Heitner, a nonresident of Delaware, owns one share of stock in Greyhound Corp, which has its principal place of business in Phoenix. Heitner files shareholder’s derivative suit in Delaware against Greyhound Lines Inc., and Greyhound Corp, and 28 present or former officers or directors of one or the other corporations. He files order of sequestration of Delaware property of individual defendants. Defendants are non-residents, but H sues for stock, rights, debts, or credits due or accrued. 82,000 shares were seized as a result, by placing “stop transfers.” All 28 notified by certified mail.
ourt of Chancery rejected defendant’s arguments. Court argues that sequestration is used to compel personal appearance of a nonresident defendant. If the defendant enters a general appearance, sequested property is released.
Delaware Supreme Court affirms.
Can a plaintiff assert quasi-in-rem jurisdiction over a D’s property that is unrelated to the suit and causes violates “traditional notions of fair play and substantial justice.”
No. Now apply International Shoe Test.
“Traditional notions of fair play and substantial justice” that govern a state’s power to adjudicate in personam should also govern its power to adjudicate personal rights to property located in the state. Property cannot be subjected to a court’s judgment unless reasonable and appropriate efforts have been made to give the property owners actual notice of the action. “In order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising “jurisdiction over the interests of persons in a thing.” The standard for determining whether an exercise of jurisdiction over the interests of persons is consistent with the Due Process clause is the minimum-contacts standard elucidated in International Shoe.
Delaware defendants’ property is not the subject of litigation, nor the underlying cause of action related to the property. Therefore, the contacts are not sufficient to support jurisdiction.