Vaughan and Sons, Inc. v. State

• Decision Date: 16 September 1987
• Docket Number: No. 339-83,339-83
• Citation: Vaughan and Sons, Inc. v. State, 737 S.W.2d 805 (Tex. Crim. App. 1987)
• Parties: VAUGHAN AND SONS, INC., Appellant, v. The STATE of Texas, Appellee.
• Court: Texas Court of Criminal Appeals

Page 805

737 S.W.2d 805

VAUGHAN AND SONS, INC., Appellant, v. The STATE of Texas, Appellee.

No. 339-83.

Court of Criminal Appeals of Texas En Banc.

Sept. 16, 1987.

Robert C. Bennett, Houston, for appellant.

John B. Holmes, Jr., Dist. Atty., Ray Elvin Speece, Asst. Dist. Atty., Houston, Robert Huttash, State's Atty., Austin, for the State.

Before the court en banc.

OPINION ON STATE'S PETITION FOR DISCRETIONARY REVIEW

ONION, Presiding Judge.

Appellant, Vaughan and Sons, Inc., a Texas corporation, was convicted by a jury of criminally negligent homicide. V.T.C.A., Penal Code, § 19.07. The information alleged that appellant, acting through two of its agents, caused the death of two individuals in a motor vehicle collision. See V.T.C.A., Penal Code, § 7.22(a)(1). Punishment was assessed by the trial court at a fine of $5,000.00. See V.T.C.A., Penal Code, § 12.51.

On appeal the appellant contended, inter alia, that the "penal code provisions for prosecution of corporations and other artificial legal entities do not extend to any type of criminal homicide, therefore the trial court erred in failing to grant appellant's motion to set aside the information."

The Court of Appeals agreed and reversed the conviction. Vaughan and Sons, Inc. v. State, 649 S.W.2d 677 (Tex.App.--Texarkana 1983). The Court of Appeals wrote in part:

"A superficial reading of the negligent homicide statute construed with the Penal Code definition of 'person' [§ 1.07(27) ] indicates that a corporation could indeed be found guilty of the crime charged. But the actual question before this court is whether a legislative intent plainly appears which includes corporations within the criminal field of negligent homicide by use of the term 'person.' "

After reviewing other statutes, etc., the Court of Appeals concluded:

"Therefore, without a stronger, clearer indication from the legislature that the policy for holding corporations criminally responsible for homicide has changed, we decline to so hold. We should make haste slowly when it is in the direction of holding either an individual or a corporation criminally liable for a crime, especially one so serious as homicide, when it is committed by someone other than the person charged."

Thus, the Court of Appeals ruled that even though the statutes so state, the Legislature could not have intended to include corporations within the class of culpable parties because corporations are unable to formulate "intent" in their "artificial and soulless" form. 649 S.W.2d at 678.

We granted the State's petition for discretionary review to determine the correctness of the holding of the Court of Appeals. ¹

At common law a corporation could not commit a crime. See generally 10 W. Fletcher, Cyclopedia of Corporations, § 4942, at 620 (1978); Henn Corporations, § 186 (1961); W. LaFave & A. Scott, Criminal Law, § 33 (1972). ² "This position was predicated on the rationale that a corporation had no mind and hence could not entertain the appropriate criminal intent required for all common law crimes. Also, the absence of physical body precluded imprisonment, the primary punishment available at common law. Illegal acts of a corporate agent were not imputed to the corporate entity because they were considered ultra vires and therefore without the authority of the corporation." Clark, Corporate Homicide: A New Assault on Corporate Decision Making, Notre Dame Lawyer, Vol. 54, pp. 911-912 (June 1979). See also Wharton's Criminal Law, 14th Ed., Vol. 2, § 111, pp. 80-81.

The rule that a corporation could not be tried for any criminal offense was once widely accepted, not just in Texas, but throughout the nation. Today, however, the general rule is that a corporation may be held liable for criminal acts performed by its agents acting on its behalf. See generally 18B Amer.Jur.2d, Corporations, §§ 2136 and 2137 (1985); 19 C.J.S., Corporations, § 1358, p. 1073. ³

Prior to the 1974 Penal Code and the conforming amendments thereto corporate criminal responsibility was recognized only to a very limited extent in Texas. Searcy and Patterson, Practice Commentary, V.T.C.A., Penal Code, § 7.22. Texas was then apparently the only state that did not provide for general criminal liability. See Hamilton, Corporate Criminal Liability in Texas, 47 Texas Law Rev. 60 (1968); Hamilton, Texas Business Organizations, § 239 (1973); Lebowitz, Recent Development in Texas Corporation Law--Part I, 28 Southwestern Law Journal 641, 662, n. 148 (1974). See also Hildebrand, Corporate Liability for Torts and Crime, 13 Texas Law Rev. 253, 275 (1935); Keeton & Searcy, A New Penal Code for Texas, 33 Tex.B.Journal 980, 985 (1970). "While there were a few statutes that imposed criminal liability in limited situations, mainly for pollution or willful violations of economic regulatory legislation, ⁴ even these were virtually negated by the absence of a procedure under which Texas corporations could be prosecuted." Lebowitz, supra, at p. 662. See also Practice Commentary to V.T.C.A., Penal Code, § 7.22, supra; Thompson v. Stauffer Chemical Co., 348 S.W.2d 274 (Tex.Civ.App.-Waco 1961) writ ref'd n.r.e.

Three earlier criminal cases left considerable doubt whether a corporation could be successfully prosecuted as a possible defendant. Guild v. State, 79 Tex.Cr.R. 603, 187 S.W. 215 (1916); Judge Lynch International Book and Publishing Co. v. State, 208 S.W. 526 (Tex.Cr.App.1919); Overt v. State, 260 S.W. 856, 859 (Tex.Cr.App.1924). Guild discussed the impossibility of punishing a corporation with imprisonment, ⁵ Judge Lynch International Book and Publishing Co. discussed the failure of the term "person" as used in the statute under which prosecution was brought to include corporations, ⁶ and Overt discussed the same matter as well as the imputing of intent, and the lack of procedure to bring corporations into court. ⁷

Thompson v. Stauffer Chemical Co., supra [348 S.W.2d 274 (Tex.Civ.App.-Waco 1961, writ ref'd n.r.e.], involved an appeal from a district court judgment holding void a judgment of a Justice of the Peace Court, and enjoining the Justice of the Peace from issuing execution thereon. A corporation was charged by a criminal complaint with permitting fumes and gases detrimental to health to escape its premises in violation of Article 695, V.A.P.C. (1925), which provided that the misdemeanor offense could be punishable by a fine not to exceed $100.00 upon conviction. The Justice of the Peace issued a civil citation and attached a copy of the criminal complaint thereto. It was executed upon the vice president and general manager of the corporation. When the corporation did not appear for trial, the State made out a prima facie case, and the Justice of the Peace entered a judgment of conviction reciting the corporation "appeared in absentia" and assessed a $100.00 fine. The corporation sought relief in district court and obtained a favorable ruling and an injunction. An appeal followed. The Court of Civil Appeals did not rest its judgment upon the ground that a corporation was not included within the pronoun "whoever" in Article 695, supra, but rested its decision on the following basis:

"It is our view that the matters of which appellant complains are matters which the Legislature will have to afford relief for, if any relief be afforded. There is no procedure in the Code of Criminal Procedure whereby a corporation as such, can be prosecuted for misdemeanor in Texas, and we cannot give our approval to the method employed. The Corporation was never arrested; nor entered an appearance; was tried and convicted 'in absentia;' and we think that such Justice of Peace Court judgment of conviction was void." (Emphasis supplied.)

The Texas Supreme Court refused the writ of error, "no reversible error." Thus there was no practical procedure for bringing a corporation into court for criminal prosecution.

Former Penal Code Article 22 did define "person," but it was held that the word used therein extended only to a corporation as the "person" or "party" who, or whose property was affected by the crime. Cochrain v. State, 248 S.W. 43 (Tex.Cr.App.1922). Further, most of the Penal Code statutes, in defining offenses, used the term "whoever" or "person" without any indication that corporations were to be included therein.

It is not difficult to see why it could be said that prior to the 1974 Penal Code "a corporation or a partnership could not be indicted or tried under the criminal laws of Texas." Tex.Jur.3d, Vol. 18, Criminal Law, § 161, p. 232. ⁸

In 1968 Professor Robert W. Hamilton's treatise, Corporate Criminal Liability in Texas, 47 Texas Law Review 60, was published. In it he reviewed the history of corporate criminal liability in Texas, or rather the lack of it and the steps necessary for criminal prosecution of corporations. In his advocacy of corporate criminal liability he offered in his treatise at pp. 77-85 proposed amendments to the Texas Penal Code which were made available to the State Bar Committee on the Revision of the Penal Code on which he served as a reporter. To overcome legal obstacles of the past Professor Hamilton advocated a definition of "person" used in various Penal Code statutes be broadened to embrace a corporation, that there be a corporate liability statute, procedural provisions for bringing or summoning corporations into court for criminal prosecution, and ample statutory authority for the imposition of fines upon conviction rather than the impossible imprisonment. It appears that said State Bar Committee and subsequently the Legislature addressed some of Professor Hamilton's concerns. See Anderson, Corporate Criminal Liability for Specific Intent Crimes and Offense of Criminal Negligence--The Direction of Texas Law, St. Mary's Law Journal, Vol. 15, p. 231 (1984).

With that background we turn to the 1974 Penal Code.

V.T.C.A., Penal Code, § 1.07(a), provides:

"(a) In this Code:

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"(17) 'Individual'...