
jurisdiction
at
the
Constitutional
He
predicted
that
"in
Philad[elphia]
&
New York,
It
will
be referred
to
the
establishment
of
a
Bank,
which
has been
a
subject
of
contention
in
those Cities.
In
other
places
it
will
be
referred
to
mercantile
monopolies."
Id.
at
616.
George
Mason argued
that
the
power
of
incorporation
by
Congress
should
be
limited
"to
the
single
case
of
Canals,"
because
"[h]e
was
afraid
of
monopolies
of
every
sort."
Id.
Even
limited
to
canals,
the
Convention
rejected
giving
Congress
the express
power
of
incorporation.
See
id.
117.
See
Jay,
supra
note
60, at
23
(describing
and
quoting
a
1788
South
Carolina
statute
granting
privileges
to
corporations,
such
as
erecting
and
operating
"locks,
dams
or canals").
118.
Id.
at
23-24
(providing
an
example
of
legislative
charters
for
religious
societies,
as
well
as
Harvard).
119.
See
1
THE
RECORDS
OF
THE
CONSTITUTIONAL
CONVENTION
OF
1787,
at
552
(Max
Farrand
ed.,
rev.
ed.
1937)
(statement
of
Governor
Morris);
FLETCHER,
supra
note
110
§
2,
at
6
("In
America,
some
of
the
colonies
were themselves
essentially
public
corporations,
albeit
they
were
chartered
companies
....
(footnote
call
number
omitted)).
120.
See,
e.g.,
Charter
of
Connecticut
(1662),
reprinted
in
THE
FEDERAL
AND
STATE
CONSTITUTIONS,
COLONIAL
CHARTERS,
AND
OTHER
ORGANIC
LAWS
OF THE
STATES, TERRITORIES,
AND
COLONIES
Now
OR
HERETOFORE
FORMING
THE
UNITED
STATES
OF
AMERICA
533
(Francis
Newton
Thorpe
ed.,
1909)
[hereinafter
AMERICAN
ORGANIC
LAWS]
(providing
that
the
colonists
"shall
have
and
enjoy
all
Liberties
and
Immunities
of
free
and
natural
Subjects"
in
England);
see
Charter
of
Rhode
Island
&
Providence
Plantations
(1663),
reprinted
in
AMERICAN
ORGANIC
LAWS
at
3220
("[Colonists]
shall
have
and
enjoye
all
libertyes
and
immunityes
of
ffree
and
naturall
subjects..,
borne
within
the
realme
of
England.");
Jay,
supra
note
60,
at
32-33
(detailing
privileges
granted
by
colonial
charters).
121.
2
THE RECORDS
OF
THE FEDERAL
CONVENTION
OF
1787,
supra
note
116,
at
362
(statement
of
Colonel
Mason).
122.
1
THE RECORDS
OF
THE
CONSTITUTIONAL
CONVENTION
OF
1787,
supra
note
119,
at
357
(statement
of
James
Madison).
2015]
21
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LA
WREVIEW
Convention
and
in
ratification
proceedings.
They
were
not
important
interstate
actors,
but rather
impersonal
entities
created
for
a
range
of
specific
local
purposes,
most
of
which
had nothing
to
do
with
business.
Words
themselves
have
no
essence;
their
meaning
varies
by
conventional
usage,
which
can
diverge
among
speakers
of
the
same
language
and
change
over
time.
"Such
is
the
character
of
human
language,
that
no
word
conveys
to
the
mind,
in
all
situations,
one
single
definite
idea,"
Chief
Justice
Marshall
wrote
in
McCulloch
v.
Maryland'
23
The
meaning
of
words
depends
on
the culture
in
which
they
are
used,
including
the
assumptions
of
the
era
in
which
they
are
expressed.
As
Ludwig
Wittgenstein
said:
"[T]o
imagine
a
language
means
to
imagine
a
form
of
life."'
2
4
How
words
are
used
explains
a
great
deal
about
a
culture.
In
this
instance,
the
meaning
of
citizenship
and
its
attendant
rights
have
changed
significantly
since
the
Constitution
was
adopted,
as
have
attitudes
about
corporations.
For
early
Americans,
the
idea
of
a
"citizen"
paralleled
the
English
concept
of
a
"subject."
The
privileges
and
immunities
of
subjects
arose
from
the
reciprocal
obligations
of
the
monarch
and
the
people
born
on
British
soil.
The
subject
owed
allegiance
to
the
crown,
and
the
king
or
queen
in
turn
owed
a
duty
to
protect
the
subject's
natural
rights.
1
25
"Allegiance
is
the
right
of
the
magistrate,
and
protection
the
right
of
the
people,"
Blackstone
wrote.
126
This
allegiance
was
tied
to
birth
in
the
crown's
dominions,
and
it
was
a
permanent
obligation,
"which
cannot
be
forfeited,
cancelled,
or
altered,"
except
by
"the
united
concurrence
of
the
legislature.'
27
In
the
English
scheme,
it
would
have
been
bizarre
to
think
of
corporations
as
subjects,
because
the
elements
of
birth
in
the
country
and
fealty
to the
monarch
were
inherently
missing.
An
early
English
treatise
writer
on
corporate
law
explained
that
"[a]
Corporation
aggregate
cannot
do
Fealty;
for
a
Body
invisible
cannot
be
in
Person,
cannot
swear,"
and
thus,
"cannot
commit
Treason.'
' 128
Furthermore,
there
would
have
been
no
point
in
worrying
about
discrimination
against
corporations
by
123.
17
U.S.
(4
Wheat.)
316,
414
(1819).
124.
LUDWIG
WITTGENSTEIN,
PHILOSOPHICAL
INVESTIGATIONS
7e
(G.E.M.
Anscombe
trans.,
3d
ed.
2001).
125.
See
BLACKSTONE,
supra
note
27,
at
*119
(describing
reciprocal
rights
and
duties
of
the
monarch
and
subject).
126.
Id.
127.
Id.
at *357.
By
contrast,
"aliens"
only
owed
allegiance
"for
so
long
time
as
he
continues
within
the
king's
domain
and
protection."
Id.
at
*358.
They
could
not
have
"a
permanent
property
in
lands"
without
owing
permanent
allegiance
to
the
monarch,
"which
would
probably
be
inconsistent
with
that,
which
he
owes
to his
own
natural
liege
lord."
Id.
at
*360.
128.
LAW
OF
CORPORATIONS,
supra
note 27,
at
6.
[Vol.
44:79
22
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
different
parts
of
the
kingdom.
Unlike
the
thirteen
states
in
America,
Great
Britain
was
a
single
country.
All
of
the
privileges
and
immunities
of
subjects
were
controlled
by
Parliament.
At
the
same
time,
it
was
easy
to
rationalize
the
legal existence
of
corporations
by
analogizing
them
to
real
people---"artificial
persons."'
29
They
were
owned
by
subjects
who
were
in effect
acting
as
one
individual
for
purposes
of
the
company.
Under English
law,
corporations
had
numerous
"privileges
and
immunities"'
130
that
also
were
possessed
by
subjects,
including
the
ability
"[t]o
purchase
lands,
and
hold
them,
for
the
benefit
of
themselves
and
their
successors."''
Corporations
are
a
"Fiction
of
Law,"
that
are
"framed
in
similitude
as a
natural Body;
with
a
Capacity
to
take,
hold,
and
enjoy,
and
act
as
a
natural
Body:
it
is
a
Capacity
framed
to
be
and
act
as
one
Person."'
32
In
a
manner
of
speaking,
corporations
were
"born"
in
England
by
acts
of
Parliament,
and
they
could
even
die
through
dissolution.
When
the
Revolution
abruptly
transformed
Americans
from
subjects
to
citizens,
they
seamlessly
adapted
the concept
of
being
a
subject
to
the
idea
of
citizenship.
Indeed,
the
whole
point
of
the
Privileges
and Immunities
Clause
was
to
continue
the
rights
Americans
possessed
as
British
subjects
when
they
traveled
or
did
business
throughout
the
kingdom,
including
in
other
colonies.'
33
Americans
of
the
revolutionary
era
also
associated
citizenship
with
loyalty,
literally
expelling
the
disloyal
and
confiscating
the
property
of
those
unwilling
to
transfer
allegiance.
134
Pledging
allegiance
to
the
new
American
states
literally
was
required
of
many
in
the founding
era,
as
the
rebelling
colonies
went
about
cleansing
themselves
of
British
loyalists.
35
Citizenship
could
only
be
conferred
on
"a
person
of
whom
allegiance
is
predicable,
and
who
may
be
guilty
of
treason.'
1
3
6
129.
See
supra
text
accompanying
note
26.
130.
BLACKSTONE,
supra
note
27,
at
*456.
131.
Id.
at *463.
132.
LAw
OF
CORPORATIONS,
supra
note
27,
at
1-2.
133.
See
Jay,
supra
note
60,
at
19-20.
134.
MARY BETH
NORTON,
THE
BRITISH-AMERICANS:
THE LOYALIST
EXILES
IN
ENGLAND,
1774-1789,
at
176
(1972);
see
HAROLD
M.
HYMAN,
To
TRY
MEN'S
SoULs:
LOYALTY
TESTS
IN
AMERICAN
HISTORY 61
(1959);
Ruth
M.
Keesey,
Loyalism
in
Bergen
County,
New
Jersey,
18
WM.
&
MARY
Q.
558,
561
(1961);
Robert
S.
Lambert,
The
Confiscation
of
Loyalist
Property
in
Georgia,
1782-1786,
20
WM.
&
MARY
Q.
80,
81-82
(1963);
Harry
E.
Seyler,
Pennsylvania's
First
Loyalty
Oath,
3
HIST. EDUC.
J.
114,
114-16
(1952)
(providing
examples
of
a
loyalty
oath).
135.
In
addition
to
loyalty
oaths
during
the
Revolution,
slates
in
the
early
nation
commonly
required persons
wishing
to
become citizens
to take
a
loyalty oath.
See
Jay,
supra
note
60,
at
36, 49
&
n.279.
136.
Wheeden
v.
Camden
&
Amboy
R.R.,
1
Grant
420,424
(Pa.
1856).
2015]
23
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LAW
REVIEW
In
modem
America,
the
legal
connection
between
allegiance
and
citizenship
has
become
tattered.
3
7
According
to
the
Court's
interpretation
of
the
First
Amendment,
a
person
cannot
be
forced
to
pledge
allegiance
to
the
nation.'
38
American
citizens
even
have a
First
Amendment
right
to
belong
to
organizations
that
seek
to
overthrow
the
government
by
force,
and
advocate
the
same,
so
long
as
they
do
not
act
to
further
the
illegal
ends
of
the
group.
13
9
Citizens
can
be
conscripted
into
the
armed
forces,
which
might
be
seen
as
the
ultimate
test
of
loyalty,
but
permanent
non-citizen
residents
also
have
been
subjected
to
the
draft.
4°
It
is
true
that,
at
naturalization
ceremonies,
new
citizens
pledge
to
"bear
true
faith
and
allegiance
to"
the
Constitution
and laws
of
the
United
States
and
vow
to
"bear
arms
on
behalf
of
the
United
States
when
required
by
the
law."''
However,
conscientious
objectors
to
military
service
may
opt
out
of
the
requirement
and
still
be
naturalized.
142
In
any
event,
after
citizenship
is
conferred,
newly-minted
citizens
are
free
to
change
their
minds
about
loyalty
and
advocate
overthrowing
the
government.
Today
"citizenship"
is
regarded
as
more
of
a
legal
status
than
a
matter
of
allegiance
to
a
sovereign,
especially
at
the
state
level.
People
become
citizens
of
the
United
States
to
benefit
from
the
privileges
and
immunities
of
that
status,
even
if
their
personal
loyalty
remains
with
another
homeland.
"Dual
citizenship"
is
now
possible,
even
if
that
term
would
have
been
an
oxymoron
in
the
eighteenth
century.
1
43
The
same
is
137.
This
is
not
to
deny
that
many
Americans
connect
citizenship
with
loyalty
to
their
country.
The
issue
here
is
the
legal
relationship
between
citizenship
and
allegiance
to a
state
or
nation.
138.
See
W.
Va. State
Bd.
Educ.
v.
Bamette,
319
U.S.
624,
626,
642
(1943)
(holding
that
students
cannot
be required
to
pledge
allegiance
to
the
flag
because
"no
official,
high
or
petty,
can
prescribe
what
shall
be
orthodox
in
politics,
nationalism,
religion,
or
other
matters
of
opinion
or
force citizens
to
confess
by
word
or
act
their faith
therein").
139.
See
Scales
v.
United
States,
367
U.S.
203,
221-24,
228-30
(1961)
(construing
the
Smith
Act
to
exclude
culpability
of
"mere
passive
members"
of
the
Communist
Party
in
order
to
avoid
"close
constitutional
questions");
Yates
v.
United
States,
354
U.S.
298,
321-22
(1957)
(stating
that
mere
"advocacy
[of
forcible
overthrow
of
the
state],
even
though
uttered
with the
hope
that
it
may
ultimately
lead
to
violent
revolution,
is
too
remote
from
concrete
action
to
be
regarded
as
the
kind
of
indoctrination
preparatory
to
action"
that
is
outside
the
First
Amendment).
140.
See
Military
Selective
Service
Act,
50
U.S.C.
app.
§
453
(2012)
(requiring
draft
registration
"of
every
male
citizen
of
the
United
States,
and
every
other
male
person
residing
in the
United
States").
The
Universal
Military
Training
and
Service
Act,
which
became
effective
June
19,
1951,
made
aliens
who
were
"permanent
residents
of
this
country"
subject
to
conscription.
Astrup
v.
INS,
402
U.S.
509,
510
n.l
(1971).
141.
8
C.F.R.
§
337.1
(2015).
142.
8
U.S.C.
§
1448(a)(5)
(2012)
(providing
that
applicants
for
citizenship
who
"by
reason
of
religious
training
and
belief'
cannot
participate
in war still
may
become
naturalized
citizens).
143.
See
Mandoli
v.
Acheson,
344
U.S.
133,
134,
139 (1952)
(holding
that
a
U.S.
citizen
by
birth
did
not
lose
such
citizenship
as
a
result
of
gaining
Italian
citizenship
through
his
parents
and
living
abroad
past
the
age
of
majority).
[Vol.
44:79
24
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS
EXCLUSION
OF
CORPORATIONS
true
of
state
citizenship,
only
more
so.
No
proof
of
allegiance
is
required
to
become
a state
citizen,
even
though,
in
the
beginning
of
the
nation,
it
was,
at
least
if
one
wanted
to
exercise
a
right
open
only to
citizens-
voting.
14
4
No
state
now
demands
that
its
citizens
serve
in
the militia,
although
this
was
an
obligation
of
male
citizens
in
the
early
republic.
1
45
Furthermore,
under
the
Court's
interpretation
of
the
Equal Protection
Clause,
once
individuals
have
established
a
domicile
in
a
state,
they
are
entitled
to
vote
within,
at most,
a
month
or
two,
4
6
which
hardly
seems
long
enough
to develop
feelings
of
loyalty
or
even
familiarity
with
local
issues.
The
first
state
constitutions
often
imposed
one-year
waiting
periods
for voting,
along
with
property
ownership
requirements,
which
were
designed
to
assure
that
voters
were
committed
members
of
the
state
with
a stake
in
its
proper
governance,
as
well
as
knowledgeable
about
local
affairs.
1
4
7
State
citizenship
now
is
irrelevant
for
most
purposes,
and
the
idea
of
loyalty
to
a
state
is
not
a
concept
most
Americans
today
have
even
contemplated.
Residency
and
domicile,
not citizenship,
are
the critical
questions
when
it
comes
to
ascertaining
an
American's
legal
affiliation
with
a
state.
Residency
determines
such
matters
as
eligibility
to
vote,
qualification
for
in-state
tuition
at
public
universities,
and
ability
to
claim
various
state
subsidies,
as
well
as
liability
for
state
taxes.
In
effect,
residency
has
become
the
modem
substitute
for state
citizenship,
as
the
Court
has
squarely
held
in
applying
the
Privileges
and
Immunities
Clause.
148
Yet
residency
in
a
state
does
not
depend
on
showing
loyalty
to
144.
Jay,
supra
note
60,
at
48-49 (discussing
the
oaths
required
for
state voting
privileges).
But
see
Minor
v.
Happersett,
88
U.S.
(21
Wall.)
162,
173-75
(1874)
(denying
that
"suffi-age
was
necessarily
one
of
the
absolute
rights
of
citizenship").
The
Court
was
forced
to
this
conclusion
in
order
to
deny
women
the
franchise
under
the
Privileges
and
Immunities
Clause
of
the
Fourteenth
Amendment.
Id.
at
163-64,
177-78.
Chancellor
Kent
had
written
earlier
that "[t]he
privilege
of
voting,
and
the
legal
capacity
for
office,
are
not
essential
to
the
character
of
a
citizen,
for
women
are
citizens
without
either."
2
KENT,
supra
note
53,
at
258
n.b.
Other
courts
disagreed,
stating
that
although
women
were
citizens,
in
effect
men
voted
on
their
behalf-they
"are
generally
dependent
upon
adult
males
through
whom
they
enjoy
the
benefits
of
those
rights
and
privileges."
Amy
v.
Smith,
11
Ky.
(1
Litt.)
326, 333-34
(1822).
145.
See
Act
of
May
8,
1792,
ch.
33,
§ 1, 1
Stat.
271
(repealed
1903)
(requiring
militia
service
of
"every
free
able-bodied
...
male
citizen"
between
the
ages
eighteen
and
forty-five);
Michael
J.
Golden,
The
Dormant
Second
Amendment:
Exploring
the
Rise,
Fall,
and
Potential
Resurrection
of
Independent
State
Militias,
21
WM.
&
MARY
BILL
RTS.
J.
1021,
1028
(2013).
146.
See
Marston
v.
Lewis,
410
U.S.
679,
680-81
(1973)
(upholding
a
fifty-day
voter
registration
cutoff
as
"necessary
to
permit
preparation
of
accurate
voter
lists,"
but
affirming
the
holding
in
Dunn
v.
Blumstein
that
a
three-month
waiting
period
was
"too
long");
Dunn
v.
Blumstein,
405
U.S.
330,
348
(1972)
(holding that
"30
days
appears
to be
an
ample
period
of
time
for
the
State
to
complete
whatever
administrative
tasks
are
necessary
to
prevent
fraud-and
a
year,
or three
months,
too
much").
147.
See,
e.g.,
Jay,
supra
note
60, at
36,
50
&
n.286.
148.
See
Supreme
Court
v.
Friedman,
487
U.S.
59,
64
(1988)
(stating
that
"[w]hile
the
2015]
103
25
Jay: The Curious Exclusion of Corporations from the Privileges and Imm
Published by Scholarship @ Hofstra Law, 2015
HOFSTRA
LA
W
REVIEW
that
sovereign,
such
as
by
swearing allegiance.
Rather,
it
means
that
a
person
is
living inside
a
state's
borders.
4 9
Residency
is
not
even
the
same
thing
as
being
a
domiciliary,
which
includes
the
element
of
intending
to
remain
in
the
state
indefinitely.'
50
Even
so,
allegiance
is
not
a
requirement
for
establishing
a
domicile.
But
why
would
the
Court
treat corporations
differently
for
purposes
of
diversity
jurisdiction,
or
regard them
as
persons
in
so
many
other
contexts?
Each
application
has
its
own
explanation,
or
rather
rationalization,
tied
to
a
particular
history.
Treating
corporations
as
citizens
for
diversity
purposes
was
understandable
given
that
the abilities
to
sue
and
be
sued
in
a
corporate
name
were
long
considered
core
attributes
of
a
corporation.'
5
'
Bringing
them
within
federal
judicial
jurisdiction
also
did
not
require
recognizing
that
they
had
any
specific
substantive
rights.
As the
Kentucky
Court
of
Appeals
observed
in
1851,
"[t]he
privilege
of
suing,
and
the
form
of
suing,
and
the
question
in
what
tribunal
the
[case]
is
to
be
entertained,
do
not
reach
the
question
of
the
privilege
of
acquiring
the
rights
which
are
to
be
asserted
in
the
suit."'
5
The
necessity
of
giving
corporations
access
to
national
courts
in
interstate
disputes
was
beyond
doubt,
particularly
as
the
corporate
form
of
business
became
vastly
more
common.
Furthermore,
including
them
within
diversity
jurisdiction
had
a
convenient
explanation
that
might
have resonated
with
the
Framers
had
they
thought
about
the
matter.
States
controlled
all
aspects
of
the
corporation's
existence.
They
needed
only
to
authorize
shareholders
to
sue
or
be
sued
on
behalf
of
the
company,
and
thus,
their
citizenship
could
count
for
diversity
purposes.
The Court
eventually
took
something
like
that
approach
to
the
problem
by
deciding
that,
for
this
purpose,
the
shareholders
were
the
true
parties
appearing
in
the
case.'
53
Privileges
and
Immunities
Clause
cites
the
term
'Citizens,'
for analytic
purposes
citizenship
and
residency
are
essentially
interchangeable").
149.
See
BLACK'S
LAW
DICTIONARY
1502 (10th
ed.
2014)
(defining
"residency"
as
"[a]
place
of
residence"
and
defining
"residence"
to
mean
"bodily
presence
as
an
inhabitant
in
a
given
place").
150.
In
determining
whether
a
person
is
a
citizen
of
a
state
for
federal
diversity
jurisdiction,
courts
inquire
as
to
whether the
party
is
a
domiciliary,
not
a
mere
resident.
See
Kanter
v.
Warner-
Lambert
Co.,
265
F.3d
853,
857
(9th
Cir.
2001)
("The
natural
person's
state
citizenship
is
then
determined
by
her
state
of
domicile, not
her
state
of
residence.
A
person's
domicile
is
her
permanent
home,
where
she
resides
with
the
intention
to
remain
or to
which
she
intends
to
return.").
151.
See
LAW
OF
CORPORATIONS,
supra
note
27,
at
2
(defining "corporation"
as
a
"Body
Politick"
that,
among
other
attributes,
could
"sue
or
be
sued").
152.
Commonwealth
v.
Milton,
51
Ky.
(12
B.
Mon.)
212,
228
(1851);
see also
Tatem
v.
Wright,
23
N.J.L.
429,
446
(1852)
(opinion
of
Elmer,
J.)
("A
corporation
having
a
right
to
sue
like
a
natural
person,
may
well
be
considered
an
inhabitant
or
citizen
of
a
particular
state,
for
the
purpose
of
bringing
suit
... ").
153.
See
supra
text
accompanying
notes 67-68.
[Vol.
44:79
26
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4
THE
CURIOUS EXCLUSION
OF
CORPORATIONS
Not
recognizing
corporations
as
persons
for
purposes
of
the
Fourteenth
Amendment
would
have
conflicted
with
the
reality
that,
by
the
last
decades
of
the
nineteenth
century,
these
business
entities
owned
vast amounts
of
property
and
were
increasingly
critical
to
the
national
economy. Courts
certainly
could not
have
allowed
states to
confiscate
the
property
of
corporations
or
deny
them
fair
trials.
The
consequences
for
the
owners
of
the companies,
as
well
as
interstate commerce
itself,
would
have
been
incalculable.
V.
CONCLUSION
Since
the
mid-nineteenth
century,
courts
have
held
consistently that
corporations
cannot
be
citizens
for
purposes
of
the
Privileges
and
Immunities
Clause
of
Article
IV.
By
itself,
that
conclusion
is
reasonable,
given the historical
legacy
of
basing
membership
in
the
polity
as
a
citizen
or subject
on
loyalty
to
a
monarch
or
republic.
Considering
the
scarcity
of
interstate
business
corporations
when
the
Constitution
was
written,
however,
it
is
highly
unlikely
that
any
of
the Framers
or
ratifiers
thought about
the
matter.
But
the
same
goes
for diversity
jurisdiction,
under which
corporations
are
counted
as
citizens
because
they
embody
the
interests
of
actual
people. The
Court
also
extended
to
corporations
many
of
the
same
rights
that
individuals
had
under
the
Fourteenth
Amendment,
with
no
explanation
at the
time.
This
episode
of
constitutional
history
stands
as
a
prime
example
of
what
Oliver
Wendell Holmes,
Jr.
wrote
about-"[t]he
life
of
the
law,"
'154
that
it
was
not
one
of
"logic:
it
has
been
experience."'
55
He
explained:
The
felt necessities
of
the
time,
the
prevalent
moral and
political
theories,
intuitions
of
public policy,
avowed
or
unconscious,
and
even
the
prejudices
which
judges
share
with
their
fellow-men,
have had
a
good
deal
more
to
do
than
syllogism
in
determining
the
rules
by
which
men
should
be
governed.
The
law
embodies
the
story
of
a
nation's
development
through
many
centuries, and
it
cannot
be dealt
with
as
if
it
contained
only
the
axioms
and corollaries
of
a
book
of
mathematics.
156
There
is
a
good
case
to
be
made
that,
in
principal,
courts
should
have
brought
corporations
under
the
wing
of
the
Privileges
and
Immunities
Clause
on
the
same
basis
that
they
included
them
within
diversity
jurisdiction.
Ultimately,
in
both
contexts, real
people are
the
154.
OLIVER
WENDELL
HOLMES,
JR.,
THE
COMMON
LAW
2
(Boston,
Little, Brown
&
Co.
1881).
155.
Id.
156.
Id.
2015]
27
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Published by Scholarship @ Hofstra Law, 2015
106
HOFSTRA
LAWREVIEW
[Vol.
44:79
ones
affected
by treatment
of
the
companies
they
own.
The
reasons
why
courts
did
not
do
so
are
somewhat
complex,
but
they
are
not
based
so
much
on
logic
as
attitudes
about
citizenship
and
corporations
in
early
America that
have
long
faded.
Modem
corporations
come
in
many
shapes
and
sizes;
the
great
majority
are
small
businesses,
while
some
are
so
enormous
that
their
downfall
could
imperil the
national economy.
At
the
same
time,
a
large
percentage
of
the
investors
in
publicly-traded
corporations
are
pension
funds
for ordinary
people,
a
phenomenon
that
no
nineteenth-century
judge
could
have
imagined.
Yet
the
doctrine
excluding
corporations
from
the
Privileges
and
Immunities
Clause
persists through
unreflective
repetition,
its
mission
largely
supplanted
by
interpretations
of
the
Commerce
Clause
and
the
Fourteenth
Amendment.
28
Hofstra Law Review, Vol. 44, Iss. 1 [2015], Art. 4
https://scholarlycommons.law.hofstra.edu/hlr/vol44/iss1/4