Shaffer v. Heitner

Facts

Plaintiff, a stockholder for Greyhound Corp., a company incorporated in Delaware with its principal place of business in Arizona, sued Greyhound Corp., Greyhound Lines, Inc., (a subsidiary of Greyhound Corp.) and present and former officers of the two companies for violating duties to Greyhound Corp. by causing it to be liable for damages in an antitrust suit and a fine in a criminal contempt action in Oregon. Plaintiff filed a motion for sequestration of the officers’ stock. Under a Delaware statute, Delaware is the situs of all stock in Delaware corporations. The stock was seized. Defendants were notified by certified mail of the sequestration and notice was published in a Delaware newspaper. Defendants entered a special appearance so they could move to quash service of process and vacate the sequestration order. Defendant argued that the order violated due process and therefore the property could not be attached in Delaware. In addition, Defendants argued that they did not have the minimum contacts with Delaware required to establish jurisdiction under International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). In addition, Defendants argued that the sequestration procedures were inconsistent with the Sniadach cases (see Sniadach v. Family Finance Corp., 395 U.S. 337, 89 S.Ct. 1820, 23 L.Ed.2d 349 (1969)). The Court of Chancery found for Plaintiff and the Supreme Court of Delaware affirmed the Court of Chancery. The Supreme Court of Delaware reasoned that the Sniadach cases involved default judgments and not compelling a party to appear. This court furthered reasoned that sequestration procedures help to adjudicate claims of mismanagement against Delaware companies, and do not cause permanent deprivation of property to their shareholders. Defendants appealed.