This will also be my last post on this thread.
I just want to make a final point about the ability of suing. Unless stated otherwise in a contract (and even then that is up for review if certain facts need to be taken into consideration) nearly anyone can try suing anything for any reason. The only difference is it might not stand up in court very long if the facts fail in the plantiffs case.
In the case of finding guilt in a corporation it is usually laid upon those that manage it and control it as is part of their contract. Shareholders are liable as far as the amount they have invested since they do not manage the company. But if it is found that a shareholder has been in direct managment of the company or is colluding with the manager or is directly responsible for the damage that a company has done they are liable in court and can be liable for more than their investments
In the case of a classic partnership the partners decide to be become essentially one legal economic unit (somewhat akin to marrying). They therefore take equal responsibilty for the actions of the other (so far as the business goes) as they have promised to each other by contract.
Not to mention that since they legally (by contract if not in reality) take a managment role in the business they also have unlimited liability (more than their investment) since they are directly responsible for the actions of the company, so more than their investment is at stake since they have laid out their duties and responsibilties in the contract.
I cannot engage in any discussion tonight beyond just making this clarification.
I was wrong to use the bank and the creditor as examples to compare with the ownership of shares in a corporation. JC Folsom is completely right in that in the case of a creditor you own the debt but not the business or property. I think it is more akin to issues of liabilty in areas of rental property or in areas of trusts where the trust is managed by someone who does not own the account and is put in charge of it but they are responsible for managing the funds while the owners of the trust fund do not engage in the management.
Usually in those scenarios the person who for instance rents a chainsaw and then uses it to cause a tree to fall on their neighboor's house is held liable and not the one who rented it out to the guy (unless they knew something about it). The person who tends to be renting the use or is placed in charge of the property in question (like a corporate manager) is the one who tends to be liable since they control it at the time of any incident.
Deist:Usually in those scenarios the person who for instance rents a chainsaw and then uses it to cause a tree to fall on their neighboor's house is held liable and not the one who rented it out to the guy (unless they knew something about it). The person who tends to be renting the use or is placed in charge of the property in question (like a corporate manager) is the one who tends to be liable since they control it at the time of any incident.
It is not like a renter of a chainsaw. It is you owning the chainsaw (capital), and hiring the logger (manager) to use it. A renter of a chainsaw is not your agent. The logger you hire is.
Yes it is somewhat like hiring a logger to use your chainsaw but in this case the manager is not directed at all or governend at all by your directive. The logger has to work in a specific area under your supervision and has little ability to take independent action very unlike a CEO. The manager of a corporation decides the operations, investments and all other business that the company does. Liability falls under those that are in charge of operations all the way up the line but shareholders are not in charge of operations at all, CEO's are.
The manager of a corporation agrees to take full liability for the companies actions as its manager. The shareholder owns the property but does not direct the property. The shareholder takes no agreement to be the manager unlike those in a classsic partnership.
Deist:Yes it is somewhat like hiring a logger to use your chainsaw but in this case the manager is not directed at all or governend at all by your directive. The logger has to work in a specific area under your supervision and has little ability to take independent action very unlike a CEO. The manager of a corporation decides the operations, investments and all other business that the company does. Liability falls under those that are in charge of operations all the way up the line but shareholders are not in charge of operations at all, CEO's are. The manager of a corporation agrees to take full liability for the companies actions as its manager. The shareholder owns the property but does not direct the property. The shareholder takes no agreement to be the manager unlike those in a classsic partnership.
Nonsense. Majority shareholders are the ones that appoint their CEO and who, by investing him with their authority, give him power over the company. Your standard share in a company does give you power over it, it is just that other shareholders may have such overwhelmingly greater portions of the shares than you that your power is insignificant. Nonetheless, the owner(s) of a company are its ultimate decision makers, and hire managers for their convenience. But these managers, as I said, only have authority because they act as the agents of the shareholders.
Yes they do appoint people who appoint the manager but I dont see why you have a problem with this as a contract. It is a voluntary situation. The manager agrees with this contract voluntarily. As far as the owners of the company being the ultimate decision makers they are not in this case so why would you hold them liable.
If this is a legal fiction then all other legal contractual standards are as well and this argument will devolve into a semantive game. Shareholders are liable when they actually direct the operations that cause harm. Again anyone can sue anyone for anything but as usual courts tend to follow the contracts especially if they do not hold someone liable for something they did not directly control.
Have you ever heard of subcontractor contracts. They are contracts that sometimes come up that between an employee and employer that will hold the person who committed the offense directly liable.
It is just as much a legal fiction that employers are held liable for actions that they could not even forsee with some of their employees. For instance if I am an employer of delivery men and I had no way of knowing that someone I hired would one day drink on the job and cause a massive accident. I support this doctrine but it is just as much a legal fiction as anything else.
I'm not sure if someone mentioned this already or not, but upon closer consideration it would be more accurate to say that taxation is extortion, which of course is a form of theft. You're treated as if you have incurred a debt for merely existing in the territory. It's not as immediate or direct as a common mugging, but they will eventually come for you if you try to withhold payment. Taxation is actually far worse than theft in that not paying may additionally lead to kidnapping, physical injury or even death upon resistance. Common thefts are often comparatively benign in terms of what happens to oneself such as when someone's not looking or isn't there, and as Spooner pointed out, common thefts also aren't so repetitive or intergenerational, while taxation is repetitive and intergerational. It's also on a much grander scale, effecting the most people, than any other case of theft.
Deist:Yes they do appoint people who appoint the manager but I dont see why you have a problem with this as a contract. It is a voluntary situation. The manager agrees with this contract voluntarily. As far as the owners of the company being the ultimate decision makers they are not in this case so why would you hold them liable. If this is a legal fiction then all other legal contractual standards are as well and this argument will devolve into a semantive game. Shareholders are liable when they actually direct the operations that cause harm. Again anyone can sue anyone for anything but as usual courts tend to follow the contracts especially if they do not hold someone liable for something they did not directly control. Have you ever heard of subcontractor contracts. They are contracts that sometimes come up that between an employee and employer that will hold the person who committed the offense directly liable.
Well, of course, as I have said elsewhere, I think corporations are illegitimate ficticious entities, as are their shares. That being said, I am engaging this particular topic giving corporate collectivists the benefit of the doubt.
Let us say that I have hired a man to cut down trees with a chainsaw. However, my trees are tall enough that if they are not cut in the right direction, they could fall on my neighbor's house. Now, I have the choice between hiring a competent and well-referenced lumberjack or a bum off the street. Either can operate the chainsaw well enough to cut down the tree, but only the one with experience can do so and reliably control the direction of its fall. However, the bum costs a tenth as much as the one with expertise. If I have no liablility for the actions of my employee, then I have no incentive to hire the experienced lumberjack over the bum; indeed, I have a strong disincentive to. If one of the trees does indeed fall on your house, you can collect damages from only the penniless bum. Sound good?
That being said, even if I hired the lumberjack, and the tree fell on your house, I should still be liable. The fact that he botched the job is proof that I did not do a good enough job ensuring my hiree was competent enough to not cause damage to your property. It is a risk whenever you hire someone to do something for you, because you are not in direct control of their actions, and it ought to be a risk.
JCFolsom:That being said, even if I hired the lumberjack, and the tree fell on your house, I should still be liable.
Yep. Your tree, your responsibility.
Now if you sold the tree to the lumberjack and it fell while he was cutting down his tree it would be a different story.
Well the reason you dont see lousy tree cutters signing these contracts more often is because they know they could not afford the liability so they refuse to sign the contract that specifies them as fully independent operators from those that hire them. Even if the homeowners did have this bum from the street sign the contract they would still have to pay legal fees for the lawyer if they are sued unsuccessfully and if they tried arbitrating with their neighboors (most cases try to get settled outside of court so the people involved, plaintiff and defendant, will have more say in the judgment instead of leaving it up to a more neutral judge), so they have an added incentive to go more professional with the tree cutting to avoid a lawsuit. Not to mention this bum might even wreck their yard in the process. Now if this bum was a drug addict or alcoholic at the time he signed the contract and this effected his reason then the contract is void and the homeowners are fully liable.
In the case of hiring tree cutters, homeowners usual go to a legitimate business that does it professionally and it is this business that is the target of the lawsuit as the responsibilty is delegated to them not to mention they probably have more wealth to get at, through insurance (something corporations also have) or simply savings. These companies are delegated the responsibilty of managing the operation through the contract they agree to with the homeowner. Of course, just like in the case of corporate shareholders, the howeowners can be held liable if something they directly did lead to some property damage.
CEO's of companies make enough money and are solvent enough (just like the tree cutting business) to declare themselves independent agents. If they do not declare themselves such in their contracts then they are viewed as managed agents in common law doctrine dealing with employer-employee relations.
Limitation of liability shouldn't be strictly about ownership. Depending upon the situation, there should be cases where the manager is liable and other cases where the share-holders are independent of any formal contract. Even in cases where there is a contract, there may be significant reason to deny the contract as binding, for the situation. All any "formal" contract is is simply evidence that some actor knew the expectations of how another party believed he should act. Whether such knowledge of conditions matters to a jury or arbitor is not absolute. Almost everything we do is a contract - there is a legal and economic expectation of coordinated action.
It seems most of the mentioned scenarios can occur: some share-holders could contract their liability to other share-holders (along with their voting power probably), who can then contract it over to managers, but the enactment of justice doesn't require an absolute law here. Perhaps justice is best served when it is left to a case-by-case subjective judgment for such controversial situations? of course, simply dumping the liability on the "public" through government is what we agree is the worst case scenario (or dumping it onto someone comletely innocent).
Let me give you an example - if a logging company had a deranged CEO, who told a work-site manager tell the workers to stop cutting down trees and start cutting down residential houses, and the manager got the workers to do such, who is liable? Depending upon who knew what (such as whether the company owned the homes) and what individuals were expected to do via prior contracts, there can be a variety of liability assignments. The individual workers could be held liable, or the site manager, or the CEO, or the share-holders. While it would seem unlikely for the workers to be capably sued, perhaps they signed a contract stating that they would only cut down trees, or that any property he was asked to touch needed to be verified by him that the company owned it. It would likely seem that the CEO should be liable, but there is the case that the share-holders are at fault for hiring him.
Ultimately, contracting is about a lot more than simply what you sign. There are rational expectations, social conventions/implications...there are even contracts that legally mean nothing - having no party willing to enforce it.
As such, you can make this conversation as arbitrary as you want. It's ultimately how people feel and accordingly act that make anything happen. Laws are guidelines for action, but not guarantors. Liability should simply make sense, being placed upon those judged to be most responsible for bad decisions. If only such a concept applied to government...
Check my blog, if you're a loser
I agree with that view. I just think that people don't know that limited liability is not some absolute thing. Customary courts weigh and access the facts in any given situation since common law is a very decentralized form of addressing these issues. For instance if the CEO is deranged then the contract he signed with the shareholders is void under common law even if he goes crazy after he signed it, since he has lost his ability to perform the responisbilites implied in it.
meambobbo:Ultimately, contracting is about a lot more than simply what you sign. There are rational expectations, social conventions/implications
That is also right on. Contract law can only work in such a framework as that since how could you even begin to write down all the details and responsibilites in a contract. For instance there is always something implied but never expressed specifically in a contract. Also the contract should always follow the common law doctrine of "duty of care" to others, which of couse is something that courts have to reason upon. All in all, as you said, an absolutist approach is not likely to help.
Limited liability itself is only allowed in a specific context where people who are not directing the operation at hand are limited in their liability. It is an illegal contract and therefore void if I was actually managing the operation but wanted to pass the buck unto some one else. Contracts can not deny reason or reality if they are to be enforced.
liberty student: Brainpolice:Their legal status as a "person" is a state granted privilege. That's the point. Agreed. Brainpolice:This pro-corporatism is just conservative infiltration. Nothing about libertarianism or laissez-faire to my knowledge implies corporatism. There is nothing "marxist" about opposing corporatism. Do you actually know any conservatives?
Brainpolice:Their legal status as a "person" is a state granted privilege. That's the point.
Agreed.
Brainpolice:This pro-corporatism is just conservative infiltration. Nothing about libertarianism or laissez-faire to my knowledge implies corporatism. There is nothing "marxist" about opposing corporatism.
Do you actually know any conservatives?
Liberty student hit the nail on the head...do you understand conservatism?
Yes, I very well do understand conservatism in the broadest and historical sense as a defense of the status quo and a desire to concentrate power into the hands of the fewest people possible (as opposed to actually reducing or abolishing power). In the historical context of Europe, conservatism stands for monarchy, mercantalism and theocracy. Contemporary conservatism, even in America, is largely supportive of neo-mercantalism, militarism and theocracy. In either context, it has always been statist. Conservatism is the polar opposite of libertarianism, since it is the eternal enemy of evolution and progress. It is the will to stagnation. It is a nasty plague that devours the spirit of liberty, leaving nothing but power in its wake. The conservative is a reactionary to modernity and proposes to look back towards the past as a model.
*boinks the crunchy cons*
*boinks the neocons*
*boinks the paleocons*
*boinks the theocons*
*boinks the libercons*
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