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A Theory of Legal Personhood$

Visa AJ Kurki

Print publication date: 2019

Print ISBN-13: 9780198844037

Published to Oxford Scholarship Online: September 2019

DOI: 10.1093/oso/9780198844037.001.0001

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PRINTED FROM OXFORD SCHOLARSHIP ONLINE (oxford.universitypressscholarship.com). (c) Copyright Oxford University Press, 2021. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in OSO for personal use. date: 29 November 2021

Collectivities as Legal Persons

Collectivities as Legal Persons

Chapter:
(p.155) 5 Collectivities as Legal Persons
Source:
A Theory of Legal Personhood
Author(s):

Visa A.J. Kurki

Publisher:
Oxford University Press
DOI:10.1093/oso/9780198844037.003.0006

Abstract and Keywords

This chapter examines corporate legal personhood as well as the legal status of collectivities in general. It exposes a number of problems the Orthodox View has as regards the rights and duties of collectivities. For instance, many constitutions and human rights documents recognize the rights of minorities, but minorities are regardless generally not taken to be corporations or legal persons. The chapter offers a different explanation of corporations. It applies social ontology to argue that even non-incorporated group agents can hold legal rights. Regardless, such groups are not legal persons. What distinguishes corporations from other groups is not that they hold rights, but rather that they are endowed with a significant number of the incidents of legal personhood: they can own property, sue, and so on. The chapter concludes by considering whether collectives that are not group agents could be legal persons.

Keywords:   corporate personality, minority rights, collective rights, social ontology, group agency, corporation

Groups and Corporations

A highly important type of legal persons has heretofore only been addressed en passant: collectivities of human beings. Such collectivities are often designated as ‘corporations’, though the term is perilously unclear. First, the British usage of the word is quite different from the primary American usage. In the UK a corporation can be any incorporated entity such as a Cambridge college, whereas in the US the word primarily refers to large for-profit companies or to groups of such companies. I will be using ‘corporation’ in the British sense. Second, the term may be used to refer to a kind of legal platform as well as to an organized collectivity that is a legal person. If one announces the plan to found a one-person corporation, one is referring to a legal arrangement; if one talks of the great company culture of a certain corporation, the focus is on the organization.1 Neither of these uses of ‘corporation’ will be given priority here, but when the two senses should be kept distinct, ‘collectivity’ and ‘group agent’ are used to refer to the organization whereas ‘legal platform’ will denote the arrangement.

Jurists and legal theorists have been debating the nature of corporations for a long time. The question was of particular interest during the nineteenth and early twentieth centuries, especially among French and German jurists and theorists. I shall not conduct an extensive review of these theories here, as the literature covering the topic is vast.2 Eric Orts categorizes the legal theories of corporations under three (p.156) main groups: (1) concession theories (also known as fiction theories), according to which corporations exist as creations of the state or the sovereign; (2) participant theories, which identify corporations as primarily created by individuals; and (3) institutional theories (also known as real entity theories), which understand corporations as ‘institutions both formed according to legal rules and organized and run by individual people’.3

Orts styles the concession and participant theories as ‘top-down’ and ‘bottom-up’ views, respectively. The theories often draw rather far-reaching normative conclusions from their basic understandings of the corporation. For instance, a typical concession theory would maintain that since corporations are created at the pleasure of the state (‘top-down’), they have only those legal entitlements that have explicitly been granted to them. Those legal entitlements may also freely be taken away by the state. However, that conclusion does not necessarily presuppose any particular view on questions such as whether the corporation is irreducible to its individual members or whether it exists outside the law. One could very well maintain that the corporation is a ‘real’ entity, separate from its members and existing as a human organization even outside the law, but that the political community is nevertheless morally permitted to revoke the legal recognition of any corporation at will. This conclusion depends on a particular political ideology; it never flows directly from an analytic theory of the corporation.4

Theories of corporations are thus often combinations of social ontology, normative political philosophy, and analytic jurisprudence. In addition, the ambiguity of ‘corporation’ seems to be pertinent here. Many concession theories understand corporations as legal platforms whereas participant theories focus on them as organizations. If a corporation is understood purely as a legal arrangement, it makes more sense to say that corporations exist only in the ‘contemplation of law’, as the US Supreme Court put it in Trustees of Dartmouth College v Woodward—a judgment often cited as laying out a concession theory of the corporation. Contrariwise, human organizations are obviously not ‘mere creature[s] of law’, to borrow another expression from the same verdict.5

(p.157) The institutional theory, favoured and advanced by Orts, is an intermediate position. I am in general sympathetic to Orts’s views on the matter, which he summarizes as follows:

The institutional theory sees firms as socially established entities that are both authorized and recognized by governments and organized and managed by individual participants. The institutional recognition of the business enterprise as a legal ‘entity’ or ‘person’ interposes a conceptual separation between the political state and the firm’s individual participants. Once a regular legal process for the governmental recognition and individual creation of firms has become established, business firms become social institutions. In legal terms, they become ‘entities’ and ‘persons’ with specified legal rights and obligations.6

I do not intend to offer a full-blown theory of corporations here; rather, the aim is to show how collective legal persons fit into the overall theory of legal personhood. In particular, the stated objective means leaving out many prescriptive issues pertaining to collective legal personhood, such as questions about the extent to which corporations (rather than their individual members) should be held legally responsible, questions about the ascribability of certain fundamental rights to corporations, and so on.

Within the scope of this book, understanding collective legal persons boils down to understanding two interrelated issues: (1) the nature of the legal platform that can constitute the legal personhood of a collective, and (2) the nature of the collectivities to which the legal platforms can attach. The gist of the matter is that not all legal platforms are natural legal platforms that would follow an individual from the cradle to the grave. Some legal platforms, such as one-person corporations, can rather be sold or donated, meaning that their object of attachment changes. However, more interestingly, most of these legal platforms can also attach to numerous individuals simultaneously. The question then arises whether the group consisting of these individuals could under some conditions be treated as a kind of collectivity that is irreducible to the individuals. If some collectivities can perform acts and are endowed with interests, this implies that they could be legal persons in their own right, separate from their members. I will be advancing this position in this chapter, relying primarily on recent philosophical work in social ontology and group agency produced by authors such as Philip Pettit, Christian List, and Raimo Tuomela. Social ontology has greatly improved our understanding of group phenomena, but it will benefit from an in-depth analysis of what the legal personhood of groups implies. I will also show how collectivities that are not legal persons can nevertheless hold various legal positions, including claim-rights and duties. This supports my argument, made in Chapters 2 and 3, that legal personhood and the holding of legal rights and/or duties should not be equated.

(p.158) The attention here will be focused on certain types of groups, and we can initially distinguish between two main types: aggregates and group agents. I use the term ‘aggregate’ here to refer to a group of individuals who share a common attribute, such as ‘people with a benign naevus on their right-hand index finger’.7 This example should make it clear that the property of being an aggregate alone is largely irrelevant to group personhood. The focus here will rather be on group agents. I will also address the topic of group beneficiaries, meaning groups that are not agents but that hold claim-rights.

It is important to keep in mind here the distinction between potential legal personhood and actual legal personhood. The fact that a group agent can in a relevant sense perform actions and possess interests does not imply that it is a legal person. Rather, this fact implies that the collectivity is a potential legal person which can be endowed with legal personhood. Most group agents come into being and are dissolved without ever becoming legal persons. Thus, the question of the nature of group agents (and other collectivities) may be intertwined with the concept of legal personhood, but the two issues are still clearly separate. Group agents could exist even in a lawless state of nature—think of an organized group of highwaymen—whereas legal personhood as it is understood here is a feature of modern Western law. Endowing a group agent with legal personhood will provide it with benefits such as the separate ownership of funds and enhanced trackability by other actors. Of course, the legal arrangements that constitute the legal personhood of a group agent can also be used for other purposes. One-person corporations, for instance, involve granting an individual the capacity to control more than one legal platform; such corporations do not have anything to do with group agents.

The discussion here will be focused on organized groups where group membership is clearly voluntary, such as business companies, sports organizations, and so on, as well as small-scale group beneficiaries. It is not obvious that this analysis can be applied to states and other similar large-scale political organizations without some amplification of the theory.

The Ontology of Group Agents

There are probably as many ways to account for the ontology of group agents as there are authors who write on the subject. The different views can be arrayed on a spectrum with ‘strong individualism’ at one end and ‘group realism’ at the other.8 Strong individualist views eschew all talk of groups whereas group realists ascribe (p.159) real existence to group agents. However, even among the latter views, the existence of group agents is typically not taken to be a brute physical fact like the existence of stars or rivers. It is something less tangible that depends on human beings’ representations of the world. Groups, like money, exist because we represent them as existing and act accordingly. I will now present some ideas that are classifiable as group realist views, focusing on the work of Raimo Tuomela, Philip Pettit, and Christian List.9

Social ontology is founded on the idea of collective intentionality. In a specialist philosophical sense, ‘intentionality’ refers to the ‘aboutness’ of mental states: most of our mental states, such as beliefs, are about states of affairs. In this specialist sense, ‘intention’ denotes mental states that are about states of affairs. To avoid confusion, I will here use the word ‘intent’ in the sense ‘commitment to a given action or to bringing about a given state of affairs’. Accounts of collective intentionality often build on the so-called belief–desire–intent model, where intentional states are divided into these three main groups. Beliefs are representations of the world, whereas desires are dispositions to act. However, beliefs are not always sufficient for action: especially in the case of several strong and conflicting desires, intent is required to choose a path of action.

Collective intentionality is a particular type of intentionality where the ‘grammatical subject’ of a mental state is plural: instead of your and my believing that p, we believe that p. One typical example that illustrates the separateness of collective and individual intentions is that of travelling. One can travel to a conference knowing that another person from the same faculty will also be going. This does not yet constitute collective intentionality, or a collective intent. However, if the two people decide to attend the conference together, then they are collectively committed. Tuomela styles these two modes of intentionality the I-mode (‘I will attend the conference knowing that Y will attend, too’) and the we-mode (‘We [Y and I] will attend the conference’); he claims that we-mode intentionality cannot be reduced to I-mode intentionality. We-mode intentional actions involve of course I-mode intentions that are necessary for playing one’s part in the joint intent; for instance, ‘Since we are attending the conference, I will book the train tickets’. The main reason for performing this action is, however, the joint intent. Tuomela calls these reasons-for-action group reasons.10 One final thing to be noted is that, in larger groups, not all members need to be thinking in the we-mode—though a significant proportion of them do need to be thinking in this mode if the group is to be functional. This is why the workings of, say, a corporation cannot be explained by merely making reference to the independent beliefs, desires, and intents of the members: the we-mode intentionality simply does not exist except in the context of the group.11

(p.160) List and Pettit focus in their work on the content of group intentions, rather than on their mode. They argue that groups that are organized to some degree can reach decisions that their members would not reach outside the group context, and can even have beliefs, desires, and intents that none of their members alone would hold. I reproduce here an example that Pettit describes in an interview.12 Imagine that a three-member board consisting of A, B, and C is to decide whether to hire X as a professor. They agree that X needs to be both a good researcher and a good teacher in order to be hired, and that the group’s opinions on each of these matters should be decided by a majority vote. The results are shown in Table 5.1.

Table 5.1 The hiring example of Pettit and List

Good researcher (p)

Good teacher (q)

Decision (p & q)

A

Yes

Yes

Yes

B

Yes

No

No

C

No

Yes

No

Meets condition?

Yes (2/3)

Yes (2/3)

No (1/3)

In this example, the majority of the board think that X is a good researcher and that he is a good teacher, yet he is not hired. This is because the decisions of the members are not dependent on the decisions of the group; consequently, the consistency of every member’s reasoning does not guarantee the consistency of the group’s reasoning. Given that collective inconsistency is not optimal, groups typically need to decide that certain propositions are prioritized over others. For instance, they could decide to prioritize premises over conclusions; in this case, they would first vote on p and q according to their personal preferences, after which the conclusion would be settled. They would have thus settled for a rudimentary form of what Pettit and List style the constitution of the group. What is noteworthy here is that p and q would then be the group’s attitudes (beliefs). After the vote, C might say that ‘I personally do not think you are a good researcher but we, the board, do’. Through processes such as this—processes that are often informal—the group may form not only joint intents but also joint beliefs and desires (which, in the case of groups, should perhaps be described as goals). Of course, all of this supervenes on the individual members; the (p.161) group’s existence is dependent both on the minds of its members and, partly, on the minds of others who recognize the group as existing.

None of what has been stated above should be interpreted as meaning that the group’s beliefs, goals, and intents are phenomenal in the same sense as the corresponding states of human beings13—who typically, though not always, experience such states in their conscious minds at least occasionally. The mentioned states are only functional or operational in the case of group agents, whereas human beings also have a felt element in their agency.

Margaret Gilbert and Tuomela, in particular, argue that group commitment is ontologically irreducible to individual commitment (what Tuomela dubs I-mode commitment).14 However, group agency can also be approached as a matter of pragmatic and moral irreducibility. I am using the phrase ‘pragmatic irreducibility’ to mean that treating a group agent as a separate actor is often the most useful way of explaining a phenomenon, as the intentional stance can be adopted in order to understand and predict the group’s behaviour. An intentional stance focused on the level of individuals can be used to explain the behaviour of a group agent—as long as the stance pertaining to individual intentions takes into account the joint intentionality involved—but the group-level intentional stance is the simplest way of explaining and predicting the behaviour of a functioning group agent. However, both of these stances are possible ways of explaining what is happening, as is the physical stance.

Finally, treating the group as an agent may also be morally the most fitting choice: to employ Ronald Dworkin’s example, the moral responsibility for the production of defective cars that cause hundreds of people to be killed might—depending on the circumstances—is best ascribable to the automobile manufacturer itself and not to any particular human being.15 The moral requirement for group responsibility is accentuated in such a situation, where a wrong has clearly taken place but placing the blame on any particular individual would be unjust.16

I have presented a number of arguments that favour treating groups as agents. Collective intentionality is ontologically separate from individual I-mode intentionality, and individuals can engage in group projects where the group can have intentions that none of its members would hold alone. In addition, we can enhance our predictive efforts by taking the intentional stance towards certain groups, and our treatment of groups as agents capable of wronging others and acting culpably is in certain cases morally fitting. With this general understanding of group agency at hand, I will now discuss certain features of organized groups further with the aim of (p.162) demonstrating that such groups can hold claim-rights, exercise Hohfeldian powers, and bear duties.

Hohfeld and Groups

The philosophical and legal literature on the rights and duties of collectivities is vast, and it addresses diverse issues. Topics vary from minorities’ rights to self-determination to the workings of business corporations.

A central philosophical issue regarding group rights is whether the rights of a group are reducible to rights of the members of that group, or whether the group rights are somehow irreducible to the individual level or inexplicable at that level. In addition, authors offer very different accounts of the sense in which group rights are distinct from the rights of the individuals. Peter Jones has classified philosophical accounts of (moral) group rights into ‘corporate’ and ‘collective’ accounts. (The word ‘corporate’ should not be understood in a strictly legal sense here.) Corporate accounts treat a group as an entity, as a ‘group-individual’ with rights (and possibly duties) of ‘its’ own, whereas the collective accounts describe rights that are held by the members of the group—rather than the group itself—but jointly.17

It is striking that philosophers addressing the moral rights of groups often take it to be self-evident and not requiring any argumentation that some collectivities hold legal rights.18 Such a view is, however, not unanimously held by legal theorists. For instance, Hohfeld took the putative legal positions of collectivities to be reducible to legal positions held by individuals.19 The question whether groups can hold Hohfeldian legal positions has not received as much attention as the question of moral rights, even if some scholars such as Matthew Kramer and John Morss have addressed the issue.20 Although Hohfeld himself was sceptical of the notion that collectivities irreducibly hold legal positions, this does not mean that he was correct. I intend to show here how groups can hold Hohfeldian positions, including claim-rights and duties, as ‘group-individuals’.

(p.163) There are countless group agents which are not corporations and thus not legal persons. For instance, a group of political prisoners may decide to become organized in order to demand better treatment of the inmates. They may then very well have a method (democratic vote, for instance) for deciding a course of action. This makes them a group agent but most likely not a legal person. An even more striking example is the Mafia: a Mafia family has a well-defined organization but is not a legal person (though it may control a number of corporations). Are these groups nevertheless Hohfeldian parties, capable of participating in Hohfeldian relations? I argued in Chapter 2 that there are three separate criteria for qualification as Hohfeldian parties: intentionality (for powers and disabilities); ultimate value (for claim-rights and no-rights); and the capacity to act, to follow normative requirements, and to benefit and suffer detriment from states of affairs (for duties and liberties). I will address these in turn. Liabilities and immunities can be held by entities that can hold of any of the other positions, and will therefore not be addressed separately.

Powers of Group Agents

If one accepts the points made above regarding joint intentionality, the power-holding of group agents is relatively clear, as the intentional stance for coming to grips with group agents is appropriate. The decision-making process of a group agent typically involves the use of moral and/or legal powers at the level of the individual. When the executive board of a company decides on an issue, the board members are using powers when voting on an issue, and these individual instances constitute a board-level exercise of power. In this way, group-level exercises of powers are constituted by individual-level exercises. There are interconnections between the individual and group intentions: even though the group’s intentions are separable from the intentions that individual members would hold qua individuals, the group intentions are also held by the individuals—though they hold these intentions in the we-mode, that is, qua members of the group.

Claim-Rights of Group Agents

Assigning claim-rights (as defined in the interest theory) to groups is a more difficult matter than that of powers. I have maintained that the agency of groups is only functional or operational, whereas the hallmark of claim-right-holding is sentience. As groups are not sentient, it would seem tempting to ascribe claim-rights only to the members of the group and not to the group itself. However, this would leave something out of the analysis. Collectivities can hold claim-rights even though they are not sentient and thus not of ultimate value.

Talk of group rights leads one easily to think of so-called minority rights. However, people belonging to minorities are not necessarily members of a group agent that would represent its members qua members of the minority. In this (p.164) sense, the minorities are aggregates but not group agents. I will here be focusing on the claim-rights of group agents and only later on collective beneficiaries that are not agents.

Kramer addresses the claim-rights of groups rather lengthily; he makes for instance the important distinction between explicability and reducibility:

Because a group is an overarching structure, it can never be reduced to the individual interactions that are its components—notwithstanding that it can be thoroughly explicated by reference to those components. Its interests do not amount to a sum or welter of individual interests, since its interests are those which characterize its members qua collectivity rather than those which characterize its members qua individuals.21

This is correct and in line with the analysis offered above by Pettit and List. For instance, the members of a religious community can have ‘member-interests’ (interests qua members of the community) that can even be in conflict with their ‘individual interests’. The practice of shunning any member who breaks the community norms could serve the member-interests of a shunned member—because the practice would keep the community together—even if the shunned individual would on a personal level suffer.

A further argument that some claim-rights only exist at group level can be derived from a particular insight of Tuomela. He separates ‘owning’ the products of a group’s activities from being the beneficiary of them:

In [we-mode intentionality] the satisfaction of the intention is for [the group]. This ‘for-groupness’ involves that a paradigmatic we-mode group is taken to ‘own’ the products of its activities and thus to be able to make either itself or some other party the beneficiary. The aspect of owning and that of being a beneficiary are to be kept apart. To own the satisfaction activity entails it being allowed in principle for a paradigmatic, thus autonomous, we-mode group to choose the party that will be the intended beneficiary, be it the group itself, some group member(s), or another group or person.22

This is an important point. What is also significant is that the intended ‘final’ beneficiary of a group-level intention is not always settled when a particular obligation relating to the intention is in existence. The products of the group’s activities can be said to be ‘in limbo’ until the matter is settled.

For instance, in Helsinki, Finland, something called ‘the Restaurant Day’ is organized four times a year, allowing anyone to set up their own restaurant or café for one day. Such restaurants are usually not registered as corporations, and they are often run by groups of friends as an exercise of collective intentionality. Someone ordering a meal at such a restaurant has the claim-right to receive what she has ordered, and the duty to pay for the meal. The party with the claim-right to receive payment and the duty to provide the meal—that is, the other contracting party—is, however, not for (p.165) instance the cashier of the restaurant but rather the group itself. It is up to the group to decide who is tasked with preparing the meal23 and serving it to the customer and how the proceeds from the restaurant are divided among group members and, possibly, other parties. Here one must apply the so-called Bentham’s test, which restricts the number of third-party right-holders, as refined by Kramer. I have already introduced the test in Chapter 2, but I shall offer a quick summary. According to Bentham’s test, when determining whether someone is a claim-right-holder under a contract or another legal norm, one needs to examine each minimally sufficient set of facts that would constitute a breach of the norm. If at least one such set of facts includes the undergoing of some detriment by X, then X holds a claim-right correlative to a duty imposed by the norm.

Bentham’s test does establish claim-rights for the group. In the case of the restaurant, we do not need to establish that any of the group’s members would undergo some detriment in order to establish that a customer who has left the restaurant without paying for her meal has violated the terms of her contract with the restaurant. The group members’ individual situations are irrelevant here; it is sufficient to show that the group’s interests have been harmed. The group may very well have yet to decide whether the proceeds from the restaurant should go to charity or to the group members; the money is ‘owned’ by the group until a decision has been reached.

As the group ‘owns’ the products of its joint project, and the final beneficiary of the project may not be settled at the time a duty is borne towards the group, it would be highly unsatisfactory to claim that the group is unable to hold claim-rights of its own. The group is externally a whole, and the relevant interests pertain to the joint intention that is irreducible to (though explicable by) the individual, conscious level. It therefore makes sense to talk of the group’s claim-rights.

A caveat should be entered: in some circumstances the beneficiary of a group’s activities may be settled, in which case it is conceivable that both the group and the beneficiary might hold a claim-right that correlates with a duty pertaining to the group’s project. I do not address this further here, as it does not affect my main point.

Duties of Group Agents

What has been said above is also relevant with regard to group duties. A duty is a group duty if, externally (i.e. in relation to non-members), the duty is borne primarily by the group and not by a particular member of the group. Internally, group-borne duties may be assigned to a group member or members, but the holder of the corresponding claim-right often does not need to concern himself with the division of work within the group.

(p.166) Group-borne duties are occasionally recognized by legal systems even in the case of groups that are not legal persons. Let us think of a rural community with a well-organized group of hunters. If their hunting trip results in the injury of a bystander, this unfortunate result may not be due to the negligence of any particular individual but rather to a lack of coordination within the group. In this case, it may be justified to consider the group as an actor. However, as the group is not a legal person and thus cannot own property, it cannot be the target of sanctions.24 So how can legal systems recognize the fact that the group as a collective was responsible for the deed? One way of doing this is to allow for solidary tort liability, as in French and Finnish law, according to which the debtee may demand full payment from any of the debtors, and the debtors may then settle the correct division among themselves internally. In this case, the group of hunters would be considered as one in relation to the bystander. If, for instance, the hunters A, B, and C cause damage to X and are solidarily liable to pay €3,000, then X may demand the whole of the €3,000 from A, B, or C. If A pays X €3,000, then A may demand that B and C pay her €1,000 each. Solidary liability is often used in cases where damage is caused by group action. (I should point out that I do not claim that the duty-to-pay-€3,000 would necessarily be a collective duty. It is better understood as an array of intermeshing powers, liabilities, and duties. By contrast, the contravened duty-not-to-shoot-bystanders was and is held by the group—though similar duties are held by the group members individually, too.)

Examples such as this show that legal systems do occasionally recognize group agents that are not legal persons, despite the claims that legal personhood would be the only way for a group to hold rights and bear duties.

Preliminary Conclusions

There is a linguistic tendency not to ascribe legal rights to legal nonpersons, but, as I argued in Chapter 2, the most prominent theories of rights can be used to show that right-holding and legal personhood do not always go hand in hand. This is also true of group agents: groups may hold claim-rights and bear duties and occupy other legal positions regardless of whether they are granted legal personhood.

What, then, is the difference between groups that are legal persons and groups that are not? This is where my general theory of legal personhood comes into play: groups that are legal persons are endowed with incidents of legal personhood; they have, for instance, legal standing and can therefore be parties in lawsuits. They can also own property in their name. I will in the next section discuss the nature of the legal personhood of groups further.

(p.167) The Legal Personhood of Collectivities

Let us recall John Locke’s account of the person as a ‘forensic term’. According to Locke, ‘[t]his personality extends itself beyond present existence to what is past [ … ] whereby it becomes concerned and accountable; owns and imputes to itself past actions, just upon the same ground and for the same reason as it does the present’.25 Locke is not writing about groups here, but he does raise an important point that can be applied to group entities: most incidents of legal personhood do not function properly unless the relevant entitlements and burdens can persist across certain transitions, and unless the disappearance of obligations (as in the case of bankruptcy) is regulated. The need for a clear identification of persons is recognized in many particular instances: birth and death certificates establish the beginning and end of a human being’s legal personhood, and national identification numbers are used to track the citizens and residents of certain countries. However, the continuity of human beings is easier to establish than that of corporations, as we have physical bodies (with features such as fingerprints and DNA) that typically maintain some continuity over time. On the other hand, groups do not have a bodily form and are often ephemeral: it can be difficult for an outsider to know when a group dissolves. This is why the establishment and dissolution of corporations are typically regulated, and their numerical identity is tracked with identification numbers. The legal personhood of a group is, therefore, a kind of ‘visibility cloak’ (as opposed to the invisibility cloak in the Harry Potter series) that makes corporations and their entitlements and obligations easier to track by other actors.

The existence of group agents is in ordinary cases prior to their existence as legal persons. Typically, when a group of people decide to file for the registration of a company, they have already established a collective intentionality. However, there are cases when the legal platform (the ‘cloak’) may exist before the existence of the group agent. For instance, a so-called dormant company may be registered for a long time without engaging in any business, until its owners one day decide to start a business and remember that they can use the company as the platform for the business. In this case, the legal platform has clearly existed before the coming into being of the new group agent. One interesting consequence of such an arrangement is that the new group agent may end up legally liable for debts incurred by the earlier collectivity that operated using the same legal platform.

Even though I claim that group intentionality is in most cases prior to legal personhood, this is not to say that being a legal person would not affect the group agent in many ways. On one hand, being a legal person imposes certain requirements on the group agent: for instance, almost any legally registered business corporation must (p.168) have a board of directors. Even if the board is really dominated by an outsider who wields the actual power in the company, the company nevertheless cannot make certain decisions without following a prescribed procedure. If we continue using the metaphor of the visibility cloak, we can say that the cloak may only be worn by certain kinds of groups; otherwise it will fall off or will fail to expose some parts of the group agent.

On the other hand, legal personhood also allows group agents to grow in size and function in ways which would most likely not be possible for group agents that are not persons. The limited liability of corporations, and especially so-called entity shielding, is of particular interest. When entity shielding is in effect, the owners of a business corporation are liable for the debts of the corporation only in exceptional circumstances—when ‘the corporate veil is pierced’. This separation provides opportunities for controlled risk-taking by the owners, and accentuates the separateness of corporations from any particular human beings.

The legal personhood of a group also enables the group to encompass people who do not share the group intentionality. As the legal personhood of a group agent empowers it to enter into contracts and to suffer legal harms, I-mode thinkers who participate in the group’s activities for purely individual (‘selfish’) reasons can more easily be incentivized to act in the group’s interests: they may for instance be liable to compensate the group for their misfeasance, and the group may more easily recompense the individuals for their contributions.26

The Alleged Fictionality of Corporations

Corporations are often designated as fictitious persons. This usage dates back to the Middle Ages, when Pope Innocent IV labelled corporations with the phrase persona ficta. Occasionally, the whole concept of legal personhood is referred to as a ‘legal fiction’, though what exactly is meant by this designation is often unclear.27 Roughly put, legal fictions can be found in cases where legal rules are extended to cover situations that would not be covered by the full literal contents of their paradigmatic formulations.28

The problem here is that the fictitiousness of a statement depends on its formulation. Kenneth Campbell notes this:

(p.169)

Suppose [that one has the rule ‘if p then c’] and it is desired to increase its range of application: the law may resort to rules, inter alia, in the following semantic forms:

(12) ‘q shall be treated as if it were p’,

(13) ‘q is deemed to be p’,

(14) ‘p’s include q’s’,

(15) ‘a finding of q is conclusive of p’.29

Campbell considers (15) to be a likely legal fiction (unless p actually entails q), and assumes that (12) does not create a fiction. I will not dwell on analysing these claims, but his general point is important: the fictitiousness of corporate legal personhood depends on the formulation of the proposition assessed. In addition, something seems to turn on whether we use the term ‘person’ or the phrase ‘legal person’: the latter is a specialist phrase, whereas the former can refer to, say, the metaphysical person or to a human being (particularly if used in the form ‘person—people’ rather than ‘person—persons’). The meanings of words change over time, too; even if the Supreme Court of the US originally extended the scope of application of certain constitutional provisions beyond their literal contents by deeming corporations to be persons, it may perhaps be argued that, at least among jurists, one literal meaning of the word ‘person’ now includes corporations.

Overall, the matter is quite muddled. However, there is one particular question on which this work may shed light: are corporations legal persons in the same sense as human beings are, and does this similarity explain the fact that we can attribute similar legal incidents to both? If the answer is affirmative, this would imply that the talk of corporations as legal persons is not purely fictitious.

There are relevant similarities between corporations (qua group agents) and human beings. Both corporations and human beings can hold claim-rights, bear duties and perform acts with the intention to effect legal consequences. They can consequently be endowed with both passive and active incidents of legal personhood, such as the capacity to enter into contracts. Here we must recall the functional/felt distinction. Both corporations and adult human beings of sound mind are able to act in the world of obligations in the functional sense. Adult human beings of sound mind may also act in the felt sense: they experience beliefs, desires, and intentions. Is this difference relevant? For the purposes of acting in law, it is not. Functional legal agency is most often sufficient for entering into legal contracts and even for many forms of legal responsibility. In this sense, corporate legal personhood is not a fiction: corporations can act in the law much as adult human beings of sound mind can. Both corporations and human beings also have identities that can persist over time, underlying their capacity to perform acts-in-the-law. There would not even be anything conceptually problematic in granting corporations the right to vote, even though there are relatively obvious moral and political arguments against this.30

(p.170) Collectivities as Beneficiaries

The focus of this chapter has been on organized collectivities that constitute group agents, where the members of such a group participate in the formation of the collective beliefs and attitudes of the group and/or in carrying out its collective goals. Such collectivities can be legal persons because they can function as agents—rendering them potential active legal persons—and because such a group ‘owns’ the products of the common enterprise, which is why duties can in many typical cases be borne towards the group rather than towards the individual members. Group agents can therefore be passive legal persons.

Having said that, I have maintained that individuals and nonhuman animals can be legal persons without having control over any legal platform, if they are represented by administrators. Would a similar setup be possible in the case of collectivities? Such an arrangement would have to involve an individual or a group being tasked with the administration of a legal platform for the benefit of a group of individuals or creatures. The beneficiaries would not actually partake in the formation of the collective attitudes of the group. The collectivity consisting of these individuals or creatures would thus supposedly constitute a passive legal person.

Let us think of foundations. A typical civil-law foundation has three features: an endowment, a stipulated purpose, and a governing body (comparable to a board of directors). What distinguishes these types of foundations from other corporations is that they do not have members (as with associations) or owners (as with business corporations). Rather, the governing body is initially chosen by whoever establishes the foundation, and, whenever an individual leaves the governing body thereafter, the replacement will be chosen by the remaining directors. Now, let us say that a foundation is set up with the purpose of promoting the interests of a relatively small group of severely mentally disabled people. Can we understand these individuals collectively as the beneficiary of a collective legal person, akin to the way an individual can be a passive legal person? The theories of Pettit, List, and Tuomela are not directly applicable here because mentally disabled individuals cannot partake in such a form of joint intentionality. However, Bentham’s test is again helpful: it is easy to think of cases where ascertaining that the foundation has acted in breach of its duties necessarily involves establishing that the group of disabled individuals has been harmed, rather than any one in particular among them. For instance, if the administrators culpably mismanage the endowment of the foundation, leading to significant financial losses, it might not be possible to single out any individual who has suffered detriment because of the maladministration. This conclusion depends of course on the circumstances. If the foundation promotes the interests of its beneficiaries only by making monthly support payments to these individuals, and if the level of the payments depends on the appreciation of the endowment, then the mismanagement has likely caused individuated harm. On the other hand, if the foundation engages in (p.171) various forms of support, such as organizing events, then the detriment likely cannot be individuated—especially if the loss of funds means that the foundation refrains from engaging in any new (currently unplanned) projects instead of cutting its current projects.

The example just sketched is a relatively straightforward case. It is often much less clear whether a particular legal platform constitutes legal personhood for a collective beneficiary. I cannot hope to address every possible case or to provide exhaustive criteria for when a collective beneficiary counts as a legal person. In general, one should focus on the degree to which the collective beneficiary is endowed with incidents of legal personhood. Consequently, one should ask, for instance, whether the collectivity owns some property just as mentally severely disabled individuals can own property. Ownership is, of course, in itself a cluster phenomenon, consisting of separate incidents, and one would have to look at the incidents separately. I will address some central points.

First, an important criterion is that the parties who have originally established the legal platform must not be able to revoke the arrangement—barring exceptional circumstances such as the obsolescence of the purpose of the foundation. If the founders can simply reclaim the assets of the legal platform at will, the situation resembles one where an individual is allowed to use a piece of property at the pleasure of the owner rather than his or her owning the property.31

Second, the assets in the legal platform need to be earmarked for one specific purpose, or for a number of very closely related purposes, and the range of the beneficiaries cannot be overly vague or unclear. This pertains to the characteristics of a legal platform that were identified in Chapter 4: a legal platform must be integrated and separate from other legal platforms. Crudely put, if a guardian of funds for a client is legally permitted to divert the funds for the payment of the personal debts of the guardian or some other client of his, we should conclude that the guardian owns the funds but is under a duty to the client to use some of his funds in specific ways. He does not merely look after funds that belong to the client. Analogously, a foundation could have a number of multifarious and even mutually conflicting stipulated purposes, and the range of the potential beneficiaries can be very extensive and vague. An affluent individual who has grown up in village A, done her life’s work in organization B, and lived her final years in senior community C could register a foundation whose purpose would be to provide aid to A, B, and/or C. The executive body could have full discretion over the details, such as which of the three collectivities to prioritize. If the foundation then chose to engage in a construction project in village A, but ended up losing the whole endowment due to unforeseen risks, A, B, and C would be equally affected. In this case, it could hardly be said that A, B, or C owned (p.172) the funds of the foundation in a manner analogous to the manner in which a passive individual owns property.

Another indication that an arrangement has constituted legal personhood for a collective beneficiary is that the administrators can represent the collectivity in dealings with third parties. If a foundation were authorized to act in the name of the collectivity in a given matter (regarding, for example, certain collective interests of the mentally disabled individuals), the legal relationship would resemble that between an infant and a guardian even more. The foundation discussed here would of course likely only be authorized to represent the group if it received authorization from all the legal guardians of the beneficiaries, but this does not make any significant difference—the arrangement would merely involve the transferral of some of the authority of the legal guardians to the organization. What is important, however, is that the foundation would need to have a degree of discretion in how exactly they choose to further the collective beneficiary’s interests. If they received very specific instructions, their role would resemble that of a legal counsel rather than a legal guardian.

These points may help us in determining the import of the Whanganui River arrangement. According to the agreement between the Whanganui tribes and the Crown, each party appoints a guardian to administer the legal platform together with the other party. This position is called Te Pou Tupua.32 They are required to act in accordance with Te Awa Tupua values, which involve treating the river as an indivisible whole and recognizing the special connection that the indigenous tribes have with the river. We should firstly note that since the tribes and the democratically elected government appoint the guardians, the tribes and affected individuals cannot be understood as purely passive collective beneficiaries here. However, the Te Awa Tupua values appear to entail duties pertaining to the preservation of the river as a viable ecosystem; such duties could be held collectively towards the sentient beings that depend on or benefit from the river in one way or another.33 Most such beings could not partake in the administration of the legal person in any way.

The arrangement seems to fulfil the criteria mentioned above: the legal person receives full ownership of the Crown-owned parts of the riverbed, and it can represent the collective beneficiary in dealings with third parties.34 The arrangement cannot be unilaterally revoked by the Crown, at least not without changing the legislation. What might complicate this analysis is that the guardians may have some obligations best understood as religious duties towards the Whanganui Iwi tribes. The relevant (p.173) documents describe the river as a metaphysical being with a soul. If some duties flowing from the Te Awa Tupua values do not contribute to the preservation of the river as a viable ecosystem, they may have to be understood on religious terms instead. However, what the values imply in this regard is unclear. In any case, it seems that the vast majority of the duties of the Te Pou Tupua can be understood as being held towards the collective beneficiary constituted by the sentient beings that depend on the river in one way or another.

This discussion of collective passive legal personhood has not aimed to be comprehensive; I do not claim to have set out all the criteria that a collective beneficiary must meet in order to qualify as a potential legal person, nor have I addressed all the possible forms of legal arrangements that might establish the legal personhood of a collective beneficiary. However, I have sought to show that collective legal personhood is not limited to organized group agents.

Conclusion

This chapter has addressed numerous points surrounding corporations. I have proceeded from a distinction between the ontological status of a group agent and the jural status of legal personhood. This distinction, which is occasionally neglected, has been central in the arguments advanced here. I have argued, first, that human beings can form group agents that can have their own beliefs, goals, and intents. Furthermore, such collectivities hold legal positions regardless of whether they are legal persons, which underscores the shortcomings of the Orthodox View.

Rather than endowing collectivities with the capacity to hold rights and bear duties, corporate personhood (in its central form) makes group agents more ‘visible’ and less ephemeral by regulating their establishment, dissolution, and other such matters. In addition, the legal institution of asset shielding allows for individuals to demarcate their own assets from the assets they have devoted to a common project. That institution is, of course, an instance of the more general feature of the separateness of legal platform.

I have also inquired whether groups can be passive legal persons as collective beneficiaries. The answer has been affirmative, even if the issue is thorny and difficult. The Whanganui River arrangement could be understood as establishing legal personhood for a collective beneficiary, but much depends on the details.

What if the group-realist account offered here is wrong, and strong individualism is right in that legal positions cannot be ascribed to collective entities? Such a result would of course be at odds with much of what has been said in this chapter, but it would not upset the overall theory of legal personhood, nor would my criticism of the Orthodox View come into question. I would probably have to concede that group entities cannot be legal persons. Regardless, one could still establish corporations qua legal platforms, even though this establishment would not grant the (p.174) collectivity the capacity to hold legal positions: the participants in the collective project would already be able to hold legal positions whereas the collectivity would be unable to hold such positions regardless of its legal status. The ontological status of groups cannot be changed by legal decisions. Either the collectivities addressed here are conceptually capable of holding various legal positions—in which case they can be endowed with the incidents of legal personhood—or they cannot hold these legal positions—in which case they cannot be so endowed. This is also why the Capacity-for-Rights position cannot explain corporate personhood. Even if I am wrong in arguing that collectivities are capable of holding legal positions, their legal personhood should be understood in terms of a complex of legal positions held by the shareholders, the executive board, and so on.

Notes:

(1) Some authors are careful in not conflating these two senses of ‘corporation’. Simon Deakin distinguishes ‘firm’ and ‘corporation’, the former being an ‘organisation engaged in the production of goods and/or services’ and the latter a ‘legal mechanism by which firms [ … ] operate in contemporary market economies’. Deakin is of course only addressing business corporations here. Simon Deakin, ‘The Juridical Nature of the Firm’ in Thomas Clarke and Douglas Branson (eds), The SAGE Handbook of Corporate Governance (SAGE Publications 2012) 115–16.

(2) For an overview of the historical corporate personality debate, see Alfred F. Conard, Corporations in Perspective (Foundation Press 1976) 417–45. Some examples of English-language treatises of corporate personality are Ernst Freund, The Legal Nature of Corporations (Batoche Books 2000), originally published in 1897; John Dewey, ‘The Historic Background of Corporate Legal Personality’ (1926) 35 Yale Law Journal 655; Arthur W. Machen, ‘Corporate Personality’ (1911) 24 Harvard Law Review 253; and Frederick Hallis, Corporate Personality. A Study in Jurisprudence (Oxford University Press 1930). Karl Olivecrona provides a good summary of the ‘classical’ Continental theories of the nineteenth century in Karl Olivecrona, Studier över begreppet juridisk person i romersk och modern rätt (Appelbergs 1928).

(3) Eric W. Orts, Business Persons: A Legal Theory of the Firm (Oxford University Press 2013) 13. For an account that is in many ways similar, see Deakin (n 1).

(4) The connection between political philosophy and corporate theory is apparent in the title of Frederick Hallis’s doctoral dissertation: Frederick Hallis, ‘An examination of some modern theories of the relation of law and state with special reference to the juristic doctrine of corporate personality: a study in jurisprudence’ (DPhil thesis, University of Oxford 1927).

(5) Trustees of Dartmouth College v Woodward, 17 US 518 (1819) 636.

(6) Orts (n 3) 14.

(7) The distinction between aggregates and other types of groups is made, among others, by Peter French. See Peter A. French, Collective and Corporate Responsibility (Columbia University Press 1984) 1–18.

(8) For an overview of individualist views, see Paul Sheehy, The Reality of Social Groups (Ashgate 2006) 14.

(9) Tuomela may baulk at being denoted a group realist; his views are in any case very close to group realism.

(10) Raimo Tuomela, Social Ontology: Collective Intentionality and Group Agents (Oxford University Press 2013) 97ff.

(11) Ibid. 93–5.

(12) ‘Philip Pettit on Group Agency’, interview of Philip Pettit in David Edmonds and Nigel Warburton, Philosophy Bites, 18 December 2010. Available at https://philosophybites.com/2010/12/philip-pettit-on-group-agency.html (accessed 8 January 2019). The same situation, though without the hiring setting, is described in Christian List and Philip Pettit, Group Agency: The Possibility, Design, and Status of Corporate Agents (Oxford University Press 2011) 70.

(13) Certain nonhuman animals most likely have such states as well, but as I am only considering human group agents, this discussion will be limited to human experiences.

(14) For Gilbert’s views, see Margaret Gilbert, Sociality and Responsibility: New Essays in Plural Subject Theory (Rowman & Littlefield Publishers 2000).

(15) Ronald Dworkin, Law’s Empire (Harvard University Press 1986) 169.

(16) Peter French discusses quite extensively the question of when responsibility ought to be attributed to a group and when to its members. See French (n 7).

(17) Peter Jones, ‘Group Rights’ in Edward N. Zalta (ed.), Stanford Encyclopedia of Philosophy (Summer 2016) <https://plato.stanford.edu/archives/sum2016/entries/rights-group/>.

(18) Chris Chapple, for instance, writes that ‘The personification of companies in law has been associated with the recognition both of certain responsibilities and certain rights. [ … ] The more controversial question is whether we can talk meaningfully about moral rights (as opposed to merely legal rights).’ Chris Chapple, The Moral Responsibilities of Companies (Palgrave Macmillan 2014) 140.

(19) Hohfeld mainly addressed these issues in Wesley Newcomb Hohfeld, ‘Nature of Stockholders’ Individual Liability for Corporation Debts’ (1909) 9 Columbia Law Review 285.

(20) Matthew H. Kramer, ‘Rights Without Trimmings’ in Matthew H. Kramer, N. E. Simmonds and Hillel Steiner (eds), A Debate over Rights: Philosophical Enquiries (Oxford University Press 1998) 49ff and John R. Morss, ‘The Legal Relations of Collectives: Belated Insights from Hohfeld’ (2009) 22 Leiden Journal of International Law 289.

(21) Kramer (n 20) 56.

(22) Tuomela (n 10) 68 (emphasis in original).

(23) Except, for instance, where the identity of the cook is decided in the contract.

(24) Apart from disbandment, economic sanctions seem to be the only feasible form of punishing group agents, as they do not have a corporal existence.

(25) John Locke, An Essay Concerning Human Understanding (1690), Book II, ch XXVII, para 26.

(26) There is also a branch of economics, called the theory of the firm, focusing on the question why a corporate structure may be more efficient than self-interested individuals forming contract networks when producing goods and services. The classic account in this regard is Ronald Coase’s transaction cost theory, according to which transaction costs (such as the cost of determining the prices of one’s products) can be lower when the production is coordinated within a firm. Ronald Coase, ‘The Nature of the Firm’ (1937) 4 Economica 386.

(27) For a good discussion of the ‘fictionality’ of corporations, see Orts (n 3) 30–2. However, Orts takes it for granted that corporations can always be described as legal fictions, which I see as problematic.

(28) This is not to be taken as a complete definition but merely as a sketch of the concept.

(29) Kenneth Campbell, ‘Fuller on Legal Fictions’ (1983) 2 Law and Philosophy 339, 368.

(30) One would, however, have to define ‘corporation’ carefully if corporations were given the vote. If corporations qua legal platforms had the right to vote, then anyone could register a theoretically unlimited number of single-person corporations and vote using all of them.

(31) This revocability pertains also to the legal personhood of artificial intelligences, which will be addressed in the next chapter.

(32) Whanganui River Settlement Ratification Booklet for Whanganui Iwi 26.

(33) ‘The role of Te Pou Tupua is to represent and advocate for the interests of the River, not represent its appointors.’ Ibid.

(34) ‘The functions of Te Pou Tupua include: (a) acting and speaking on behalf of Te Awa Tupua; [ … ] (d) exercising the landowner functions in relation to any land vested in Te Awa Tupua’. Ibid.