Note by Patrick Johnson, Jr.
A nonresident shareholder of a Delaware corporation filed a shareholder's derivative suit against current and prior officers and directors of the corporation and its subsidiary alleging that the defendants had breached their fiduciary obligations to the corporation. In order to obtain jurisdiction over the nonresident defendants, plaintiff moved for an order of sequestration of defendants' Delaware property pursuant to Delaware's sequestration statute. After the order was granted, defendants entered a special appearance to quash service of process and to vacate the sequestration order, contending that the statute as applied violated the due process clause of the fourteenth amendment. The Court of Chancery found that the Delaware situs of defendants' property provided a sufficient basis for the exercise of quasi in rem jurisdiction by a Delaware court, and the Supreme Court of Delaware affirmed. The United States Supreme Court reversed and held that Delaware's assertion of jurisdiction over defendants, based solely on the presence of their property in Delaware, violated the due process clause of the fourteenth amendment. Shaffer v. Heitner, 97 S. Ct. 2569 (1977).
About the Author
Patrick Johnson, Jr.
Citation
52 Tul. L. Rev. 171 (1977)