The Transplantation of the Legal Discourseon Corporate Personality Theories: FromGerman Codification to British PoliticalPluralism and American Big Business

I. IntroductionThe debate on the nature of the legal personality of groups gathered momentum and focus in Germany after 1868, with the criticism mounted by Gierke on Savigny's theory of corporate personality and with the intensifying controversies over the drafting of the German Civil Code.1 This discourse was well-rooted in German jurisprudential traditions, German historical narratives and the German political context.2 Yet, somewhat unexpectedly, it was imported into the Anglo-American world in about 1900.3 The GermanGierkian real entity theory of the corporation journeyed through several contexts and discourses in Britain and the United States.4 It inspired numerous articles and books in English, French and German.5 Various scholars, counsel, politicians and judges used this and other corporate theories to advance different doctrinal and policy objectives.6 This was arguably the most intense legal discourse of the first quarter of the twentieth century. Around the mid192Os it abruptly subsided, leaving only traces for historians to follow. Arthur Machen, writing in a sarcastic style in 1911, at the heat of the debate, captured the flavor of the discourse: The followers of real entity theory "strive to exaggerate the importance of those questions, in order to pose as great reformers engaged in a gigantic task of emancipating the legal world from the thralldom of mediaeval superstition."7While all three venues of the discourse, Germany, Britain and the United States, have been thoroughly studied, the relationship among the three has been relatively neglected.8 I shall concentrate on this transnational aspect of the discourse. While every intellectual relationship is likely to be reciprocal, my interest is in the flows of influences from Germany to Britain and the United States. This was the main direction of the flow of ideas in this specific discourse because the discourse originated in Germany,9 which was at that time at the zenith of its legal-intellectual prestige. A study of the import of AngloAmerican influences to Germany is beyond the scope of this project.The discourse focused on three theories of corporate legal personality that were played against each other.10 The theories aimed to explain the rationale for the status of groups as entities bearing legal rights and duties. It was assumed that the nature of the rationale had bearing on the magnitude and range of these rights and duties. I will present them now in their developed archetypical form. In the next sections I will deal with their historical development and minute variations.The first theory to appear both in Germany and in the Anglo-American world was the state grant theory, also called the fictitious personality theory, the artificial personality theory, the concession theory or the hierarchical theory.11 Grant theory viewed groups as gaining legal status by way of incorporation. Incorporation was a monopoly of the state. Only the state could incorporate groups and grant them legal personality. The state attached rights and duties to the legal personality at its discretion. The corporate personality was created by the state in the realm of public law.12The second theory was the contract, aggregate, or partnership theory. Groups became legal entities by a voluntary and consensual undertaking of their members.13 This undertaking had constitutive status-creating consequences; namely, the birth of a new legal entity. This was a legal birth but one that took place in the realm of private, rather than public, law.14The third theory, whose formation in Germany and import into Britain and the United States initiated the discourse, is the real entity theory, also called the natural entity theory. '5 This theory holds that the real and social existence of a group makes it a legal person. The corporate entity is pre-legal or extra-legal. The law does not create it; it is bound to recognize and respect its real existence. …