Santa Clara Railroad Case

  Today, you know the Fourteenth Amendment as being the one that gives all citizens "equal protection of the laws," but have you ever thought about where corporations fall into this? A railroad company in California had its own run in with the specifics of one of these so called "freedom amendments."

The year is 1886. The Southern Pacific Railroad Company is upset about being taxed by the state of California, and about the difference in amount of exceeding mortgages. They used the fact that the state constitution says that they are only allowed to be taxed on "the franchise, roadway, roadbed, rails, and rolling stock." The company also claimed that the outstanding mortgages were not subtracted correctly from its property value. A decision could not be made on their own so Santa Clara County took it to the state court.

    The county's argument was that since it could tax the land with the fences, then it could tax the additional value of the land that was incorporated with the fences. The Railroad Company then took it to the federal district court, which sided in favor of the company. The county had it brought to the Supreme Court.

    A support for Southern Pacific's claim was, in fact, their own lawyer. Roscoe Conkling, who was actually there for the drafting of the Fourteenth Amendment, states that he remembers the amendment being changed from "citizens" to "persons" so that it could include corporations, or natural persons, too. He even had a journal from his time with the drafting committee.

An illustration of Edward H. Harriman

    Unfortunately for the company, this was all a hoax. It turns out that corporations were never considered from the committee. 

    Morrison Waite, a Chief Justice on the Supreme Court, actually worked on this case. In his argument he states, when talking about whether corporations are included in the 14th Amendment, that "We are all under the opinion that it does." Its clear from the beginning that the court believed that the county wrongly taxed the company. The court decided that taxing the company differently than private property owners was completely biased and violates the 14th amendment.

In the end, the court sided with the railroad company and decided that corporations would also be "guaranteed the right to liberty, property, and due process of the law and for legal purposes may be regarded as persons." This was a major turning point in Supreme Court history, and so many have never heard of it.

An overall summary of the court case