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Kaiser-Frazer Corp. v. Eaton

Superior Court of Delaware, New Castle County

January 3, 1952

Kaiser-Frazer Corp.
v.
Eaton

Page 753

[46 Del. 510] S. Samuel Arsht (of Morris, Steel, Nichols & Arsht), of Wilmington, for plaintiff.

William Prickett, of Wilmington, appearing specially for defendant William R. Daley.

John J. Morris, Jr. (of Hering, Morris, James & Hitchens), of Wilmington, appearing specially for defendant Cyrus S. Eaton.

Page 754

[46 Del. 511] HERRMANN, Judge.

The pending motions present two ultimate questions for decision:

1. Where there is a valid attachment of some property of the defendant in an action begun by writ of foreign attachment, will the effectiveness of a garnishment of other property, rights or credits of the defendant be determined upon motion made under special appearance for the purpose of challenging the jurisdiction of the Court?

2. In an action commenced by writ of foreign attachment, may a defendant be permitted to enter a special appearance for the purpose of defending the action on its merits with liability limited to the value of property of the defendant validly attached or garnished?

The plaintiff is a corporation of the State of Nevada. The defendants reside in Ohio. On August 1, 1951, the plaintiff filed a complaint asserting an action in tort against the defendants. Simultaneously, the plaintiff filed the affidavit required by the foreign attachment statute, [1] together with a praecipe requesting the issuance of a writ of foreign attachment. The writ was issued on August 1, 1951 and was served by the Sheriff upon Otis & Co., a Delaware corporation. On August 2, 1951, pursuant to 1935 Code 4633, the plaintiff's attachment bond was approved by the [46 Del. 512] Court and filed. The Sheriff's return states that on August 1, 1951, pursuant to the writ, he attached all the shares of stock of Otis & Co. owned or held by the defendants. The return also states that the Sheriff summoned Otis & Co., as garnishee of the defendants, to appear and answer as commanded by the writ. There was attached to the return, and made a part thereof, the certificate of the resident agent of Otis & Co. showing that, as of the date of the attachment, the defendant Eaton held or owned 1,180 shares of the common stock of that corporation, and that the defendant Daley held or owned 1,100 shares of that stock.

On August 21, 1951, Otis & Co. appeared pursuant to the command of the writ of foreign attachment served upon it as garnishee of the defendants. The plaintiff elected [2] to take the garnishee's special declaration which asserted, in substance, that as of August 16, 1951, (1) Otis & Co. was indebted to the defendant Eaton in the sum of $79,145.02 and to the defendant Daley in the sum of $52,878.37; and (2) Otis & Co. was obligated to the defendant Eaton in the sum of $20,450 and to the defendant Daley in the sum of $600, these obligations being represented by notes due on January 1, 1952; and (3) pursuant to certain subordination agreements which expired on December 31, 1951, the defendant Eaton had deposited with Otis & Co. $893,814.10 in cash, together with certain securities, and the defendant Daley had deposited $601,411.89 in cash, together with

Page 755

[3]

Thereafter, William Prickett, Esquire, and John J. Morris, Jr., Esquire, filed applications for leave to appear specially for the defendants for the purpose of challenging the jurisdiction of this Court on the ground that the writ, the return, and the attachment or garnishment were insufficient and ineffective. Simultaneously, alternative motions were made on behalf of the defendants for leave to appear specially to defend the action on its merits with liability limited to the value of property of the defendants validly attached or garnished. Under special [46 Del. 514] appearances for which leave was granted, motions have been filed to quash the writ, set aside the Sheriff's return, and dissolve the garnishment or attachment. Affidavits have been filed in support of those motions.

I shall consider the last-mentioned motions first. It appears, in the final analysis, that no question is raised by these motions regarding the regularity of the writ or of the return. It appears also that the validity of the attachment of the defendants' stock in Otis & Co. is conceded. It is manifest, therefore, that the writ may not be quashed, the return may not be set aside, and the attachment may not be dissolved. In an action begun by writ of foreign attachment, an attachment, valid as to some property of the defendant, will not be dissolved, either in whole or in part, upon motion of this nature. S. Catanzaro & Sons, Inc., v. Brown, 278 Pa. 548, 123 A. 491; McCloskey v. Northdale Woolen Mills, 296 Pa. 265, 145 A. 846.

The motions made on behalf of the defendants are directed solely to the question of the effectiveness of the garnishment of property, rights and credits of the defendants in the hands of Otis & Co. as garnishee. The contentions made on behalf of the defendants may be summarized as follows:

1. The garnishment was wholly ineffective because: (a) The order of the Reorganization Court reprives this Court of jurisdiction over property, rights and credits in the possession of Otis & Co., as

Page 756

garnishee; (b) the garnishee's obligations and indebtedness to the defendants were not to be performed or paid in Delaware; and (c) the garnishee was not subject to garnishment because it was not doing business in Delaware.

[46 Del. 515] 2. The garnishment was partially ineffective because certain property, rights and credits: (a) Were not within the State of Delaware; (b) were not yet due; and (c) were conditional.

These contentions are based upon the special declaration of the garnishee, as supplemented, and upon affidavits filed in support of the motions made on behalf of the defendants.

It is clear from the foregoing statement of contentions that the moving parties are now raising this question: Should the garnishee be discharged and, if not, to what extent should it be charged? Otherwise stated, the question now being raised on behalf of the defendants is whether the plaintiff may have a judgment against the garnishee and, if so, the extent of such judgment. These are not proper questions for determination at this stage of this case. The only question properly before me at this time is whether this Court has jurisdiction in the action begun by the writ of foreign attachment [4].

Jurisdiction in a case of this kind is acquired when the plaintiff files a proper affidavit and bond, when the writ is properly issued and the return is properly made, and when property of the nonresident defendant is properly attached or garnished within the territorial limits of the jurisdiction of this Court. Woolley, Del.Pract., ยง 1268, et seq. No irregularity has been shown as to the affidavit, bond, writ or return. The validity of the attachment of the defendants' stock in Otis & Co. is conceded. There are present here a plaintiff, a cause of action, a res and ...


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