The Development of English Law
What was the explanation of the view of the Trade Union constitution that the judges took? The English Courts of Justice, it must be remembered, have peculiar rules of their own for the construction of statutes. When the plain man wants to know what a document means, he seeks every available explanation of the intention of the author. When the historian inquires the purpose and intention of an Act of Parliament, he considers all the contemporary evidence as to the minds of those concerned. The Courts of Law, for good and sufficient reasons, debar themselves from going behind the face of the document, and are therefore at the mercy of all the unstudied ineptitudes of House of Commons phraseology. Along with this rigour as to the intention of a statute, the English and American judges combine a capacity for developments of doctrine in the form of legal principles which is, we believe, unequalled in other judicial systems. Now, the subject of corporations is one of those in which there had been, among the past generations of English lawyers, a silent and almost unselfconscious development of doctrine, of which, in Germany, Gierke had been the great inspirer, and Maitland in this country the brilliant exponent.[663] Our English law long rigidly refused to admit that a corporate entity could arise of itself, without some formal and legally authoritative act of outside power. How, it was asked, except by some definite act of creation by a superior, could the persona ficta come into existence? How, otherwise (as Madox quaintly puts it), could this mere “society of mortal men” become something “immortal, invisible, and incorporeal”?[664] As a matter of fact, associations or social entities of all sorts always did arise, without the intervention of the lawyers, and nowadays they arise with amazing ease, without any act of creation by a superior; and when the English lawyers refused to recognise them as existing, it was they who were irrational, and the common law itself that was at fault. Nowadays we live in a world of social entities of all sorts, and of every degree of informality, corporate entities that to the old-fashioned lawyers are still legally non-existent as such—clubs and committees of every possible kind; groups and circles, societies and associations for every conceivable purpose; unions and combinations and trusts in every trade and profession; schools and colleges and “University Extension Classes,” often existing and spending and acting most energetically as entities, having a common purse and a single will, in practice even perpetual succession, and (if they desire such a futile luxury) a common seal, without any sort of formal incorporation. Gradually English lawyers (whom we need not suspect of reading Gierke, or even, for that matter, Maitland) were unconsciously imbibing the legally heterodox view that a corporate entity is anything which acts as such; and so far from making it impossible for the persona ficta to come into existence without a formal act of creation, they had been, by little alterations of procedure and imperceptible changes in legal principles, sometimes by harmless little dodges and fictions of the Courts themselves, coming near to the practical result of putting every association which is, in fact, a social entity, however informal in its constitution, and however “spontaneous” in its origin, in the same position of a persona ficta, for the purpose of suing and of being sued, as if it had been created by a formal instrument of incorporation, decorated by many seals, and procured at vast expense from the post-Reformation Pope himself; or as if it had been expressly incorporated by the Royal Charter of a Protestant King or the private statute of a Victorian Parliament.
Now this development of legal doctrine to fit the circumstances of modern social life is, when one comes to think of it, only common sense. If twenty old ladies in the workhouse club together to provide themselves with a special pot of tea, and agree that one among them shall be the treasurer of their painfully-hoarded pennies as a common fund, they do, in fact, create a social entity just as real in its way as the Governor and Company of the Bank of England. Why should not the law, if it ever comes to hear of the action of the twenty old ladies in the workhouse, deal with the situation as it really is, according to their wishes and intentions, without inquiring by what formal act of external power a persona ficta has been created; and therefore without demanding that the old ladies shall first procure a charter of incorporation from the Pope, from the King, or from Parliament? And considering that Trade Unions were now in fact social entities, often having behind them more than a hundred years of “perpetual succession”; counting sometimes over a hundred thousand members moving by a single will; and occasionally accumulating in a common purse as much as half a million of money, the Law Lords might well think it absurd and irrational of Parliament to have decided in 1871-76, and again in 1906, to regard them as unincorporated groups of persons, having, in a corporate capacity, no legally enforceable obligations and hardly any legally enforceable rights. It may have been absurd and irrational, but what right—so the Trade Unionists asked—had the judges to change the law?
Whatever may be the justification for the momentous change in the law which the Six Judges (namely, the three members of the Court of Appeal, and three out of the five Law Lords, all of whom agreed in the series of propositions that we have cited) suddenly, without Parliamentary authority, of their own motion effected, it created an intolerable situation. There was, in the first place, the application of the doctrine of ultra vires to corporate entities quite unaware of its existence. It was all very well, in order to fit the law to the facts, to throw over the old legal doctrine that the persona ficta of a corporation could only come into existence by some formal act of incorporation by an external authority. But then it plainly would not do to retain, as the Six Judges quite calmly retained, the severe limitations on the action of statutory corporate entities which is involved in the doctrine of ultra vires, and which, as Lord Halsbury put it, was to prohibit them from doing what they liked. The argument for that principle is that such a corporate entity owes its existence entirely to the statutory authority by which it is created; that the legislature has brought it into being for certain definite purposes; that for those purposes and no others the exceptional powers of a corporation have been conferred upon it; that as such it is, in a sense, the agent whom the community has entrusted with the execution of these functions, and who cannot therefore (even if all the constituent members of its body so agree and desire) assume any other purposes or functions. But any such doctrine of ultra vires can have no rational application to the corporate entity formed by the twenty old ladies in the workhouse for their private pot of tea. If we are going, in effect, to treat as corporate entities all sorts of spontaneously arising associations, such as an unregistered Trade Union (and some of the wealthiest and most powerful Trade Unions were still unregistered), or such as an Employers’ Association (which was hardly ever a registered body)—corporate entities which were, in fact, lawfully in existence long before the Act of 1876—we must give up the fiction that the purposes of these associations have been authoritatively fixed and defined in advance by Parliament in such a way that the members themselves, even when they are unanimous and when they are acting in strict accord with their constitution and rules, cannot add to or alter the objects or methods of their organisation. What was logically required, in fact, was not the arbitrary identification of spontaneously arising associative entities with legally created corporations, but the formulation of a new conception as to the functions and legal rights that such spontaneously arising associative entities—to which the limitations of legally created corporations could not be simply assumed to apply—should, as a class, be permitted to exercise.