Shaffer v. Heitner (1977) (in rem Greyhound action sequestering property)

a.       Facts- Δ is Greyhound Corp and some of its officers, while Π is a shareholder of Greyhound Corp. Π sued Δ for causing it to be liable for an action in Oregon. Π filed for motion to sequester Δ’s (officer’s) property, which are stock shares and options. Δs argued that minimum contacts, according to International Shoe were not met, and the property cannot be attached to the suit (because it has nothing to do with the suit).

b.      Procedural History- Del. Ct of Chancery found for Π, Del. Sup Ct affirmed. U.S. Sup Ct reversed.

c.       Issue- Whether a Δ needs to have minimum contacts with a forum State, as in International Shoe, for that State to exercise in rem Jx.

                                                              i.      And if so, must the contact with the forum State be related to the cause of action?

d.      Holding- Yes, a Δ must have minimum contacts with a forum State for that State to exercise in rem Jx over the Δ. Further, the cause of action must be related to the contact with the forum State.

                                                              i.      Concurrence: Stevens, J.- Majority should not eliminate in rem (where property is only contact with forum State)

                                                            ii.      Concur./Dissent: Brennan, J.- Officers have “purposefully availed” themselves of Del. laws. Del. has interests in protecting its corps from suits by non-resident shareholders. Δs benefitted from incorporation in Del.

e.       Rule- When the only contact a Δ has with the forum State is owning property within that State, the forum State cannot exercise personal Jx unless the contacts satisfy International Shoe (purposeful availment).

f.       Rationale-

                                                              i.      In rem is not a proceeding against a property, it is a proceeding against a person’s interest in that property.

                                                            ii.      Having property in a State does NOT give the State the power to exercise Jx over claims not related to the property---the person must also pass the International Shoe test

                                                          iii.      If it is unconstitutional to exercise Jx of a person directly, then it is unconstitutional to exercise Jx indirectly

g.      Notes-

                                                              i.      It is unlikely for a Ct to exercise Jx over a Δ whose only contact with the forum State is owning property. Even if the property is connected to the suit, International Shoe minimum standards must still be satisfied.

                                                            ii.      Del.’s sequestration statute is meant to “compel foreign Δs to answer actions in Del.”

                                                          iii.      The stock was not the subject matter of the case, the fiduciary breach was the subject matter (Case is NOT about property)

                                                          iv.      It’s quasi in rem to compel the Δs to answer in Del.

                                                            v.      Two types of quasi in rem

1.      Type I: Π is seeking to secure a pre-existing claim in the subject property; and to quiet all claims to said property

2.      Type II: To use the property to enforce a judgment

                                                          vi.      MAIN POINT: International Shoe (minimum contacts) must still be applied to in rem and quasi in rem actions

1.      If you have property in a State, there are minimum contacts that subject you to the Jx of that State

                                                        vii.      We cannot do away with quasi in rem (but check to make sure that “quasi in rem” is still around)