We the Corporations Read online

  The second time Field was targeted, the sitting justice ended up in jail for murder. Field’s arrest was itself a testament to the passions he aroused. In the nineteenth century, Supreme Court justices were required to “ride circuit.” Each would travel to a particular region of the country and hear cases, a grueling part of the job for men in the later stages of life traveling in harsh conditions. Justices were often assigned to cover circuits with which they had some geographical connection. Field was assigned to the new western Ninth Circuit, which included California, Field’s home state prior to joining the bench. He had been born in Connecticut but moved west when gold was discovered in 1849. Within a year of his arrival in California, he was elected to the state legislature and, a few years later, to the state supreme court. One of the other judges on the California court was David Terry, and the two men shared an intense, mutual animosity for one another. Years later Terry would become the second person to threaten Field’s life.

  Riding circuit in 1888, Field presided over a case involving Terry, who was then no longer a judge, and his new young wife, Sarah Althea Hill. The couple sought a share of the estate of a wealthy former senator to whom Hill claimed to have been secretly married. As proof, Hill produced a marriage contract purportedly signed by the deceased. Field’s court, however, deemed the contract to be a forgery, and Field from the bench questioned Hill’s virtue, the lack of which stood out even in as rough and ready a state as California in the late nineteenth century. Soon after, Terry swore publicly that he would exact revenge if Field dared to return to California. The threats were sufficiently serious—Terry was reputed to have killed two other men—that the attorney general of the United States ordered extra security for Field.33

  On the justice’s next trip to California, Field and his bodyguard, Deputy Marshal David Neagle, were having breakfast at a train stop in Lathrop, about 70 miles due east of San Francisco, when Terry snuck up behind the justice and struck him. Neagle jumped up and shot Terry twice, once in the head and once in the heart, killing the former judge instantly. It was then discovered, however, that Terry was unarmed, and California authorities arrested both Neagle and Field for murder. To this day, Field remains the only justice ever arrested while serving on the Supreme Court, much less for a crime as serious as murder.

  On account of his position, Field was quickly released, but California prosecutors charged the hapless Neagle with murder. Before trial, Neagle sought relief from the federal courts and his writ went to the Supreme Court. Writing for the court, Justice Samuel Miller held that California could not hold a federal officer in custody for acts the officer was authorized to take under federal law. Because Neagle was appointed to guard Field against an attack by Terry or Hill, he could not be prosecuted under California law for performing his duties. The Supreme Court’s decision In re Neagle remains a landmark precedent on federal/state relations still studied by law students today.34

  Although Field’s run-ins made headlines, he was best known among lawyers for his bold and influential rulings from the bench. John Norton Pomeroy, the law professor who also was one of Southern Pacific’s lawyers in the San Mateo case, wrote that Field “impressed his own conceptions upon the jurisprudence of the country—as much so, perhaps, as any living jurist in America.” When Field was on the California Supreme Court, he had authored groundbreaking opinions on property rights and mining claims, reorganized the state judiciary, drafted ethical guidelines for lawyers, and written comprehensive rules of procedure for both criminal and civil cases. His influence “upon the people and material prosperity has been simply immeasurable,” gushed Pomeroy. Even more levelheaded analysts would acknowledge that the California Supreme Court under Field’s leadership gained national renown—a stature it retains to this day.35

  It is tempting to believe that Field was born for such success. His ancestors were among America’s first settlers, arriving as early as the 1630s. Both of his grandfathers fought in the Revolutionary War. His siblings were also an accomplished lot. His brother Cyrus laid the first transatlantic telegraph cable and was mentioned by name in Jules Verne’s 1870 classic, 20,000 Leagues Under the Sea. Another brother, David, was “known throughout the world” for spearheading the codification movement, which brought order and clarity to what was a morass of judge-made common law rules by incorporating them into written statutes. Henry, Field’s youngest brother, humbly chose to become a Presbyterian minister, only to end up the influential editor of one of the nation’s leading religious newspapers.36

  Stephen Field was said to possess an “iron character” marked by “intensity, and persistent force.” He was, one biographer wrote, “self-confident, almost to the point of being offensive; and he was sometimes hot-tempered and vindictive.” His confidence was reflected in his opinions. Field did not believe the role of a judge was, as John Roberts would famously say in his confirmation hearings more than a century later, to be a passive umpire calling balls and strikes. Field believed, like most elites in the bar at the time, that the law was to be shaped for the betterment of society. As Pomeroy described him—using language that would be unheard of today—Field’s most distinctive trait as a judge was “his creative power,” “his ability in developing, enlarging, and improving the law.” Field’s jurisprudence was one of “constant rejection of ancient common-law dogmas, no matter how firmly settled,” to be replaced by “more just, consistent, and practical doctrines adapted to the needs of our own country and people.” In the late nineteenth century, the mark of a good judge was not how well he adhered to the Framers’ original understanding but how much his innovations bettered society.37

  Field, moreover, had the will to make other justices go along. When Chicagoan Melville Fuller was appointed chief justice in 1888, Wirt Dexter, a lawyer familiar with both men, reportedly said, “Field will eat him in one bite.”38

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  THE MOST POWERFUL CORPORATIONS of the Gilded Age were the railroads, and Stephen Field was a vote they could usually count on. Field had well-known and controversial ties with the railroads, especially the Southern Pacific and its president, Leland Stanford. Field and Stanford were close friends, and when Stanford established Leland Stanford Junior University near Palo Alto in 1891, he asked Field to be one of its founding trustees. Stanford was even said to be behind Field’s nomination to the Supreme Court. Throughout his time on the bench, Field ruled consistently in Stanford’s favor. Even when he was not assigned to the case, Field was known to lobby the presiding judges to help them see the merits of Stanford’s positions.39

  Field’s allegiance to Stanford and his railroad corporations did not go unrecognized by his colleagues. When Field tried to convince Chief Justice Waite to assign him the majority opinion in one case decided on behalf of another Stanford railroad, the Central Pacific, Waite refused, citing Field’s “intimate personal relations with the managers.” Waite explained that it was “specially important that the opinion come from one who would not be known as the personal friend of the parties representing these railroad interests.”40

  For Field, however, ruling in favor of the railroads and against burdensome state regulation was not just a matter of personal ties; it was a manifestation of his forcefully pro-business worldview. A subscriber to the emergent theory of social Darwinism, Field thought meddling in the marketplace stagnated and distorted economic evolution, enabling the government to pick winners and losers. Like modern-day libertarians, Field generally believed that leaving markets alone would produce a higher standard of living for more Americans. His faith in the free market was buttressed by the enormous growth in the American economy in the last half of the nineteenth century, much of it fueled by corporations.41

  The Gilded Age was also known as the “Age of Enterprise.” Almost daily, incredible new products were being introduced: telephones, phonographs, cable cars, ready-to-wear clothing, soft drinks, and canned fruits. Kerosene, marketed by Rockefeller’s Standard Oil, became a cheap and widely available subst
itute for whale oil and candles to illuminate homes, only to be challenged soon after by the advent of electrical lighting. The Home Insurance Building in Chicago, the nation’s first skyscraper, was completed in 1885, and at ten stories it became the tallest man-made structure in the world. Homes were being outfitted with running water and cooled by electric fans, the first home appliance. By the time Justice Field was asked to decide whether corporations had rights under the Fourteenth Amendment, technological development promoted by commercial enterprises of the post–Civil War era had radically transformed the daily lives of most Americans.

  LELAND STANFORD OF THE SOUTHERN PACIFIC RAILROAD HAD A CLOSE RELATIONSHIP WITH JUSTICE STEPHEN FIELD.

  The railroads could plausibly claim to have improved society as much as any other corporations. In 1869, the transcontinental railroad was completed when Stanford drove in the famous Golden Spike, engraved with Stanford’s name, at Promontory Summit. Not only did the transcontinental railroad enable people to cross the country with ease—something that could be appreciated by Field, whose first journey to California more than twenty years earlier had taken six weeks on a boat packed with cholera-infected passengers—but goods moved easily too. Railroads transported more than 350 million tons of freight each year and employed upwards of 1.5 million people. The new refrigerated railroad cars brought fresh fruits and vegetables grown in Florida and California to markets across the nation, a sign of the truly national economy.42

  Field thus had little sympathy for the populist heirs to Jefferson, Jackson, and Taney who enacted laws subjecting successful businesses like the railroads to special, disadvantageous rules and taxes. When Stanford and the railroad corporations decided to mount their test cases against California’s tax, Field recommended the Southern Pacific hire Professor Pomeroy, who would write so glowingly about Field’s creative approach to judging.43

  There was nothing inappropriate about a judge recommending a good lawyer to a friend involved in a lawsuit. Yet by modern-day standards of judicial ethics, Field crossed the line by then participating as a judge in that case. Indeed, Field presided over the case multiple times. Before Conkling made his argument in the Supreme Court, the case was heard by the federal circuit court in California, presided over by Field. Rather than recuse himself for the obvious conflict of interest, Field took the lead role among the judges, writing a strong opinion in favor of the Southern Pacific and endorsing the arguments made by the lawyer he had recommended. Field also traversed ethical boundaries when, during the litigation, he shared with the Southern Pacific’s lawyers confidential memoranda about the case written by other justices.44

  Field’s luck ran only so far, however, and he was denied his opportunity to deliver a victory for Stanford and the Southern Pacific in Roscoe Conkling’s case. Although Field wrote to a friend that the oral argument went “great,” the case, he explained, “will be held under advisement until next term.” In fact, the justices never issued a final decision on the merits in San Mateo County v. Southern Pacific Railroad. Two years later, the court having yet to rule, the case was suddenly settled. The Southern Pacific surprisingly agreed to pay the taxes owed to San Mateo County.45

  Why Stanford agreed to settle the San Mateo case remains something of a mystery, but it may have had something to do with Conkling’s deception. Test cases do not typically settle. The lawsuit had been designed solely to spur a Supreme Court decision. Graham, the librarian who rebutted Conkling’s conspiracy theory of the Fourteenth Amendment, speculated that the justices might have been troubled by certain factual discrepancies in the record and, with other test cases challenging the California tax law wending their way up through the courts, Stanford cut his losses. Yet the supposed discrepancies were exceedingly minor, and hardly enough to prevent the justices from ruling on the case had they so desired. One is left to wonder whether the justices had, in fact, realized the larger discrepancy in Conkling’s account of the drafting of the Fourteenth Amendment. Or perhaps the other lawyers on the Southern Pacific’s legal team, who were all men of public repute, uncovered their colleague’s deception and made it known that the case should be dropped.

  Another of Stanford’s test cases made its way to the Supreme Court shortly after, and the actions of the lawyers in that case suggest Conkling’s deceit had been discovered. The case came out of Santa Clara County and challenged the same California railroad tax rules. Southern Pacific had the same legal team, save for Conkling, who was no longer involved. Tellingly, none of the Southern Pacific’s briefs in the Santa Clara County case made mention of Conkling’s journal or his statements about the drafters’ intentions. Given that Conkling, a drafter himself, had offered direct testimony about the intended meaning of the Fourteenth Amendment, such an omission was glaring. If the lawyers believed Conkling had been telling the truth, omitting his argument would have been malpractice. In any event, the test cases were about to take another unexpected turn.46

  * * *

  THE JUSTICES WOULD HEAR arguments in the Southern Pacific’s second test case, Santa Clara County v. Southern Pacific Railroad, in January of 1886. The issues were exactly the same as in the San Mateo case: Did corporations have rights under the Fourteenth Amendment? And, if so, did California’s tax rules prohibiting railroads from deducting mortgages that other landowners were allowed to deduct amount to an unconstitutional denial of the corporations’ right to equal protection of the laws? The procedural posture of the case was also the same. In both cases, the circuit court had ruled in the Southern Pacific’s favor before the appeal to the Supreme Court. And, in both cases, Justice Field had written the circuit court opinion holding that corporations were protected by the Fourteenth Amendment. In fact, the only significant difference between the San Mateo case and the Santa Clara case was the absence of Conkling and of any discussion of his journal.

  In Field’s ruling for the circuit court in Santa Clara, he made clear that corporations should have Fourteenth Amendment rights of equal protection and due process in order to protect the property rights of the stockholders. He explained that “whenever a provision of the constitution or of a law guaranties to persons protection in their property, . . . the benefits of the provision or law are extended to corporations.” Treating the property of corporations differently was unconstitutional, in Field’s view, not because the drafters intended that result but because such disparate treatment was “the very essence of tyranny.” “Strangely, indeed, would the law sound in case it read that in the assessment and taxation of property a deduction should be made for mortgages thereon if the property be owned by white men or by old men, and not deducted if owned by black men or young men; deducted if owned by landsmen, not deducted if owned by sailors.” Field was saying that just as a person’s racial identity was an inappropriate basis for singling someone out, so too was the Southern Pacific’s corporate identity.47

  For Field, any other interpretation of the Fourteenth Amendment would empower the enemies of capitalism and threaten the nation’s economic well-being. “Indeed, the aggregate wealth of all the trading, commercial, manufacturing, mining, shipping, transportation, and other companies engaged in business,” he warned in his circuit court opinion, “amounts to billions upon billions of dollars; and yet all this vast property which keeps our industries flourishing, and furnishes employment, comforts, and luxuries to all classes, and thus promotes civilization and progress, is lifted, according to the argument of counsel, out of the protection of the constitutional guaranties, by reason of the incorporation of the companies.” Such a result would be absurd. “How petty and narrow would provisions thus limited appear in the fundamental law of a great people!”

  Field supported broad constitutional protections for corporations, but he did not embrace corporate personhood—at least in anything more than a superficial way. While his circuit court opinion insisted that a corporation does count as a “person” under the equal protection and due process guarantees of the Fourteenth Amendment, Field’s logic and
reasoning were based on piercing the corporate veil and allowing the corporation to claim the rights of other people, namely, its members. As legal historians Morton Horwitz and Greg Mark have recognized, Field treated the corporation like an association of people. The corporation’s “members do not, because of such association, lose their rights to protection,” wrote Field. The court should look not to “the name under which different persons are united, but to the individuals composing the union.” While Field did say that corporations were people, he did not treat corporations as independent legal actors, with rights separate and distinct from the rights of members. Like Horace Binney, John Marshall, and Daniel Webster, Field treated the corporation as an association of people, not as a person itself.48

  Field had not always conceptualized the corporation as an association whose interests were reducible to those of stockholders. Years earlier, in 1869, he had authored an opinion for the Supreme Court that did rest on corporate personhood. Paul v. Virginia was a rehash of Bank of Augusta v. Earle, the Taney court decision holding that corporations were not protected by the comity clause of the Constitution. And just like the Taney court, the court in Paul affirmed that states could impose special rules on out-of-state corporations. Field’s opinion explicitly rejected the corporation’s argument that the justices should “look beyond the act of incorporation and see who were its members for the purpose of affording them” the protections of the comity clause. Field reaffirmed the Taney court’s reasoning that when “a corporation makes a contract it is the contract of the legal entity, the artificial being created by the charter, and not the contract of the individual members.”49

  Nearly two decades later, however, Field reasoned from very different premises in the Southern Pacific cases, where he looked to the rights of the corporation’s members. Perhaps he only used the reasoning of corporate personhood in Paul because he was repeating the arguments found in the Taney court precedent. Or perhaps it was that Field’s views about corporate rights changed over the course of the 1870s, when he became increasingly hostile to government regulation of the economy. According to Field’s biographer, Carl B. Swisher, the justice had generally been open-minded about state regulation of private property prior to 1870. The violence brought on by the Paris Commune of 1871, however, highlighted the dramatic rise of communist and radical agitation in Europe and deeply affected Field. Indeed, in 1876 Field himself wrote an opinion that scaled back the rule of Bank of Augusta v. Earle and Paul v. Virginia by allowing companies to challenge state foreign corporation fees under the commerce clause. (It is a sign of how determined corporations were to invalidate these state laws that they repeatedly challenged them, first under the comity clause, then the Fourteenth Amendment, and then under the commerce clause.) Whatever the cause of Field’s transformation, one thing is clear: by the time the justices heard arguments in the Santa Clara case in 1886, Field was restless to establish new protections for corporations under the Fourteenth Amendment.50