Concept
Rejected Justifications
In rem and quasi in rem jurisdiction
Rejected Justifications
Shaffer v. Heitner retired a rule that American courts had accepted for at least a century, and it did so only after asking whether the old rule did any work the new standard could not. The conclusion was that every assertion of state-court jurisdiction must be evaluated under International Shoe and its progeny, which ask whether the defendant's contacts with the forum make suit there consistent with “traditional notions of fair play and substantial justice.”1 Defenders of property-based jurisdiction offered three answers: that it stops debtors from evading their obligations, that it gives the plaintiff certainty and a guaranteed forum, and that its long history validates it.
Each answer rests on a real value: protecting creditors, ease of administration, and continuity with settled practice. Each also benefits the plaintiff, the court, or the law's stability, and none of them supplies what the contacts standard requires, which is a relationship among the defendant, the forum, and the litigation. A value that favors the plaintiff can leave the defendant with no tie to the state asserting power over them. The subsections below take the three answers in order, and each ends with the point at which the Court found it insufficient.
Preventing Asset Evasion
The first defense speaks for the creditor. A debtor, in the words of a Restatement comment, “should not be able to avoid payment of his obligations by the expedient of removing his assets to a place where he is not subject to an in personam suit.”2 A debtor who moves a bank balance or a block of securities to a state with no tie to the creditor seems to have put the money out of reach, and a rule that lets the creditor sue wherever the assets landed seems to close that escape. The Court found the argument inadequate for three reasons, which go to its fit, its scope, and its premise.
On fit, the rationale describes a debtor who relocates assets to dodge a suit, but the rule it is offered to defend asks only whether property sits in the state. That rule applies in the same way to an owner who relocated nothing. The Court said as much: the justification does not explain why jurisdiction should be recognized without regard to whether the property is present because of an effort to avoid the owner's obligations.3 Delaware's statute shows the mismatch. Unlike the 49 other states, Delaware treated the place of incorporation as the situs of stock, even though both the owner and the custodian of the shares were elsewhere.4 Stock whose owner had never sent it anywhere was thus “in” Delaware by operation of law, and the rule reached that owner as readily as it would reach a debtor in flight.
On scope, the harm the rationale identifies, even for a genuine evader, is the loss of the creditor's ability to collect. Holding an asset in place protects that ability without asking the forum to decide anything about the debt. Deciding the claim is a different act, because it settles whether the defendant is liable at all, and the evasion concern gives the property's state no reason to claim that power. The Court therefore said the rationale does not support jurisdiction to adjudicate the underlying claim. At most, it suggests that a state where property is located may attach that property, by proper procedures, as security for a judgment being sought in a forum where the litigation can be maintained consistently with International Shoe.5 On that view the property's state is a holding place for assets while a proper forum does the adjudicating.
On premise, the picture of a debtor who escapes by moving assets assumes a creditor with nowhere else to turn. The Court knew of nothing to justify that assumption, because the Full Faith and Credit Clause makes the valid in personam judgment of one state enforceable in all the others.6 The creditor's path has two steps. The creditor sues where the debtor has the contacts International Shoe requires, obtains a judgment, and then enforces it in the state where the assets lie. The debtor gains nothing by the move so long as some proper forum exists. A footnote adds that the role of in rem jurisdiction in preventing evasion, like its usefulness in softening the limits Pennoyer placed on in personam jurisdiction, may once have been more significant.7 That fits the history traced earlier in this chapter. Attached property was often the only thing a creditor could reach when a defendant who left the state could not be sued personally, and the need for attachment shrank once International Shoe widened personal jurisdiction.
The question to ask when a stem says the defendant moved assets to frustrate collection is whether the plaintiff already holds a judgment. Without one, the evasion argument cannot support adjudicating the claim.
The same account looks different once a court with proper jurisdiction has established the debt.
The Court explained in a footnote that once a court of competent jurisdiction has determined that the defendant is a debtor of the plaintiff, there would seem to be no unfairness in allowing an action to realize on that debt in a state where the defendant has property, whether or not that state would have had jurisdiction to determine the debt as an original matter.8 A forum with power to answer the liability question has answered it, and only collection remains, which is the concern the evasion rationale had all along. A later section on enforcing existing judgments takes up that surviving use.
Students tend to err in one of two opposite directions. One treats the debtor's motive as if it supplied the missing contact. It cannot, because the jurisdictional question looks to the relationship among the defendant, the forum, and the litigation, and a transfer made to frustrate collection creates no tie between the forum and the claim. The other reads Shaffer as a ban on attachment. The Court left room for the property's state to attach assets as security for a judgment sought in a proper forum and to entertain an action collecting on a debt already established.9
Certainty and a Guaranteed Forum
The second defense concerns convenience and has two parts. It suggests that jurisdiction based on property avoids the uncertainty inherent in the International Shoe standard, and that it assures the plaintiff of a forum.11 The first part has obvious appeal. A property rule asks a question with a short factual answer, whether the asset lay in the state when suit began. The contacts standard asks about the character of the defendant's activity, its relation to the claim, and the fairness of suit, and none of that can be looked up in a registry. A plaintiff who files under the contacts standard may spend money litigating jurisdiction and still lose the forum. The second part adds that a defendant with assets anywhere can be sued where they sit, so the plaintiff is never left without a court.
The Court answered in two sentences, and each does separate work. The first is that the fairness standard of International Shoe can be easily applied in the vast majority of cases.12 That attacks the premise: most disputes sit clearly at one end of the contacts inquiry, with a defendant whose continuing forum activity produced the claim at one end and a defendant with no tie to the state at the other. The uncertainty the property rule promises to remove is confined to a minority of cases, and every standard is uncertain at its margins. The second sentence addresses those marginal cases. When jurisdiction under International Shoe is unclear, the cost of simplifying the litigation by avoiding the jurisdictional question may be the sacrifice of “fair play and substantial justice,” and the Court called that cost too high.13
A rule that looks only to where property sits resolves a doubtful case by declining to ask what the Due Process Clause asks, which is whether the defendant has such ties to the forum that suit there is fair. The savings go to the plaintiff and the court, and the loss falls on the defendant, who may be sued in a state with no connection to the claim or to the defendant's own conduct. A defendant can plan around a rule that turns on the defendant's own dealings with a state. A rule that turns on where a statute places an asset leaves the defendant no such control, as Delaware's stock-situs rule did when it put shares in Delaware although their owner and custodian were elsewhere.14
The guaranteed-forum half of the argument matters most to a plaintiff who would otherwise have no court, and the Shaffer plaintiff was not in that position. The Court said in a footnote that its case did not raise, and it therefore did not consider, whether the presence of a defendant's property in a state is a sufficient basis for jurisdiction when no other forum is available to the plaintiff.15 The contacts framework also gives the plaintiff's situation some weight, because the factors a court weighs in judging fairness include whether an alternative forum exists.16 A plaintiff with a fair forum available gains nothing from a rule that adds an unfair one.
The reserved question is easiest to see on facts the Court deliberately left out of the case.
The usual answer to a plaintiff who invokes the guaranteed-forum argument is that a proper forum exists, and a judgment from it can be enforced in State Z under the Full Faith and Credit Clause. That answer is unavailable here because no proper forum exists. The Court left this setting open, which is why the guaranteed-forum argument still has something to say there and nowhere else, and a later section returns to it.
A stem that says the plaintiff attached the defendant's property because it was the only thing within reach calls for a short analysis. First ask whether the plaintiff could sue elsewhere consistently with International Shoe. If so, the argument for a sure forum fails. The argument for certainty fails in any event, because a simple rule cannot justify skipping the fairness question.
Historical Pedigree
The third defense is age. The Court conceded that history counts, noting that although the theory that territorial power is both essential to and sufficient for jurisdiction had been undermined, it had never held that the presence of property in a state fails to confer jurisdiction over the owner's interest in it.19 The history, it said, must be considered as supporting the proposition that jurisdiction based solely on the presence of property satisfies due process, but “it is not decisive.”20
Age cannot settle the question because of what age proves. A rule applied for generations shows that those who applied it found it acceptable, which is evidence that it was fair when they used it, but it says nothing about whether the reason behind the rule still holds. The Court put the point in terms of the constitutional standard itself: “traditional notions of fair play and substantial justice” can be as readily offended by perpetuating ancient forms that are no longer justified as by adopting new procedures inconsistent with the basic values of the constitutional heritage.21 Property-only jurisdiction fit that description. What remained of its justification was the fiction that an assertion of jurisdiction over property is anything but an assertion of jurisdiction over its owner, which the Court called an ancient form without substantial modern justification, and whose continued acceptance would serve only to allow state-court jurisdiction that is fundamentally unfair to the defendant.22
Shaffer itself shows the principle at work. The quasi in rem rule had been dutifully accepted by American courts for at least a century when the Court examined it anew, and that record did not spare it.23 The Delaware statute at issue was not even a widely shared practice, since Delaware alone treated the place of incorporation as the situs of stock.24 Age told the Court nothing about whether Delaware had any tie to the defendants or to the dispute.
Pedigree can still carry weight, as Burnham v. Superior Court shows. A plurality there upheld jurisdiction over a nonresident personally served with process while voluntarily present in California, reasoning that in-state service is one of the continuing traditions of the legal system that define due process.25 Burnham receives full treatment later in this chapter and appears here only to mark the edge of what Shaffer said about history. The plurality said its holding did not contradict Shaffer, and it described the difference in method candidly: it conducted no independent inquiry into the fairness of in-state service, because for its purposes the rule's validation is its pedigree, while Shaffer had conducted such an inquiry.26 It also read Shaffer as addressed to absent defendants whose contact with the forum was property ownership, and not as treating physically present defendants the same way.27
What separates the two decisions is whether the old practice still has a footing in the present. The plurality suggested that Shaffer's independent inquiry might be sustained when only a very small minority of states perpetuate an ancient form, and it added that where a principle is both firmly approved by tradition and still favored, it could imagine no standard by which to call the principle no longer justified.28 Justice Brennan, concurring only in the judgment, agreed that history is an important factor but could not agree that it is the only one, and he would have examined the fairness of in-state service independently.29 Both opinions give history a role. They disagree over whether history can end the inquiry.
A stem that defends an attachment by pointing to how long the practice has existed hands you only half an argument. The history supports the proposition that property alone satisfies due process, so the next question is whether the property relates to the claim or the defendant has other contacts, because age cannot replace the International Shoe inquiry. The opposite mistake reads Shaffer's sweeping sentence, that all assertions of state-court jurisdiction must be evaluated under International Shoe, as stripping tradition of every role.30 The Burnham plurality read that sentence narrowly, and the concurrence kept tradition as a relevant factor.31