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Shaffer v. Heitner, 433 U.S. 186 (1977) p 82.

Subject:

in rem jurisdiction

Facts:

Procedure:

Heitner's cause of action was a "shareholder's derivative suit," meaning that it sought to force the individuals to pay the corporation damages they had allegedly caused it. Simultaneously Heitner filed a motion for an order of sequestration which the court granted. This Delaware procedure allowed for the seizure of D's property (stock holdings). Carried out by use of stop transfer orders placed on the company's books, which had an effect similar to the seizure of the stock. None of the stock certificates was present in Delaware, but the situs of the stock under Delaware law was deemed to be in Delaware because Greyhound was a Delaware corporation. D appeared specially for the purpose of moving to quash service and to vacate the sequestration order. The Delaware trial court rejected D's arguments that the sequestration violated due process. Delaware Supreme Court affirmed. The USSC reversed.

Issue:

Did the service and the sequestration order in Delaware violate D's right to due process?

Rule:

The minimum contacts analysis of International Shoe should be applied to jurisdiction over property.

Holding:

  1. When property is completely unrelated to the plaintiff's cause of action its presence alone will not suffice to support jurisdiction (overruled Harris v. Balk).
  2. presence of property in a state may bear on the existence of jurisdiction by providing contacts among the forum state, the defendant, and the litigation.
  3. Delaware's assertion of jurisdiction over appellants in this case is inconsistent with that constitutional limitation on state power.

Rationale:

If Delaware perceived its interest in securing jurisdiction over corporate fiduciaries we would expect it to have enacted a statute more clearly designed to protect that interest. Heitner fails to demonstrate that Delaware is a fair forum for this litigation. Appellants had no reason to expect to be haled before a Delaware court. Jurisdiction over a thing is like saying jurisdiction of person's interest in a thing. Therefore in personam and in rem should be viewed as analogous having the same requirements for jurisdiction. Appellants who were not required to acquire interest in Greyhound in order to hold their positions, did not by acquiring those interests surrender their right to be brought to judgement only in States with which they had had minimum contacts.

Policy/Notes:

quasi in rem jurisdiction usually based on attachment or seizure of property present in the jurisdiction, not on contacts between the defendant and the State.

Pennoyer rules generally favored defendants by making them harder to sue. Pennoyer sharply limited availability of in personam jurisdiction over defendants not residents in the forum state. Law of state court jurisdiction no longer stands securely on the foundation established in Pennoyer. Time is ripe to consider whether the standard of fairness and substantial justice set forth in International Shoe should be held to govern actions in rem as well as in personam.

Question in International Shoe was whether the corporation was subject to the judicial taxing jurisdiction of Washington.

A judgement in rem affects the interests of all persons in designated property. A judgement quasi in rem affects the interests of particular persons in designated property.

Harris v. Balk is over ruled.