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Sands v. Lefcourt Realty Corp.

Supreme Court of Delaware

October 14, 1955

Harry SANDS and Irene Sands, Appellants,
v.
LEFCOURT REALTY CORPORATION, a Delaware corporation, Appellee.

Suit in equity against a nonresident former director of plaintiff corporation and his wife for accounting of his alleged illegal profits arising out of corporate transactions. From a judgment of the Court of Chancery in and for New Castle County, 113 A.2d 428, denying defendants' motion for leave to enter special appearance and defend on merits with liability limited to value of shares of corporation's stock seized to compel defendants' appearance, they appealed. The Supreme Court, Southerland, C. J., held that the statute authorizing Chancery Court to compel nonresident defendant's appearance by seizure of his property does not permit special appearance by him to protect property seized and defend on merits without subjecting himself to liability for personal judgment.

Judgment affirmed.

[35 Del.Ch. 341] Appeal from the Court of Chancery in and for New Castle County denying defendants' motion for leave to enter a special appearance to defend on the merits. Affirmed.

Page 366

John J. Morris, Jr., of Morris, James, Hitchens & Williams, Wilmington, for appellants.

Richard F. Corroon, of Berl Potter & Anderson, Wilmington, for appellee.

SOUTHERLAND, C. J., and WOLCOTT and BRAMHALL, JJ., sitting.

SOUTHERLAND, Chief Justice.

This is a suit in equity by Lefcourt Realty Corporation against Harry Sands, a former director, and his wife. Lefcourt seeks an accounting for alleged illegal profits arising out of corporate transactions, and also other relief.

The Sands are residents of Florida. Shares of Lefcourt stock were seized to compel their appearance. They moved for leave to appear specially and defend on the merits with liability limited to the [35 Del.Ch. 342] value of the seized property. The Vice Chancellor denied the motion. Del.Ch., 113 A.2d 428. The Sands appeal.

The question presented is this:

Under the provisions of 10 Del.C. § 366(a), authorizing the Court of Chancery to seize property of a non-resident defendant to compel his appearance, may he appear specially to protect the property seized and defend on the merits, without subjecting himself to liability for a personal judgment?

At the time of the seizure, and at the time of the Vice Chancellor's decision, the statute referred to provided as follows:

‘ (a) If it appears in any complaint filed in the Court of Chancery that the defendant or any one or more of the defendants is a non-resident of the State of Delaware, the Court may make an order directing such non-resident defendant or defendants to appear by a day certain to be designated. Such order shall be served on such non-resident defendant or defendants by mail or otherwise, if practicable, and shall be published in such manner as the Court directs, not less than once a week for three consecutive weeks. The Court may compel the appearance of the defendant by the seizure of all or any part of his property, which property may be sold under the order of the Court to pay the demand of the plaintiff, if the defendant does not appear, or otherwise defaults. Such property shall remain subject to seizure and may be sold to satisfy any judgment entered in the cause, unless security sufficient to the Court is given to secure the release thereof.’

By amendment approved July 1, 1955, 50 Del.L.Ch. 379, the last sentence of the quoted section was stricken out ...


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