Shaffer v. Heitner

Facts

Heitner (Plaintiff) owned one share of Greyhound (Defendant) stock.  Defendant had been subjected to a large antitrust judgment in Oregon.  Heitner (Plaintiff), a nonresident of Delaware, brought a derivative suit in Delaware, the state of Defendant’s incorporation.  Jurisdiction was based on sequestration of Defendant stock, which was deemed to be located within the state of incorporation.  The Delaware sequestration statute allowed property within the state to be seized ex parte to compel the owner to submit to the in personam jurisdiction of the court.  None of the stock was actually in Delaware, but a freeze order was placed on the corporate books.  Defendant made a special appearance to challenge the jurisdiction of the court to hear the matter.  Defendant argued that the sequestration statute was unconstitutional under the line of cases beginning with Sniadach, 395 U.S. 337 (1969).  Defendant also argued that there were insufficient contacts with Delaware to justify an exercise of jurisdiction.  The Delaware courts found that the sequestration statute was valid as it was not a per se seizure of the property and was only invoked to compel out-of-state residents to defend actions within the state. Little, if any, consideration was given to the “contact” argument based on a finding that the presence of stock within the state conferred quasi in rem jurisdiction.