stock certificate

In December 1911 a federal indictment containing nine counts was returned against the defendant in the District Court of the United States for the Western District of Missouri. The seventh count charged use of the mails to transport lottery coupons or tickets in violation of section 213 of the Criminal Code. The defendant was arrested without a warrant by a police officer at the Union Station in Kansas City, Missouri, where he was employed by an express company. On the same day other police officers went to the defendant's home at 1834 Penn Street, obtained the key from a neighbor, entered the house, searched the defendant's room, and seized papers and articles that were later turned over to the United States Marshal. Later the same day the Marshal, accompanied by police officers, returned to the house, was admitted by a boarder, searched the defendant's room, and removed letters and envelopes from a chiffonier drawer. Neither the police officers nor the Marshal possessed a search warrant. Before trial the defendant filed a verified petition seeking return of the seized property, asserting that the seizure violated the Fourth and Fifth Amendments. The district court ordered return of property it deemed not pertinent to the charge but retained the remainder, which the government stated would be used in evidence. After the jury was sworn the defendant renewed the petition, which the court again denied. At trial the defendant objected to introduction of the retained papers on Fourth and Fifth Amendment grounds, the objection was overruled, and the papers—including lottery tickets seized by the police and letters seized by the Marshal—were admitted into evidence. The defendant was convicted on the seventh count and sentenced to fine and imprisonment. He then prosecuted a writ of error to the Supreme Court of the United States, assigning as error the refusal to return the property and the admission of the seized papers at trial.

In 1907 the First Russian Insurance Co., organized under the laws of the former Russian Empire, opened a New York branch and deposited assets with the New York Superintendent of Insurance to secure claims arising from its New York business. In 1918 and 1919 the Soviet Government promulgated decrees that nationalized the insurance business, declared all property of Russian insurance companies to be state property wherever situated, and cancelled the companies' debts. The New York branch continued operations until 1925, when respondent, the New York Superintendent of Insurance acting as liquidator, took possession of its assets. All domestic creditors were paid in full, leaving a surplus exceeding one million dollars. In 1931 the New York Court of Appeals directed the liquidator to pay allowed claims of foreign creditors who had filed attachments and then to distribute any remaining balance to a quorum of the company's directors. On November 16, 1933, the United States recognized the Union of Soviet Socialist Republics and, as part of that recognition, received the Litvinov Assignment. The Soviet Government released and assigned to the United States all amounts due or that might become due from American nationals, including amounts due to the Soviet Government as successor to prior Russian governments or to the nationalized insurance companies. The United States first sued in federal district court to recover the surplus; that court action was stayed and the United States was remitted to the New York courts. Its motion to intervene in the ongoing state liquidation proceeding was denied. The United States then commenced the present action in the New York Supreme Court against the liquidator and certain policyholders and creditors, seeking a judgment that it was the sole owner of the surplus fund. In 1937 the Soviet Commissariat for Justice issued an official declaration stating that, by virtue of the November 28, 1918 decree, the funds and property of former insurance companies constitute the property of the State irrespective of whether the property was situated within the territorial limits of the R.S.F.S.R. or abroad. The New York courts dismissed the complaint on the authority of their earlier decision in the Moscow Fire Insurance case; the Appellate Division affirmed without opinion and the New York Court of Appeals affirmed per curiam.

On May 22, 1974, appellee Heitner, a nonresident of Delaware who owned one share of stock in the Greyhound Corporation, filed a shareholder's derivative suit in the Court of Chancery for New Castle County, Delaware. The complaint named as defendants Greyhound Corporation, its wholly owned subsidiary Greyhound Lines, Inc., and twenty-eight present or former officers and directors of one or both corporations. Heitner alleged that the individual defendants had violated their fiduciary duties by causing the corporations to engage in activities that resulted in a private antitrust judgment of over thirteen million dollars and a criminal contempt fine of six hundred thousand dollars, both arising from events in Oregon. The individual defendants resided primarily in Arizona and conducted their business there. Simultaneously with the complaint, Heitner filed a motion for sequestration of the Delaware property of the individual defendants pursuant to Del. Code Ann., Tit. 10, § 366. The Court of Chancery granted the motion the same day and appointed a sequestrator who seized approximately eighty-two thousand shares of Greyhound common stock belonging to nineteen defendants, along with options belonging to two others and certain debentures, warrants, and stock unit credits. The stock certificates were not physically present in Delaware, but Del. Code Ann., Tit. 8, § 169 deemed the situs of ownership of all stock in Delaware corporations to be in the state, allowing the sequestrator to place stop-transfer orders on the corporation's books. The value of the sequestered stock was approximately one point two million dollars. All twenty-eight defendants received notice of the suit by certified mail to their last known addresses and by publication in a New Castle County newspaper. The twenty-one defendants whose property had been seized entered special appearances and moved to quash service of process and vacate the sequestration order. They argued that the ex parte sequestration procedure violated due process and that they lacked sufficient contacts with Delaware to sustain jurisdiction. The Court of Chancery rejected these arguments in a letter opinion, and the Delaware Supreme Court affirmed the judgment in Greyhound Corp. v. Heitner, 361 A. 2d 225 (1976). The United States Supreme Court noted probable jurisdiction and heard argument on February 22, 1977. The individual defendants whose property was seized became the appellants before the Court. Greyhound Corporation and its subsidiary appeared in the action and moved to dismiss on the ground that the sequestration statute was unconstitutional. The sequestration order remained in effect pending resolution of the constitutional questions presented.

In December 1970, federal agents obtained a search warrant for respondent John Calandra's place of business, the Royal Machine & Tool Co. in Cleveland, Ohio, authorizing the seizure of bookmaking records and wagering paraphernalia in connection with an investigation of suspected illegal gambling operations. The supporting affidavit included information from confidential informants, physical surveillance by FBI agents, and court-authorized electronic surveillance. On December 15, 1970, the agents conducted a four-hour search of the two-story building, spending more than three hours in Calandra's office on the second floor. Although the search yielded no gambling paraphernalia, an agent discovered a card among promissory notes showing periodic payments by Dr. Walter Loveland to Calandra. Believing this to be a loansharking record related to an ongoing investigation of extortionate credit transactions under 18 U.S.C. §§ 892, 893, and 894, the agent seized the card along with company books and records, stock certificates, and address books. On March 1, 1971, a special grand jury was convened in the Northern District of Ohio to investigate possible loansharking activities. The grand jury issued a subpoena to Calandra to question him based on the seized evidence. Calandra appeared on August 17, 1971, but refused to testify, claiming his Fifth Amendment privilege against self-incrimination. The Government applied for transactional immunity under 18 U.S.C. § 2514, prompting Calandra to seek a postponement to prepare a suppression motion. Calandra moved under Federal Rule of Criminal Procedure 41(e) for suppression and return of the seized evidence, contending the affidavit was insufficient and the search exceeded the warrant's scope. Following a hearing on August 27, 1971, at which Calandra stipulated he would refuse to answer questions based on the materials, the District Court on October 1, 1971, ordered the evidence suppressed and returned and ruled that Calandra need not answer any grand jury questions based on the suppressed evidence. The Court of Appeals for the Sixth Circuit affirmed. The Supreme Court granted certiorari.