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60 Calif. L. Rev. 1701 (1972)
The Historical Enigma of Corporate Legitimacy

handle is hein.journals/calr60 and id is 1721 raw text is: THE HISTORICAL ENIGMA OF CORPORATE LEGITIMACY* Edwin M. Epsteint THE LEGITIMACY OF THE BUSINESS CORPORATION IN THE LAW OF THE UNITED STATES, 1780-1970, by James Willard Hurst. Charlottesville: The University Press of Virginia, 1970. Pp. xii, 191. $6.50. In a society where the Rule of Law rather than the Rule of Men is presumed to be a foundation of the constitutional order, the American busi- ness corporation has been an enigma. The very largest corporations are economic, social, and political forces on a national and even global scale, rivaling nation states in power and significance. Yet, as private non-govern- mental entities, these organizations and those who run them have not been subject to the same range of legal constraints as public bodies and public of- ficials.' Accordingly, the emergence of a system of large-scale business * I wish to thank Mrs. Virginia Douglas and Mrs. Helen Way of the Institute of Business and Economic Research, University of California, Berkeley, for their skillful and helpful typing assistance and the Institute of Business and Economic Re- search for funding the research activities of the author. t Associate Professor of Business Administration, University of California, Berkeley. Member of the California and Pennsylvania Bars. A.B., University of Pennsylvania, 1958; LL.B., Yale University, 1961; M.A., University of California, Berkeley, 1966. 1. Evidence suggestive of this point was recently given by the Supreme Court in Lloyd Corp., Inc. v. Tanner, 92 S. Ct. 2219 (1972) wherein the Supreme Court, reversing both the Court of Appeals for the Ninth Circuit and the United States District Court, held that first and fourteenth amendment protections of free speech did not cover the distribution of anti-Vietnam war handbills at a large shopping center run by the corporate defendant that had a policy against all handbilling. The Court asserted that an incorporated shopping center, even though it covered some 50 acres, did not lose its private character merely because the public is generally invited to use it for designated purposes. Mr. Justice Powell, writing for the majority in the 5-4 decision, stated: It would be an unwarranted infringement of property rights to require them to yield to the exercise of First Amendment rights under circumstances where adequate alternative avenues of communication exist. Such an ac- commodation would diminish property rights without significantly enhancing the asserted right of free speech. Id. at 2228. The Court distinguished the situation before it from those in Marsh v. Alabama, 326 U.S. 501 (1946) and Amalgamated Food Employees Local 590 v. Logan Valley Plaza, Inc., 391 U.S. 308 (1968) which were relied upon by the plaintiffs. In Marsh, the Supreme Court held that a corporation could not prohibit the distribution of religious tracts on the sidewalks of the shopping district of a wholly owned com- pany town which except for private ownership had all the characteristics of any other American town. 326 U.S. at 502. In the 1972 decision, the Court asserted that, unlike in Marsh, the corporate defendant was not substituting for and performing the customary functions of government and was not therefore subject to First Amend- ment restrictions. In Logan Valley, the Court upheld peaceful picketing by a labor 1701

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