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  Judge Lacombe was not convinced and ordered Hale to answer Taft’s questions nonetheless. Without offering a detailed rebuttal to Nicoll’s argument, the judge simply issued an order requiring Hale to testify and produce the requested documents or go to jail. On Nicoll’s advice, Hale refused once again. With so much to lose personally, he had little choice but to do as he was told. Hale was remanded to the custody of the local US marshal, William Henkel. Nicoll then appealed Lacombe’s decision and, pending resolution of the appeal, Hale was released into his lawyer’s custody.24

  The reprieve was temporary. Four months later, in September of 1905, MacAndrews & Forbes found out about the money Hale and his neighbor and gambling partner Harry Smock had stolen. The theft was reported to New York’s district attorney, William Travers Jerome, who had run for office promising to combat corruption. On an otherwise ordinary Thursday at the company’s corporate offices on lower Fifth Avenue, Jerome had police march in and arrest the two men as coworkers looked on. The New York Times headline the next day announced, “TRUSTED MEN IN JAIL FOR LARGE DEFALCATION,” above a story connecting Hale to the antitrust investigation, Roosevelt, and American Tobacco.25

  Although Hale’s personal fate was sealed, the dispute over his refusal to testify and turn over documents continued on to the Supreme Court. The issue in the case was one of first impression: Do corporations like MacAndrews & Forbes have the rights guaranteed to criminal suspects under the Fourth and Fifth Amendments?

  * * *

  TODAY, THE FOURTH AND FIFTH Amendments are the most frequently litigated provisions of the Constitution. Anytime police search a home, they are required to follow strict rules on warrants required by the Fourth Amendment. When they arrest someone, they must read the Miranda warnings informing the criminal suspect of the right to remain silent under the Fifth Amendment. If a suspect can show these rights were violated, often the evidence uncovered as a result of the constitutional infringement will be suppressed, supplying ample incentive to suspects to raise such claims. Courts deal with Fourth and Fifth Amendment cases daily, and law students’ casebooks are filled with a detailed and rich body of cases concerning these constitutional provisions.26

  When DeLancey Nicoll brought MacAndrews & Forbes’s case to the Supreme Court in 1905, however, the jurisprudence of those two amendments was still in its infancy. Crime control was traditionally the province of the state governments, which under the original Constitution were not required to follow the Fourth and Fifth Amendments. Nor were they required to respect the freedom of speech, religious liberty, the right to keep and bear arms, or any other right listed in the Bill of Rights. For the first hundred-plus years of US history, the Supreme Court held that the Bill of Rights was only a limitation on the federal government, not on state and local governments. Over the course of the twentieth century, the Supreme Court would reverse course and gradually extend most of the provisions of the Bill of Rights to the state and local governments, but that was still years away when Nicoll appealed Judge Lacombe’s ruling.

  Another reason there had been so few Fourth and Fifth Amendment cases was that the federal government had few criminal laws to enforce, at least until the late nineteenth century. The Gilded Age saw the rise of huge, national corporations like the railroads and the trusts that were beyond the power of any one state to control. Beginning in 1887, Congress increasingly began to fill the regulatory void, starting with the Interstate Commerce Act—the first comprehensive federal regulation of a national industry, the railroads. The law required railroad rates to be “reasonable and just,” prohibited railroad companies from certain forms of rate discrimination, and established the first modern regulatory agency, the Interstate Commerce Commission, to oversee the industry. The Sherman Act was passed three years later, followed after the turn of the century by the Meat Inspection Act of 1906 and the Food and Drug Act of 1907, two additional laws inspired by muckraking journalism.

  This wave of federal regulation backed by criminal penalties inevitably brought Fourth and Fifth Amendment cases to the Supreme Court’s docket—pushing businesses to become once again constitutional first movers. Indeed, businesses being investigated or prosecuted for wrongdoing brought the earliest Supreme Court cases on the Fourth and Fifth Amendments, including Boyd v. United States and, ultimately, Nicoll’s case. The Boyd case was decided in 1886, the same year as the Santa Clara case with the misleading headnote, and is considered the first significant Supreme Court decision on the criminal rights protected by the Fourth and Fifth Amendments. The case did not involve a corporation but a business partnership, which was accused of failing to pay customs duties on imported glass. The government seized the glass and obtained a court order requiring the partnership to turn over all the relevant invoices. The Supreme Court, however, ruled for the partnership. The justices held that the compelled disclosure of a company’s papers was an unreasonable search and seizure under the Fourth Amendment. Moreover, the court held the use of those papers as evidence against their owner was forced self-incrimination under the Fifth Amendment. Although the court would water down these principles considerably in the decades to come, Boyd was nevertheless the case that first breathed life into the Fourth and Fifth Amendments, and it involved a business.27

  GOVERNMENT REGULATION AND INSPECTION OF BUSINESS GREW IN THE EARLY TWENTIETH CENTURY.

  The new federal laws of the era were part of that wave of laws, including many at the state level, that for the first time expressly specified that corporations could be prosecuted criminally. The Sherman Act, for example, set penalties of up to $350,000 for an individual and up to $10 million for “a corporation.” Of course, unlike individuals, corporations could not be sentenced to prison. Traditionally, as Blackstone recognized, corporations were not subject to criminal prosecution at all. Corporations, one nineteenth-century court explained, had “no soul” and so were incapable of having the “actual wicked intent” that criminal law usually requires for conviction. Yet as business corporations became more commonplace and economically influential in the Gilded Age and Progressive era, the notion that they were incapable of criminal intent waned and prosecutions of corporations for crime waxed. Writing in 1892, criminal law expert Joel Prentiss Bishop captured the shifting mood when he wrote that if corporations can set out, as they had, to “level mountains, fill up valleys, lay down iron tracks, and run railroad cars on them,” they could do so “as well viciously as virtuously.”28

  Philosophers, both at home and abroad, engaged in a lively debate about the nature of the corporation around the turn of the century. Was the corporation a state-created fiction? Or was it a real entity with a will of its own? American pragmatist John Dewey dismissed the various “theories” of the corporation as inherently indeterminate. Indeed, the shift toward corporate criminal liability had little to do with philosophy. Criminal law came to be applied to corporations because it was a valuable tool to discipline the emerging corporate giants of the era. As the Supreme Court would explain in a 1909 case, “the great majority of business transactions in modern times are conducted through these bodies, and . . . to give them immunity from all punishment because of the old and exploded doctrine that a corporation cannot commit a crime would virtually take away the only means of effectually controlling” business activity.29

  In his briefs filed with the Supreme Court, DeLancey Nicoll took a corporationalist tack and argued that MacAndrews & Forbes, the corporation, should be protected in the same way as the partnership in the Boyd case. Yet Nicoll was forced to address the question the justices skirted in Boyd: whether business entities, as such, even had Fourth and Fifth Amendment rights at all. For Nicoll, the answer was straightforward—if corporations could face penalties similar to those faced by individuals, they should have similar protections: “For if corporations may suffer the judgment of death by dissolution, if they may be condemned to forfeit the corporate property, if they may be indicted, convicted and sentenced to pay a fine as individuals may, what excus
e can be made for denying to them the beneficent protection of these amendments?” Nicoll cited for support Santa Clara County v. Southern Pacific Railroad.30

  Corporations were once again on the cutting edge of constitutional law. The Bank of the United States had been an early pioneer of the right to sue in federal court. Dartmouth College’s case breathed life into the contract clause. The Southern Pacific Railroad brought the lawsuits that transformed the Fourteenth Amendment into a vibrant guarantee of equality and due process for business. Now it was businesses like the partnership in Boyd and the MacAndrews & Forbes corporation that fought the first cases in the Supreme Court to establish Fourth and Fifth Amendment rights. It was only subsequent to these cases involving businesses that individuals would obtain judicial protection for those rights. Rather than corporations building on the established rights of individuals, individuals would instead build on the rights established by businesses.

  * * *

  IN APRIL OF 1905, when DeLancey Nicoll was preparing for the Supreme Court, the justices decided an important case that gave him reason to be confident in MacAndrews & Forbes’s chances. Lochner v. New York held unconstitutional a New York law that capped the number of hours bakers could work at ten per day, sixty per week. Although the case did not involve corporate rights directly, the decision proved a boon for business. The ruling made it harder for states to regulate workplace conditions, and did so in the name of empowering employees: maximum hours and minimum wage laws, the court held, interfered with the employee’s right to agree to work even longer for less money.31

  More importantly, from Nicoll’s perspective, was what the Lochner decision said about the court’s relative embrace of business interests. Indeed, Lochner would give its name to a forty-year period in Supreme Court history, lasting from 1897 to 1936, in which the justices gained notoriety for striking down labor laws, minimum-wage laws, banking reform, and other efforts to regulate business. What Nicoll could not have known, however, was that the Lochner court, like the Taney court, would also impose new limits on corporate rights.

  Although the Lochner era took its name from the 1905 case involving the bakers, as we have already seen, Justice Stephen Field was the intellectual godfather of the era’s jurisprudence. One of the last cases decided by the Supreme Court before the colorful Field was forced by senility to retire was E. Allgeyer & Company v. Louisiana, in 1897, which is often thought to be the beginning of the Lochner era. E. Allgeyer & Company was a partnership, not a corporation, but like Daniel Webster and the Second Bank of the United States in Bank of Augusta v. Earle, the company claimed to have a right to do business across state lines. The Taney court declined to extend that right to corporations, but as we have seen, businessmen persistently continued to bring new cases, raising essentially the same claim under any provision of the Constitution that might sound plausible: the comity clause, the commerce clause, and, in Allgeyer, the Fourteenth Amendment’s due process clause. The Lochner court ruled in favor of the partnership, holding that unduly protectionist state laws violated the “liberty of contract.”32

  The liberty of contract, as such, appears nowhere in the text of the due process clause—which is partly why Justice Rufus Wheeler Peckham Jr.’s opinion in Allgeyer became one of the most important in the history of the Supreme Court. Peckham’s opinion established a groundbreaking precedent for reading the promise of “liberty” in the due process clause broadly to protect unwritten rights. For Peckham, a confidant of Gould, Vanderbilt, and Morgan, those rights were largely economic, including the right to form contracts and pursue any lawful calling free from undue government interference. Yet Allgeyer was such an important precedent because, long after the Lochner era had ended, the Supreme Court continued to read the due process clause to protect unwritten rights, including the right to privacy, the right to choose abortion, and the right to same-sex marriage. Not only did Allgeyer launch the Lochner era, the decision—another landmark case in constitutional history brought and argued by a business—fundamentally reshaped American constitutional law.33

  THE JUSTICES OF THE SUPREME COURT IN THE LOCHNER ERA. STANDING, LEFT TO RIGHT: RUFUS PECKHAM, GEORGE SHIRAS, EDWARD WHITE, JOSEPH MCKENNA. SITTING, LEFT TO RIGHT: DAVID BREWER, JOHN HARLAN, MELVILLE FULLER, HORACE GRAY, HENRY BROWN.

  For years, critics of the Lochner era Supreme Court condemned the justices for making it nearly impossible for the government to regulate business. In recent years, however, scholars have gone back and reexamined the court’s Lochner era jurisprudence and found that the court, while certainly favorable to business interests, allowed many regulations to stand. And rather than simply making up a novel right of liberty of contract, the court was in many ways trying to preserve an older notion, traceable to the Framers, that understood the Constitution largely in terms of protecting private property and private economic relationships from majority rule. To the justices, individual liberty was being threatened by the unprecedented growth of the regulatory state in the late nineteenth century. The Lochner era saw many business regulations struck down, but the Supreme Court’s jurisprudence was far more complicated and nuanced than often portrayed.34

  A similar nuance ran though the Supreme Court’s treatment of corporate rights at the turn of the century. The first decades of the twentieth century witnessed an onslaught of corporate rights cases, as corporate litigants were encouraged by the court’s business-friendly reputation to bring numerous cases to the Supreme Court seeking expanded constitutional protections. The Lochner court did grant corporations some new constitutional protections. Yet the Lochner court also articulated new limits on the scope of corporate rights. The Lochner court held that corporations had property rights but not liberty rights.35

  That line was formally drawn in Northwestern National Life Insurance Company v. Riggs, a case decided in 1906—the same year the justices ruled on Nicoll’s case for MacAndrews & Forbes. An insurance company had challenged a Missouri law requiring insurers to pay out on life insurance policies even if the insured had violated the policy by lying on the application. The corporation claimed the law infringed the liberty of contract under Allgeyer and Lochner, but a majority of justices disagreed. “It is true that this Court has said that the liberty guaranteed by the Fourteenth Amendment against deprivation otherwise than by due process of law embraces the right to pursue a lawful calling and enter into all contracts proper, necessary, and essential to the carrying out of the purposes of such calling.” Nonetheless, the court held, the “liberty referred to in that Amendment is the liberty of natural, not artificial, persons.” In the spirit of the Taney court, which first rejected expansive claims of corporate rights, the Lochner court identified a new boundary to the scope of corporate constitutional protections.36

  What the Lochner court never did, however, was to offer a thoughtful justification of the distinction between property rights and liberty rights—or even bother to define the respective terms. The Riggs case provided no discussion beyond the brief statement quoted above. The differential treatment of property rights and liberty rights was not obviously required by the text of the Constitution. The due process clause of the Fourteenth Amendment, for example, joins both types of rights together in its guarantee that no state shall “deprive any person of life, liberty, or property, without due process of law.” Of course, the notion that corporations had property rights was relatively simple to understand. Since their earliest days in ancient Rome, corporations were recognized to have the ability to own property, like real estate or financial assets, in their own names. That was, indeed, the original motivation for creating the corporate form. The right of corporations to own property had been firmly established in American law ever since the Dartmouth College case, when Daniel Webster’s victory prevented New Hampshire’s attempted takeover of the incorporated school.

  Yet what exactly were liberty rights? The justices never offered a clear answer. Some years later, in a case called Meyer v. Nebraska, the court admitted that it had n
ever “attempted to define with exactness” which rights fell under the rubric of liberty rights. At its core, the notion of liberty is associated with “freedom from bodily restraint.” Yet, the court explained, liberty must include “also the right of the individual to contract, to engage in any of the common occupations of life, to acquire useful knowledge, to marry, establish a home and bring up children, to worship God according to the dictates of his own conscience.” The court was describing an array of fundamentally personal freedoms closely tied to control over your body, your conscience, and your family. With the exception of the right to contract, none of these liberty rights had anything to do with traditional business entities. Corporations did not have bodies, consciences, or families over which to exercise personal autonomy. And the law had long imposed limits on the types of business activity in which corporations could engage—even if, as the Lochner era began, many of the reins were being loosened by the new, permissive corporate laws of states like New Jersey.37