Capital Punishment for Corporations

From venerable laws, long unused, comes a new campaign theme for Eliot Spitzer, Democratic candidate for Attorney General of New York — capital punishment for corporations convicted of serious crimes. Such a punishment would mean the corporation is dissolved and its assets sold, or its corporate charter to do business revoked by state governmental authority.

In a tight, well-funded race against incumbent Attorney General, Dennis C. Vacco, Spitzer issued a statement explaining his position:

“When a corporation is convicted of repeated felonies,” declared Spitzer, “that harm or endanger the lives of human beings or destroy our environment, the corporation should be put to death, its corporate existence ended and its assets taken and sold at public auction.”

In a clear display of evenhandedness, Spitzer believes that law and order should apply to corporations just as it does to individuals. “A corporation that willfully subjects workers to unsafe working conditions leading to death or that engages in criminal activity that pollutes our environment, should be subject to the same standards of responsibility and obligation to the community as individuals,” he stated.

In today’s bland and constricted electioneering, this kind of position should make news and enliven the debate between the two law enforcement candidates. This is no thirty second political ad. It is a candidate’s platform that could teach some important history about corporations during a period of the nation’s past when people were quite concerned over an artificial legal entity called a corporation and the excessive “privileges and immunities*’ that could flow from a double standard of law — one for real people and another for an artificial “person.”

For in the early 19th century, the precursors of the modern corporation were chartered by the vote of state legislatures to perform certain specific businesses, such as manufacturing textiles in Massachusetts, under specific obligations tied to a public purpose. These state charters often lasted for a few years and had to be renewed. Caution about these limited liability companies was in the air.

In the year 1815, Massachusetts Justice Joseph Story ruled in the case of Terrett v. Taylor that a private corporation which misused its franchises could have its charter revoked under a procedure known as “quo warranto” or by what authority. Justice Story said that such a risk of revocation was “a tacit condition annexed to the creation of every such corporation.”

Spitzer mentioned in his statement numerous examples of major companies losing their charters. “During the 1840s and 1850s,” he wrote, “companies lost their charters routinely for committing serious violations. . . In the late nineteenth century, New York State led the way in revoking the charters of oil, match, sugar and whiskey trusts when these companies created criminal acts and exceeded the powers of their charters.”

Today, New York law still provides the Attorney General with the authority to bring a dissolution action in court against a corporation that abuses its powers or acts “contrary to the public policy” of the jurisdiction.

In Alabama, there is a writ of quo warranto to require the state to revoke the corporate charters of five tobacco companies for furnishing cigarettes to minors and addicting them to a substance hazardous to their health. Spitzer mentioned this case and pledged to look into similar proceedings in New York state.

Have you ever heard of any candidate for state office, much less a candidate for Attorney General, saying so insistently he or she will be tough on corporate crime, fraud and abuse which are stealing money from families and exposing them to loss of life, injuries and disease?

Spitzer does not rely on many outside campaign contributors from the monied interest. He is independently wealthy.

Eliot Spitzer spells trouble for business crooks. If he wins, he should be the person who will show bad corporations that the Sheriff has come to town!