Shaffer v. Heitner

433 U.S. 186, 97 S. Ct. 2569 (1977)

 

RULE:

Whether due process is satisfied must depend rather upon the quality and nature of the activity in relation to the fair and orderly administration of the laws which it was the purpose of the due process clause to insure. That clause does not contemplate that a state may make binding a judgment in personam against an individual or corporate defendant with which the state has no contacts, ties, or relations. 

FACTS:

A nonresident of Delaware, who owned stock in a corporation which was incorporated in Delaware but which maintained its principal office in Arizona, brought a shareholder's derivative action in the Court of Chancery for New Castle County, Delaware, naming as defendants the corporation, a wholly owned subsidiary of the corporation, and 28 present or former officers of one or both corporations. Pursuant to the plaintiff's motion under 10 Del C 366, the court sequestered certain property, primarily stock, of a number of the nonresident individual defendants. The defendants contended, inter alia, that they did not have sufficient contacts with Delaware to sustain the jurisdiction of that state's courts, but the Court of Chancery ruled that the situs of the stock, which was by Delaware statute considered to be within that state, provided a sufficient basis for the exercise of quasi in rem jurisdiction by a Delaware Court. On appeal, the Delaware Supreme Court affirmed, holding that the minimum contacts rule was not applicable since the jurisdiction in the instant case was quasi in rem and founded on the presence of stock in the state.

ISSUE:

Must a nonresident have minimum contacts with the forum state in order for the state to exercise in rem jurisdiction?

ANSWER:

Yes.

CONCLUSION:

The Court held that (1) all assertions of state jurisdiction, including in rem and quasi in rem actions, must be evaluated according to the minimum contacts standard, and (2) neither the presence of the nonresident defendants' stock in Delaware nor the fact that the nonresident defendants were officers of a Delaware chartered corporation, provided the requisite contacts to establish the jurisdiction of Delaware courts.

In support of its ruling, the court held that the minimum contacts test of International Shoe should have been applied to assertions of in rem as well as in personam jurisdiction. The court noted that appellant's seized property did not have sufficient contacts with the state to support Delaware's assertion of jurisdiction over appellants. The court further held that appellants had neither purposefully availed themselves of the privilege of conducting activities within the state, nor had any reason to expect to be brought before a Delaware court.

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