Blaustein v. Standard Oil Company

• Decision Date: 28 October 1946
• Court: United States State Supreme Court of Delaware
• Parties: JACOB BLAUSTEIN, Plaintiff Below, Plaintiff in Error, v. STANDARD OIL COMPANY, a Corporation of the State of Indiana, Defendant Below, Defendant in Error. JACOB BLAUSTEIN, HENRIETTA BLAUSTEIN, FANNY B. THALHEIMER and RUTH B. ROSENBERG, Executors of Louis Blaustein, Deceased, Plaintiffs Below, Plaintiffs in Error, v. STANDARD OIL COMPANY, a Corporation of the State of Indiana, Defendant Below, Defendant in Error. AMERICAN TRADING AND PRODUCTION CORPORATION, a Corporation of the State of Maryland, Plaintiff Below, Plaintiff in Error, v. STANDARD OIL COMPANY, a Corporation of the State of Indiana, Defendant Below, Defendant in Error

49 A.2d 726

43 Del. 449

JACOB BLAUSTEIN, Plaintiff Below, Plaintiff in Error, v. STANDARD OIL COMPANY, a Corporation of the State of Indiana, Defendant Below, Defendant in Error.

JACOB BLAUSTEIN, HENRIETTA BLAUSTEIN, FANNY B. THALHEIMER and RUTH B. ROSENBERG, Executors of Louis Blaustein, Deceased, Plaintiffs Below, Plaintiffs in Error, v. STANDARD OIL COMPANY, a Corporation of the State of Indiana, Defendant Below, Defendant in Error.

AMERICAN TRADING AND PRODUCTION CORPORATION, a Corporation of the State of Maryland, Plaintiff Below, Plaintiff in Error, v. STANDARD OIL COMPANY, a Corporation of the State of Indiana, Defendant Below, Defendant in Error

Supreme Court of Delaware

October 28, 1946

Clarence A. Southerland, Caleb S. Layton and Aaron Finger Nathan L. Miller (of New York, New York), and Karl F Steinmann (of Baltimore, Maryland) for Plaintiffs Below Plaintiffs in Error.

Hugh M. Morris, Edwin D. Steel, Jr., and S. Samuel Arsht, and Ralph S. Harris, John R. McCullough and Frederick W. F. Lorenzen (of New York, New York), for Defendant Below, Defendant in Error.

HARRINGTON Ch., TERRY, CAREY and PEARSON, J. J., sitting.

OPINION

PEARSON, J.

Plaintiffs assert error in orders of the Superior Court in three actions allegedly for damages for breaches of covenants. Defendant is a corporation of another state and has not been served with process. Jurisdiction to proceed against it in these actions is predicated upon a foreign corporation attachment statute, Rev. Code of Del. 1935, Sec. 4631, and attachments of property of defendant purportedly made under authority of that act. The Superior Court held that the statute does not authorize a writ in any of plaintiffs' cases for the reason, briefly, that it requires as a condition of the issuance of a writ that a plaintiff file an affidavit that the defendant "is justly indebted to the said plaintiff in a sum of money, to be specified in said affidavit"; and because of the uncertainty in amount of any damages plaintiffs may have sustained, they cannot properly comply with this condition. Broadly stated, the principal question before us is whether the statute is applicable generally in actions ex contractu, or only in a limited class of such actions depending upon qualifications with respect to the damages claimed.

The first and pertinent paragraph of the statute reads thus:

"A writ of foreign attachment may be issued out of the Superior Court of this State against any corporation, aggregate or sole, not created by or existing under the laws of this State, upon affidavit made by the plaintiff or any other credible person, and filed with the Prothonotary of said Court, that the defendant is a corporation not created by, or existing under the laws of this State, and is justly indebted to the said plaintiff in a sum of money, to be specified in said affidavit, and which shall exceed fifty dollars."

Of the three cases before us, we shall first consider the case discussed in some detail in the opinion of the Court below. The plaintiff, Jacob Blaustein, filed an affidavit that defendant "is justly indebted to the plaintiff in a sum exceeding Fifty Dollars ($ 50.00) to wit, in the sum of Seven Million Seven Hundred Twenty Thousand Dollars ($ 7,720,000)." A writ of foreign attachment was issued and the return indicates that the sheriff attached certain property of the defendant. Before any declaration was filed, defendant's attorneys petitioned for leave to appear specially for defendant "solely for the purpose of: * * *

"Second. Applying for a rule against plaintiff to state its cause of action * * * in order that if leave to enter a special appearance is granted, and the rule issues and is made absolute, the Court may determine in limine and upon motion made by the attorneys aforesaid under special appearance, whether the cause of action relied upon by plaintiff will justify or support a writ of foreign attachment under 4631, Sec. 26, Chap. 126 of the Revised Code of Delaware, for the following reason:

"(1) If the covenants thereof relied upon are not for the payment of a liquidated sum, or are for an unliquidated sum the amount of which is not susceptible of ascertainment by some standard fixed by the contract itself, or are for an amount which cannot with propriety be averred in the affidavit and which must be altogether uncertain until the jury have ascertained it, the writ of foreign attachment is not authorized or supported by 4631 of the Revised Code of Delaware 1935, or other law of this State."

An order was entered on the petition "that permission be granted * * * the petitioners * * * to appear as requested therein."

Defendant moved to quash the writ, set aside the return and dissolve the attachment. The only reason assigned, with which we are here concerned, reads as follows:

"If plaintiff shall be ruled to state his cause of action, pursuant to the motion filed by defendant herein for that purpose, and it shall appear from said statement that the covenants relied upon are not for the payment of a liquidated sum, or are for an unliquidated sum the amount of which is not susceptible of ascertainment by some standard fixed by the contract itself, or are for an amount which cannot with propriety be averred in the affidavit and which must be altogether uncertain until the jury have ascertained it, the writ of foreign attachment is not authorized or supported by 4631 of the Revised Code of Delaware 1935, or other law of this State."

In addition to this motion, defendant applied for and obtained a rule against plaintiff to state his cause of action. Plaintiff then filed a declaration. After argument on defendant's motion, the court ordered the writ quashed and the attachment dissolved.

Plaintiff contends that the propriety or legality of the issuance of the attachment writ must be decided from the affidavit alone, without examining the declaration, by reason of Section 4607 of the Code. This section reads thus:

"The Superior Court, in term time, or any judge in vacation, upon the petition of any defendant or tenant whose property, rights or credits may be attached under any mesne process of attachment issued out of said court or by a justice of the peace, shall investigate the allegations contained in any affidavit required by law to be made and filed before the issuing of such process except such allegations as relate to the indebtedness of the defendants to the plaintiff, * * *."

This section provides a simple method whereby a defendant may promptly obtain a judicial inquiry into certain allegations of an attachment affidavit. It excepts from such inquiry the allegations relating to the "indebtedness." But we do not construe it as forbidding the court from quashing the attachment writ if, as defendant contends, only a limited class of contract claims may properly be asserted under Section 4631 of the Code, and if plaintiff's claim, even assuming it to be valid as he has stated it in his declaration, is not within such class. It seems to us that this is the basic ground which defendant asserted in support of his motion to quash, and upon which the decision of the court below was based. Plaintiff's construction of Section 4607 would impose a purposeless restriction upon a defendant's right to challenge the jurisdiction to proceed against him and is not required by the language of the section.

Plaintiff's declaration contains two counts. From them it appears that plaintiff and his father were for many years engaged in the business of marketing petroleum products. About 1932, a dispute arose between the Blausteins and defendant concerning transactions entered into by a corporation called Pan American Petroleum & Transport Company (Pan American). At that time, defendant owned about 96% of the capital stock of Pan American; and the Blausteins were interested in Pan American's activities because of a contract with it, or a subsidiary, for the supply of certain oil requirements.After negotiations, the Blausteins, defendant, Pan American, and two other companies entered into an agreement, not under seal, dated "as of January 1, 1933," for the purpose of effecting a reorganization of Pan American (including subsidiaries) and the two other companies. The present action is founded upon an alleged agreement of March, 1933, under the seal of defendant, which confirms portions of the January agreement. For a brief statement of the nature of plaintiff's claim, it will suffice to adopt the following summary from the opinion below:

"The first count of the declaration alleges that by contract the defendant bound itself to cause Pan American to secure sufficient crude oil reserve and to maintain a backlog of crude oil properties sufficient for its operation; that defendant failed to require Pan American to secure such backlog of crude oil properties, but on the contrary bought such properties itself, and sold such oil to Pan American knowing that Pan American requirements were 40,000 barrels of crude oil per day. The declaration then alleges that the value of the oil sold to Pan American, together with the value of the crude oil production remaining in the possession of the defendant, and after deducting the defendant's cost thereof, amounted to $ 255,239,800.62; the declaration then avers that as he owns 2.956% of the stock of Pan American, so he is injured, and has sustained damage to the extent of $ 7,546,078.20.

"The second count is based upon the alleged failure of the defendant to cause a refinery to be erected by a stipulated time, and having a capacity of 40,000 barrels per day. The count sets out that the delay in erecting the refinery and the necessity that Pan American obtain some of its requirements from another source (alleged to be a subsidiary of ...