PART 1: CAN CORPORATIONS BE ACCOUNTABLE?
by Richard Grossman*
In 1628, King Charles I granted a charter to the Massachusetts
Bay Company. In 1664, the King sent his commissioners to see
whether this company had been complying with the terms of the
charter. The governors of the company objected, declaring that
this investigation infringed upon their rights. On behalf of the
King, his commissioners responded:
"The King did not grant away his sovereignty over you when he
made you a corporation. When His Majesty gave you power to make
wholesome laws, and to administer justice by them, he parted not
with his right of judging whether justice was administered
accordingly or not. When His Majesty gave you authority over
such subjects as live within your jurisdiction, he made them not
YOUR subjects, nor YOU their supreme authority."[1]
From childhood, this King had been led to act as a sovereign
should. What about us?
By means of the American Revolution, colonists took sovereignty
from the English monarchy and invested it in themselves.
Emerging triumphant from their struggle with King George and
Parliament, they decided they would figure out how to govern
themselves. Alas, a minority of colonists were united and
wealthy enough to define MOST of the human beings in the 13
colonies as property or as non-persons before the law and within
the society, with no rights that a legal person was bound to
respect.
Ours was a flawed sovereignty from the beginning. Because of its
moral failings and structural inequities, whole classes of people
had to organize and struggle over centuries to gain recognition
as part of the sovereign people--that is, they had to get strong
enough as a class to define themselves and not let either people
or institutions define them: African Americans, native peoples,
women, debtors, indentured servants, immigrants...
To this day, many still must struggle to exercise the rights of
persons, to be recognized as persons by law and by society.
Throughout this nation's history, there has always been plenty of
genuflecting to democracy and self-governance. But the further
each generation gets from the Revolution, the less the majority
act like sovereign people. And when it comes to establishing the
proper relationship between sovereign people and the corporations
we create, recent generations seem to be at a total loss.
Yet, earlier generations were quite clear that a corporation was
an artificial, subordinate entity with no inherent rights of its
own, and that incorporation was a privilege bestowed by the
sovereign. In 1834, for example, the Pennsylvania Legislature
declared:
"A corporation in law is just what the incorporation act makes
it. It is the creature of the law and may be moulded to any
shape or for any purpose the Legislature may deem most conducive
for the common good."[2]
During the 19th century, both law and culture reflected this
relationship between sovereign people and their institutions.
People understood that they had a civic responsibility not to
create artificial entities which could harm the body politic,
interfere with the mechanisms of self-governance, assault their
sovereignty.
They also understood that they did not elect their agents to
positions in government to sell off the sovereignty of the
people. In other words, they were human beings who tried to act
as sovereign people. One thing they did was to define the NATURE
of the corporate bodies they created. If we look at mechanisms
of chartering--and at the language in corporate charters, state
general incorporation laws and even state constitutions prior to
the 20th century--we find precise, defining language that was
often mandatory and prohibatory and self-executory in nature.
These mechanisms DEFINED corporations by denying corporations
political and civil rights, by limiting their size,
capitalization and duration, by specifying their tasks, and by
declaring the people's right to remove from the body politic any
corporations which dared to rebel.
Here is an example of language which sovereign people--responding
to the rise of corporations after the Civil War--placed in the
California Constitution of 1879, and which appears in other state
constitutions at about that time:
"Article I, section 2: All power is inherent in the people...
"Article I, section 10: The people shall have the right freely to
assemble together to consult for the common good, to instruct
their representatives...
"Article XII, section 8: The exercise of the right of eminent
domain shall never be so abridged or construed as to prevent the
Legislature from taking the property and franchises of
incorporated companies and subjecting them to public use the same
as the property of individuals, and the exercise of the police
power of the State shall never be so abridged or construed as to
permit corporations to conduct their business in such manner as
to infringe the rights of individuals or the general well-being
of the State."[3]
The principal mechanism which sovereign people used during the
19th century to assess whether their corporate creations were of
a suitably subordinate nature was called QUO WARRANTO. The QUO
WARRANTO form of action, as attorney Thomas Linzey has noted,[4]
is one of the most ancient of the prerogative writs. In the
words of the Delaware Court of Chancery, "the remedy of QUO
WARRANTO extends back to time whereof the memory of man runneth
not to the contrary."
QUO WARRANTO simply means "by what authority?". All monarchs
understood how to use this tool in self-defense. They realized
that when a subordinate entity they had created acted "beyond its
authority," it was guilty of rebellion and must be terminated.
Sovereignty is in our hands now, but the logic is the same: when
the people running a corporation assume rights and powers which
the sovereign had not bestowed, or when they assault the
sovereign people, this entity becomes an affront to the body
politic. And like a cancer ravaging a human body, such a
rebellious corporation must be cut out of our body politic.
During the first hundred years of these United States, people
mobilized so that legislatures, attorneys general and judges
would summon corporations to appear and answer to QUO WARRANTO.
In 1890, the highest court in New York State revoked the charter
of the North River Sugar Refining Corporation in a unanimous
decision:
"The judgment sought against the defendant is one of corporate
death. The state which created, asks us to destroy, and the
penalty invoked represents the extreme rigor of the law. The
life of a corporation is, indeed, less than that of the humblest
citizen, and yet it envelopes great accumulations of property,
moves and carries in large volume the business and enterprise of
the people, and may not be destroyed without clear and abundant
reason... Corporations may, and often do, exceed their authority
only where private rights are affected. When these are adjusted,
all mischief ends and all harm is averted. But where the
transgression has a wider scope, and threatens the welfare of the
people, they may summon the offender to answer for the abuse of
its franchise and the violation of its corporate duty... The
abstract idea of a corporation, the legal entity, the impalpable
and intangible creation of human thought, is itself a fiction,
and has been appropriately described as a figure of speech... The
state permits in many ways an aggression of capital, but, mindful
of the possible dangers to the people, overbalancing the
benefits, keeps upon it a restraining hand, and maintains over it
a prudent supervision, where such aggregation depends upon its
permission and grows out of its corporate grants... the state, by
the creation of the artificial persons constituting the elements
of the combination and failing to limit and restrain their
powers, becomes itself the responsible creator, the voluntary
cause, of an aggregation of capital... the defendant corporation
has violated its charter, and failed in the performance of its
corporate duties, and that in respects so material and important
as to justify a judgment of dissolution... Unanimous."[5]
Such a judgment should not be regarded as punishment of the
corporation, but rather a vindication of the sovereign people.
When our sovereignty has been harmed, we are the ones who must be
made whole. The concept is similar to what Hannah Arendt
described in her book EICHMANN IN JERUSALEM (1963), writing about
Nazi crimes against humanity,
"The wrongdoer is brought to justice because his act has
disturbed and gravely endangered the community as a whole, and
not because, as in civil suits, damage has been done to
individuals who are entitled to reparation. The reparation
effected [here] is of an altogether different nature; it is the
body politic itself that stands in need of being 'repaired,' and
it is the general public order that has been thrown out of gear
and must be restored, as it were. It is, in other words, the
law, not the plaintiff, that must prevail."[6]
There is no shortage of court decisions affirming the sovereignty
of the American people over corporate fictions, recognizing the
need to restore the general public order. In RICHARDSON V. BUHL,
the Nebraska Supreme Court in the late 19th century declared:
"Indeed, it is doubtful if free government can long exist in a
country where such enormous amounts of money are... accumulated
in the vaults of corporations, to be used at discretion in
controlling the property and business of the country against the
interest of the public and that of the people, for the personal
gain and aggrandizement of a few individuals."[7]
[Continued next week.]
CORRECTION
Consumers Union (CU) did not test cheeses wrapped in PVDC food
wrapping as reported in REHW #603. CU tested for plasticizers in
cheese wrapped in PVC food wrapping. Although the wraps contained
no phthalate plasticizers (phthalates found in the cheese are
apparently from another source), CU did find high levels of
adipates, a related group of plasticizers, as we reported.
Details of Consumer's Union's tests can be viewed at
www.consunion.org. | 
