The Curious Exclusion of Corporations From the Privileges and Immunities Clause of Article IV
In 1869, the U.S. Supreme Court held in Paul v. Virginia that a corporation was not a “citizen” for purposes of the Privileges and Immunities Clause of Article IV of the U.S. Constitution. In so concluding, the Court agreed with dicta in its earlier cases and numerous state court rulings. Corporations were “the mere creation of local law, [and] can have no legal existence beyond the limits of the sovereignty where created,” Justice Stephen J. Field wrote for the Court. If another state allowed them to do business inside its borders, “such assent may be granted upon such terms and conditions as those States may think proper to impose.” States could even “exclude the foreign corporation entirely,” “unless such prohibition is so conditioned as to violate some provision of the Federal Constitution” other than the Privileges and Immunities Clause. As far as the clause was concerned, “[t]he whole matter rests in their discretion,” Field underscored. The Court has never retreated from these conclusions, and commentators have accepted the exclusion of corporations from the clause without protest.
Denying corporations the protection of the Privileges and Immunities Clause effectively authorized all types of state discriminations against companies chartered under the laws of other jurisdictions. Virginia’s highest court held, in 1856, that the legislature could “forbid foreign corporations from engaging in any pursuit within the state; and, of consequence, to grant permission to engage therein only upon terms” that it imposed. Or as the Supreme Court bluntly stated in 1888, “the power of the State to discriminate between her own domestic corporations and those of other States, desirous of transacting business within her jurisdiction, was clearly established. Consequently, in Blake v. McClung, individuals won protection under the Privileges and Immunities Clause, but corporations with identical claims lost.