Corporations

Power to Charter Corporations (Necessary and Proper Clause)

In addition to the creation of banks, Congress has been held to have authority to charter a railroad corporation,1 or a corporation to construct an interstate bridge,2 as instrumentalities for promoting commerce among the states, and to create corporations to manufacture aircraft 3 or merchant vessels 4 as incidental to the war power.

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References

This text about Corporations is based on “The Constitution of the United States of America: Analysis and Interpretation”, published by the U.S. Government Printing Office.

[Footnote 1] Pacific R.R. Removal Cases, 115 U.S. 1 (1885); California v. Pacific R.R., 127 U.S. 1, 39 (1888).

[Footnote 2] Luxton v. North River Bridge Co., 153 U.S. 525 (1894).

[Footnote 3] Clallam County v. United States, 263 U.S. 341 (1923).

[Footnote 4] Sloan Shipyards v. United States Fleet Corp., 258 U.S. 549 (1922).

Tables of Contents

• Corporations and other Topics in the Contents – Article 1 of the U.S. Constitution
• U.S. Constitutional Law Category
• List of amendments to the U.S. Constitution
• Corporations and other Topics in the Constitution Contents
• Interpretation of the U.S. Constitution (Table of Contents)
• Clauses of the Constitution (Table of Contents)

Corporations

At a comparatively early date, the claim was made that a corporation chartered by a state and consisting of its citizens was entitled to the benefits of the comity clause in the transaction of business in other states. It was argued that the Court was bound to look beyond the act of incorporation and see who were the incorporators. If it found these to consist solely of citizens of the incorporating state, it was bound to permit them through the agency of the corporation to exercise in other states such privileges and immunities as the citizens thereof enjoyed. In Bank of Augusta v. Earle,174 this view was rejected. The Court held that the comity clause was never intended “to give to the citizens of each State the privileges of citizens in the several States, and at the same time to exempt them [under a corporate veil] from the liabilities which the exercise of such privileges would bring upon individuals who were citizens of the State. This would be to give the citizens of other States far higher and greater privileges than are enjoyed by the citizens of the State itself.” 175 A similar result was reached in Paul v. Virginia.176 The Court there held that a corporation, in this instance, an insurance company, was “the mere creation of local law” and could “have no legal existence beyond the limits of the sovereignty” 177 which created it; even recognition of its existence by other states rested exclusively in their discretion.178 By reason of its similarity to the corporate form of organization, a Massachusetts trust has been denied the protection of this clause.179

Corporations and the U.S. Constitution

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See Also

References

This text about Corporations is based on “The Constitution of the United States of America: Analysis and Interpretation”, published by the U.S. Government Printing Office.

Notes

[Footnote 5] 38 U.S. (13 Pet.) 519 (1839).

[Footnote 6] 38 U.S. at 586.

[Footnote 7] 75 U.S. (8 Wall.) 168 (1869).

[Footnote 8] 75 U.S. at 181.

[Footnote 9] Later cases held that this discretion is qualified by other provisions of the Constitution notably the Commerce Clause and the Fourteenth Amendment. Crutcher v. Kentucky, 141 U.S. 47 (1891).

[Footnote 10] Hemphill v. Orloff, 277 U.S. 537 (1928).