THE GREEN BAG
THE
IMPRISONMENT
OF
CRIMINAL
CORPORATIONS
By Donald R. RlCHBERG In discussing "The Control of Corpora tions" in the December number of The Green Bag, Mr. Frederick N. Judson took issue with an article on "Imprisonment of Corporations" published previously by the present writer. Mr. Judson 's article pre sented so well the original logical theory of corporate control that it would seem proper in historical sequence to follow that article with one which will endeavor to show that the development of the law through a per haps illogical sequence of decisions has now reached the point where it is necessary, for effective action against erring corporations, to carry onward the present legal theories. To go backward into the realm of what might have been can only increase the un certainty and inefficiency of the present judicial control of corporations. Mr. Jud son 's positions may be fairly stated as follows : First: Increased penalties do not diminish offenses; Second: Innocent parties would suffer disaster in the imprisonment of corpora tions; Third: The public at large would suffer in its interest; Fourth: Preventive remedies are more effective than punitive remedies; Fifth: Individual responsibility should be increased. As to the first point, historically, it may be true that "a dreadful list of penalties, instead of diminishing, increased the number of offenders." It might well be argued that the barbarism of an epoch in which hang ing was the penalty of petty larceny would, simultaneously, without casual connection, be an era of great crime. It might well be argued that as humanitarian principles in creased and the penalties were diminished, crime would also decrease, again without causal connection between the penalty and the crime. In the consideration of the
present subject, however, such arguments are hardly applicable. In dealing with the punishment of a corporation we need not reckon with the emotions and psychologi cal responses of human beings. We are at present face to face with a business prob lem pure and simple. If a corporation can make three million dollars a year by grant ing rebates or entering into unlawful agree ments, and if the chances are that the legal expenses and penalties incident thereto will not exceed one million dollars it is ob vious that in our present state of business morals that corporation will not hesitate to break the law. If, on the other hand, the penalty for such illegality is the depri vation of the corporation's income for a period of one year or more the chances of obedience to the laws by that corporation are remarkably increased. It should also be noted, as a further example of the busi ness appeal to be made by the imposition of such a penalty, that it could no longer be made an object for the unfortunate cor poration-employee to take the risk of com mitting crimes that his employer might gain. If the penalty for corporate wrongdoing were punishment of the corporation the punishment would ipso facto fall upon the true logical wrongdoer. This leads, natur ally, to the second point above stated. The only innocent parties in the present writer's view who could suffer by the imprison ment of a corporation would be those parties who have been led by false representation to invest their money in an illegal concern. Inasmuch as this variety of innocent parties is protected in no other domain of the law •the natural query is, why should an excep tion be made in favor of the stockholders of corporations? If one invests property in a concern operating a lottery, or any other gambling device prohibited by law, such property is quite liable to confiscation
