Every State Is a Corporation: States as Bodies Politic and Artificial Persons

A state is an artificial person

Lawtopolis publishes this discussion for informational and educational purposes, and as an exercise of the freedoms of speech, press, assembly, belief and religion protected by the First Amendment. It sets out what each statute and decision says and what courts have done with it. It is not legal advice and does not recommend any course of action.

Every sovereign State is of necessity a body politic, or artificial person, and as such capable of making contracts and holding property, both real and personal.

Cotton v. United States, 52 U.S. (11 How.) 229, 231 (1851)

Courts treat this as settled law. Indeed, the people create and organize each state through a constitution. As a result, the state acts only through officers and agents, and it has the legal capacities of an artificial person. In Cotton, the Court said the United States, “as a corporation or body politic,” could sue to protect its timber lands like any other owner.

The state constitution as a charter

The body politic is formed by a voluntary association of individuals: it is a social compact, by which the whole people covenants with each citizen, and each citizen with the whole people, that all shall be governed by certain laws for the common good.

Massachusetts Constitution, Preamble (1780)

State constitutions create the government’s offices, assign its powers and limit them, much as a charter organizes a corporation. Every state officer must swear an oath to support the U.S. Constitution (art. VI, cl. 3), and most state oaths include the state constitution as well. Similarly, state law charters counties and cities as corporations. For example, North Carolina law says “The inhabitants of each county are a body politic and corporate” (N.C. Gen. Stat. § 153A-11). The same is true of sheriff’s offices, school districts and public authorities: each is a governmental entity, not a living person.

Corporate capacities of a state

• Property and contracts. States own land and buildings, sign contracts and hire employees in their own names.
• Bonds and debt. States and their subdivisions issue bonds to investors. These are municipal securities, exempt from SEC registration under Securities Act § 3(a)(2), 15 U.S.C. § 77c(a)(2), with disclosures filed on the MSRB’s EMMA system.
• Lawsuits. States bring lawsuits in their own names. However, sovereign immunity and the Eleventh Amendment limit suits against them, unless the state consents or Congress validly abrogates that immunity.
• Identifiers. Also, government entities that do business with the federal government register in SAM.gov. Since April 4, 2022, the federal identifier is the Unique Entity ID; it replaced the D-U-N-S number, which Dun & Bradstreet assigns to businesses, charities and government agencies alike.

What the Dartmouth College case decided

Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat.) 518 (1819)

A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law.

Trustees of Dartmouth College v. Woodward, 17 U.S. at 636

What the case was about: New Hampshire passed laws taking control of Dartmouth College. However, the Court held that the Contract Clause protected the college’s 1769 charter as a contract, so the state could not change it without the college’s consent.

How it applies: In addition, the opinion separates private corporations, like the college, from public corporations used for government, such as towns and counties. It said the legislature may change public corporations. Still, it did not hold that corporate law governs a state like a private company.

How courts treat the state as a corporation

In short, courts agree that a state is an artificial legal person. The disagreement in popular essays is about what follows. Some essays conclude that statutes bind only people who “associate” with the state corporation, the way bylaws bind members. By contrast, courts treat a state as a body politic that governs everyone within its territory through laws passed by elected representatives, subject to the federal and state constitutions. For that reason, its legislature is not a board of directors acting for shareholders, and its laws apply to residents and visitors whether or not they sign anything.

Finally, two specific claims in these essays do not match the record. First, states do not “register as corporations” with the SEC; securities law exempts their bonds from registration. Second, Dun & Bradstreet assigns D-U-N-S numbers to many kinds of organizations, so having one does not establish a particular legal status.

How to check the state as a corporation claim yourself

The best test of state as a corporation is simple: look for a court that accepted it. We have not found one in the reported decisions. Next, read the actual law the claim points to. For example, check the statute, the UCC section or the constitutional text it cites. Then compare that text with what the claim says it means. For a real problem with a debt, a court case or a tax bill, a licensed attorney can explain your actual options. Our directory is a good place to start.

Sources and further reading

Official sources used on this page:

• static.case.law
• static.case.law
• malegislature.gov
• law.cornell.edu

Related reading on Lawtopolis:

• "The United States Is a Corporation": 28 U.S.C. § 3002(15), 18 U.S.C. § 5 and Merriam's Estate
• Sovereignty of the People: Chisholm, Yick Wo, Perry and the Supremacy of the Constitution
• Public Law and Private Law: The Two Branches of the Legal System
• State Citizen vs. U.S. Citizen: Fourteenth Amendment Citizenship and "Non-Citizen Nationals"