We the Corporations Page 17

  Chief Justice Morrison Waite, who had a long-running feud with Field, did not share the commitment to corporate rights. Although Waite was the chief justice, he was not a natural leader. When Waite was nominated to the post by President Grant in 1874—after Roscoe Conkling declined the position—he had little support from the other justices. Lacking any judicial experience and never even having argued a case at the high court, Waite seemed like the underwhelming type so often appointed by Grant, who was said to have “a peculiar talent for elevating incompetent or corrupt individuals to important federal posts.” Of Waite, Justice Miller opined that one “can’t make a great chief justice out of a small man.” With a strong work ethic and even temperament, however, Waite overcame the resistance of Miller, who eventually would praise Waite’s leadership. Field, however, was never swayed.51

  CHIEF JUSTICE MORRISON WAITE DISAGREED WITH JUSTICE STEPHEN FIELD ON ISSUES RELATING TO BUSINESS AND ETHICS.

  Certainly part of the acrimony between Field and Waite stemmed from their conflicting views on the economy and business. Although Waite had been a railroad lawyer prior to joining the court, his rulings in business cases often favored state regulators. In Munn v. Illinois, for example, a landmark decision of 1877 allowing states broad leeway to regulate private property when it is “affected with a public interest,” Waite wrote the majority opinion over Field’s vigorous dissent. “The legislation in question,” a state law setting rates for grain warehouses, “is nothing less than a bold assertion of absolute power by the State to control at its discretion the property and business of the citizen, and fix the compensation he shall receive,” Field warned, and violated “the fundamental maxims of a free government.”52

  Another difference between the two men was that Waite, unlike Field, had an abiding commitment to judicial integrity. When Field and Waite were asked to serve on the commission to settle the bitterly contested Tilden-Hayes presidential election of 1876, Field readily agreed but Waite refused, fearing his participation might embroil the court in partisan politics. Waite also chafed at Field’s informal, ethically questionable association with Stanford and the Southern Pacific. Perhaps that was one reason that when the Supreme Court hearing in the Santa Clara case began, Waite informed the lawyers that the justices did not want to hear arguments on corporate rights, the issue Field had devoted so much attention to in his circuit court opinion. Waite thought the case could be decided on narrower grounds, without addressing the rights of corporations.53

  When the ruling in the Santa Clara case was issued three months later in 1886, it was decided on narrower grounds. The court sided with the Southern Pacific, although without saying anything about corporate rights. The tax assessments imposed on the Southern Pacific were invalid, the court explained, because the county had factored into the railroad’s tax bills the value of fences running alongside the tracks, which was not allowed by California law. In essence, the court said the tax assessments were improperly calculated. Because the case could be decided “upon this ground,” the court’s opinion explained, “it is not necessary to consider any other questions,” including the “grave questions of constitutional law upon which the case was determined below.”54

  In a companion case handed down the same day, an unhappy Field filed a concurring opinion voicing his displeasure with the court for avoiding the question of corporate rights under the Fourteenth Amendment. “At the present day, nearly all great enterprises are conducted by corporations,” he noted. “Hardly an industry can be named that is not in some way promoted by them, and a vast portion of the wealth of the country is in their hands.” America’s corporations deserved to know if they enjoyed the rights guaranteed by “the great constitutional amendment which insures to every person, whatever his position or association, the equal protection of the laws.” “But I regret that it has not been deemed consistent with [the court’s] duty to decide the important constitutional questions involved, and particularly the one which was so fully considered in the circuit court,” he complained.55

  Once again, Field was foiled. Yet he was not about to concede in his quest to expand the rights of business corporations, and he soon found an unlikely ally in the Supreme Court reporter, J. C. Bancroft Davis.

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  NOT TO BE CONFUSED with a journalist, the Supreme Court’s Reporter of Decisions is the government officer responsible for publishing the official opinions of the justices. Today one expects the reporter to be a functionary who dutifully proofreads, typesets, and distributes the justices’ handiwork. In 1883, however, when J. C. Bancroft Davis became the reporter, it was a prestigious and profitable post that attracted men of public stature. The reporter prior to Davis, William Tod Otto, was assistant secretary of the interior and a close confidant of Lincoln who was present at the president’s deathbed. Two reporters before him was Jeremiah Sullivan Black, who had served as secretary of state and attorney general of the United States.56

  Davis came from an influential Massachusetts family. His father, John Davis, was a US senator and former governor of the state. The son was related by marriage to Rufus King, a Massachusetts delegate at the Philadelphia Convention and signer of the Constitution. Educated at Harvard, J. C. Bancroft Davis had been the US ambassador to Germany and an assistant secretary of state twice. He resigned his position as a federal judge on the United States Court of Claims to become the Supreme Court reporter. Money was a major draw. Still in the era of the spoils system, the reporter was given the exclusive right to sell the United States Reports, the official bound versions of the court’s opinions.57

  When Davis took the post, demand for the volumes was soaring. A movement to create publicly accessible libraries had been sweeping the nation, especially in urban areas swelling with an increasingly literate middle class. Between 1850 and 1875, over two thousand new libraries were founded. Scores of them were dedicated specifically to the law, especially in the newly emergent law schools that were replacing the old sytem of legal training through apprenticeships. As the reporter, Davis’s income would likely exceed the salaries of the justices.58

  The problem with staffing the reporter’s post with accomplished men like Davis was that they often had grandiose egos to match their bloated resumes. Davis himself was known to be patronizing to the justices and, according to one historian, “never established a good working relationship with the members of the court.” Davis often refused justices’ requests to make corrections to published opinions, believing his own understanding of what they meant was better than theirs. Davis’s views, moreover, were idiosyncratic. In one volume of the United States Reports, he included an appendix purporting to list every Supreme Court decision invalidating a state or federal law for violating the Constitution. But strangely, he omitted Dred Scott—undoubtedly the most momentous of such decisions in the history of the Supreme Court to date—while including other cases that were not decided on constitutional grounds at all.59

  By tradition, the reporter includes a summary or “syllabus” of each decision along with concise headnotes describing the court’s reasoning in a given case. The syllabus and headnotes, which are written by the reporter, appear in the published volume at the front of the relevant case. Although they are not official statements of the court, they serve the bar by making legal research easier. A lawyer can look over the syllabus and headnotes and quickly understand what the court decided before delving into the opinion itself. A headnote for Brown v. Board of Education, for example, tells us, “Segregation of children in public schools solely on the basis of race deprives children of the minority group of equal educational opportunities, even though the physical and other ‘tangible’ factors may be equal.”

  Over the course of his tenure, Davis’s syllabi and headnotes became an unending source of tension between him and the justices. In one case, Justice John M. Harlan, the “Great Dissenter” who refused to join the court’s opinion endorsing racial segregation in Plessy v. Ferguson, complained to the chief justice, “I h
ave read the head-notes in the Bank case. They are awful and are enough to make you . . . sick. There is time to correct them.” When a lawyer in one case relied on one of Davis’s headnotes to support an argument, Justice David Brewer, who was also Stephen Field’s nephew, rebuked, “The headnotes to the opinions of this Court are not the work of the Court, but are simply the work of the Reporter, giving his understanding of the decision, prepared for the convenience of the profession.” In this particular instance, wrote Brewer, Davis’s headnote was “a misinterpretation of the scope of the decision.” Eventually the justices would actively lobby for Davis to be replaced.60

  Davis, however, was still relatively new in his job and had not yet earned the complete enmity of the justices in 1886, when Santa Clara was decided. Yet his syllabi and headnotes in United States Reports for the Santa Clara case reflect his penchant for error, if not outright deception. According to Davis’s headnotes, the holding of the case was: “The defendant Corporations are persons within the intent of the clause in section 1 of the Fourteenth Amendment to the Constitution of the United States, which forbids a state to deny to any person within its jurisdiction the equal protection of the laws.” Then, just before the first lines of the court’s opinion itself, Davis added:

  One of the points made and discussed at length in the brief of counsel for defendants in error was that “corporations are persons within the meaning of the Fourteenth Amendment to the Constitution of the United States.” Before argument, Mr. CHIEF JUSTICE WAITE said: “The Court does not wish to hear argument on the question whether the provision in the Fourteenth Amendment to the Constitution which forbids a state to deny to any person within its jurisdiction the equal protection of the laws applies to these corporations. We are all of the opinion that it does.”

  Anyone who read the syllabus and headnotes without carefully reading the opinion itself would mistakenly conclude that the court in Santa Clara decided that corporations were people entitled to the protections of the Fourteenth Amendment. The court, of course, had not ruled on that question at all, prompting Field’s angry rebuke. Although the chief justice had instructed the lawyers not to focus on corporate rights, his purpose was likely to focus their attention on the other issues in the case, not to suggest that all the justices were persuaded that corporations had Fourteenth Amendment rights. One of the justices then serving on the court was William Burnham Woods, who earlier had written the Continental Insurance decision specifically rejecting that view. It would also be a surprise if all the other justices, several of whom had ruled against commercial interests repeatedly over the previous terms, simply reversed course to favor broad new Fourteenth Amendment rights for corporations.

  “Nowhere in the United States Reports are there to be found words more momentous or more baffling than these,” wrote Howard Jay Graham, the Fourteenth Amendment expert. While Davis never explained why he added such misleading language to the published version of the opinion, speculation since has focused on whether Davis might have had some personal interest in expanding the rights of corporations like the Southern Pacific. Davis, it turns out, had once served as president of the Newburgh and New York Railway Company.61

  While Davis was prone to error, his inaccurate syllabus and headnote in Santa Clara County v. Southern Pacific Railroad were not thoughtless mistakes. Before the decision was published, Davis sent to Waite a note indicating that he would include what he recalled to be the chief justice’s statement to the lawyers at the beginning of oral argument. Waite replied, “I leave it with you to determine whether anything need be said about it in the report inasmuch as we avoided the constitutional question in the decision.” Davis, in other words, had been explicitly reminded by the chief justice that the Supreme Court in the Southern Pacific’s case had not decided the corporate rights question. Yet there it was in the official United States Reports: in Santa Clara County v. Southern Pacific Railroad, the Supreme Court had ruled that corporations were entitled to the protections of the Fourteenth Amendment.62

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  STEPHEN FIELD QUICKLY SAW the opportunity presented by J. C. Bancroft Davis’s misleading syllabus and headnote. Even if they did not faithfully describe the Supreme Court’s decision, they could be used to advance the cause of corporate rights.

  The headstrong justice had previously shown his willingness to deviate from controlling Supreme Court precedent when he disagreed with it. In the 1870s, Field was responsible for what came to be known as the special “Ninth Circuit Law” that departed from the Supreme Court’s decision in the Slaughter-House Cases. The Ninth Circuit was the western region of federal courts, including those in California, over which Field presided when riding circuit. In a series of opinions for the Ninth Circuit, Field struck down several California laws that restricted the ability of Chinese immigrants to work. He was not motivated by concerns for racial justice; Field’s personal letters reveal a deep-seated racism, and as a justice he would author the notorious Chinese Exclusion Case of 1889, which employed racist assumptions to uphold a ban on immigration from China. In the Ninth Circuit cases, Field ruled in favor of the Chinese laborers not because they were Chinese but because they were laborers. Like the butchers in the Slaughter-House Cases, the laborers had economic rights under the Constitution and were entitled to pursue their calling. Due to a technicality in federal law at the time, however, the Chinese laborer cases were not appealable to the Supreme Court. As a result, Field’s rulings striking down California’s labor laws for violating economic rights under the Fourteenth Amendment were final. For the western region of the United States, Field’s opinions became their own, unique “constitutional law of the Ninth Circuit” in which Field’s dissent in the Slaughter-House Cases, rather than the court’s majority opinion, controlled.63

  Field’s rulings in the Chinese laborer cases also became incubators of what would develop into one of the most significant pro-business constitutional doctrines of the early twentieth century, the liberty of contract. Although this right sounds a bit like the contractual protections at issue in Daniel Webster’s Dartmouth College case, it was different. While Webster had argued that the state could not revise previously formed contractual arrangements, Field’s “liberty of contract” protected an individual’s right to practice the trade or profession of one’s choice without undue state interference. That is what Field had advocated for in his Slaughter-House Cases dissent. Beginning in 1897, the Supreme Court would embrace Field’s understanding of economic liberty and read this unenumerated principle of laissez-faire into the due process clause of the Fourteenth Amendment. A 1905 decision striking down a New York law that prohibited employees of bakeries from working more than sixty hours a week, Lochner v. New York, would give the jurisprudential period its name. Although Field had retired from the Supreme Court by the time of the Lochner era, the justice would nonetheless be credited as the intellectual “pioneer and prophet” of the court’s jurisprudence. His thirty-year battle to expand economic rights had proven victorious, and the Supreme Court in the Lochner era would become known for striking down dozens of laws regulating business activities.64

  In Field’s view, corporate rights were a necessary component of economic liberty—and, by March of 1888, the ranks of Field’s opponents on the court were thinning. Justice Woods, who wrote the lower court opinion rejecting corporate rights in the Continental Insurance case, had passed away the year before. Field’s nemesis, Chief Justice Waite, was on his deathbed from pneumonia. Field took advantage of the lack of oversight to insert into a Supreme Court majority opinion an affirmation that corporations had Fourteenth Amendment rights.

  The case, Pembina Consolidated Silver Mining Company v. Pennsylvania, involved another of the seemingly endless lawsuits by out-of-state companies seeking to escape foreign corporation fees and other requirements. Field was assigned to write the court’s opinion upholding the fees. Although Field believed small foreign corporation fees were no real barrier to interstate businesses and were const
itutionally permissible, he slipped into his majority opinion broad, affirmative assertions—wholly irrelevant to the case—about the constitutional rights of corporations. “Under the designation of ‘person’ there is no doubt that a private corporation is included,” he wrote. “Such corporations are merely associations of individuals united for a special purpose and permitted to do business under a particular name and have succession of members without dissolution.” Denying corporations constitutional rights would enable the government to infringe on the rights of members.65

  Four days after the court issued its opinion in Pembina Consolidated Mining Company, Waite passed away. He was replaced by Melville Fuller, who would quickly prove an ally of Field in the struggle to define the Fourteenth Amendment. In appearance, Fuller was the spitting image of Mark Twain; the humorist was once mistakenly asked for his autograph by a fan of the new chief justice, leading Twain to write, “It is delicious to be full, but it is heavenly to be Fuller.” Both Twain and Fuller had unusual relationships to the corporation. Late in life, Twain decided to become one. Anxious to keep the earnings from his writings in his own family, he formed the Mark Twain Company of New York, with the stock to go to his two daughters upon his death. He was one of the first celebrities to form a corporation to keep control over their artistic output, and the practice would eventually become commonplace. Fuller, for his part, became a consistent vote on the high court for expansive constitutional protections for corporations. It was under Fuller’s leadership that the court finally adopted Field’s “liberty of contract” and pursued the largely pro-business agenda of the Lochner era.66