Delaware – General Corporation Law – Suits Against Corporations, Directors, Officers or Stockholders

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§ 321. | § 322. | § 323. | § 324. | § 325. | § 326. | § 327. | § 328. | § 329. | § 330.

Corporations

CHAPTER 1. GENERAL CORPORATION LAW

Subchapter XIII. Suits Against Corporations, Directors, Officers or Stockholders

§ 321. Service of process on corporations.

(a) Service of legal process upon any
corporation of this State shall be made by delivering a copy personally
to any officer or director of the corporation in this State, or the
registered agent of the corporation in this State, or by leaving it at
the dwelling house or usual place of abode in this State of any
officer, director or registered agent (if the registered agent be an
individual), or at the registered office or other place of business of
the corporation in this State. If the registered agent be a
corporation, service of process upon it as such agent may be made by
serving, in this State, a copy thereof on the president,
vice-president, secretary, assistant secretary or any director of the
corporate registered agent. Service by copy left at the dwelling house
or usual place of abode of any officer, director or registered agent,
or at the registered office or other place of business of the
corporation in this State, to be effective must be delivered thereat at
least 6 days before the return date of the process, and in the presence
of an adult person, and the officer serving the process shall
distinctly state the manner of service in such person’s return thereto.
Process returnable forthwith must be delivered personally to the
officer, director or registered agent.

(b) In case the officer whose duty it is
to serve legal process cannot by due diligence serve the process in any
manner provided for by subsection (a) of this section, it shall be
lawful to serve the process against the corporation upon the Secretary
of State, and such service shall be as effectual for all intents and
purposes as if made in any of the ways provided for in subsection (a)
hereof. In the event that service is effected through the Secretary of
State in accordance with this subsection, the Secretary of State shall
forthwith notify the corporation by letter, certified mail, return
receipt requested, directed to the corporation at its principal place
of business as it appears on the records relating to such corporation
on file with the Secretary of State or, if no such address appears, at
its last registered office. Such letter shall enclose a copy of the
process and any other papers served on the Secretary of State pursuant
to this subsection. It shall be the duty of the plaintiff in the event
of such service to serve process and any other papers in duplicate, to
notify the Secretary of State that service is being effected pursuant
to this subsection, and to pay the Secretary of State the sum of $50
for the use of the State, which sum shall be taxed as part of the costs
in the proceeding if the plaintiff shall prevail therein. The Secretary
of State shall maintain an alphabetical record of any such service
setting forth the name of the plaintiff and defendant, the title,
docket number and nature of the proceeding in which process has been
served upon the Secretary of State, the fact that service has been
effected pursuant to this subsection, the return date thereof, and the
day and hour when the service was made. The Secretary of State shall
not be required to retain such information for a period longer than 5
years from receipt of the service of process.

(c) Service upon corporations may also be
made in accordance with § 3111 of Title 10 or any other statute or rule
of court. (8 Del. C. 1953, § 321; 56 Del. Laws, c. 50; 64 Del. Laws, c.
112, § 57; 67 Del. Laws, c. 190, § 7; 71 Del. Laws, c. 339, §§ 65, 66.)

§ 322. Failure of corporation to obey order of court; appointment of receiver.

Whenever any corporation shall refuse,
fail or neglect to obey any order or decree of any court of this State
within the time fixed by the court for its observance, such refusal,
failure or neglect shall be a sufficient ground for the appointment of
a receiver of the corporation by the Court of Chancery. If the
corporation be a foreign corporation, such refusal, failure or neglect
shall be a sufficient ground for the appointment of a receiver of the
assets of the corporation within this State. (8 Del. C. 1953, § 322; 56
Del. Laws, c. 50.)

§ 323. Failure of corporation to obey writ of mandamus; quo warranto proceedings for forfeiture of charter.

If any corporation fails to obey the
mandate of any peremptory writ of mandamus issued by a court of
competent jurisdiction of this State for a period of 30 days after the
serving of the writ upon the corporation in any manner as provided by
the laws of this State for the service of writs, any party in interest
in the proceeding in which the writ of mandamus issued may file a
statement of such fact prepared by such party or such party’s attorney
with the Attorney General of this State, and it shall thereupon be the
duty of the Attorney General to forthwith commence proceedings of quo
warranto against the corporation in a court of competent jurisdiction,
and the court, upon competent proof of such state of facts and proper
proceedings had in such proceeding in quo warranto, shall decree the
charter of the corporation forfeited. (8 Del. C. 1953, § 323; 56 Del.
Laws, c. 50; 71 Del. Laws, c. 339, § 67.)

§ 324. Attachment of shares of stock or any option, right or interest therein; procedure; sale; title upon sale; proceeds.

(a) The shares of any person in any
corporation with all the rights thereto belonging, or any person’s
option to acquire the shares, or such person’s right or interest in the
shares, may be attached under this section for debt, or other demands,
if such person appears on the books of the corporation to hold or own
such shares, option, right or interest. So many of the shares, or so
much of the option, right or interest therein may be sold at public
sale to the highest bidder, as shall be sufficient to satisfy the debt,
or other demand, interest and costs, upon an order issued therefor by
the court from which the attachment process issued, and after such
notice as is required for sales upon execution process. Except as to an
uncertificated security as defined in § 8-102 of Title 6, the
attachment is not laid and no order of sale shall issue unless § 8-112
of Title 6 has been satisfied. No order of sale shall be issued until
after final judgment shall have been rendered in any case. If the
debtor lives out of the county, a copy of the order shall be sent by
registered or certified mail, return receipt requested, to such
debtor’s last known address, and shall also be published in a newspaper
published in the county of such debtor’s last known residence, if there
be any, 10 days before the sale; and if the debtor be a nonresident of
this State shall be mailed as aforesaid and published at least twice
for 2 successive weeks, the last publication to be at least 10 days
before the sale, in a newspaper published in the county where the
attachment process issued. If the shares of stock or any of them or the
option to acquire shares or any such right or interest in shares, or
any part of them, be so sold, any assignment, or transfer thereof, by
the debtor, after attachment, shall be void.

(b) When attachment process issues for
shares of stock, or any option to acquire such or any right or interest
in such, a certified copy of the process shall be left in this State
with any officer or director, or with the registered agent of the
corporation. Within 20 days after service of the process, the
corporation shall serve upon the plaintiff a certificate of the number
of shares held or owned by the debtor in the corporation, with the
number or other marks distinguishing the same, or in the case the
debtor appears on the books of the corporation to have an option to
acquire shares of stock or any right or interest in any shares of stock
of the corporation, there shall be served upon the plaintiff within 20
days after service of the process a certificate setting forth any such
option, right or interest in the shares of the corporation in the
language and form in which the option, right or interest appears on the
books of the corporation, anything in the certificate of incorporation
or bylaws of the corporation to the contrary notwithstanding. Service
upon a corporate registered agent may be made in the manner provided in
§ 321 of this title.

(c) If, after sale made and confirmed, a
certified copy of the order of sale and return and the stock
certificate, if any, be left with any officer or director or with the
registered agent of the corporation, the purchaser shall be thereby
entitled to the shares or any option to acquire shares or any right or
interest in shares so purchased, and all income, or dividends which may
have been declared, or become payable thereon since the attachment
laid. Such sale, returned and confirmed, shall transfer the shares or
the option to acquire shares or any right or interest in shares sold to
the purchaser, as fully as if the debtor, or defendant, had transferred
the same to such purchaser according to the certificate of
incorporation or bylaws of the corporation, anything in the certificate
of incorporation or bylaws to the contrary notwithstanding. The court
which issued the levy and confirmed the sale shall have the power to
make an order compelling the corporation, the shares of which were
sold, to issue new certificates or uncertificated shares to the
purchaser at the sale and to cancel the registration of the shares
attached on the books of the corporation upon the giving of an open end
bond by such purchaser adequate to protect such corporation.

(d) The money arising from the sale of
the shares or from the sale of the option or right or interest shall be
applied and paid, by the public official receiving the same, as by law
is directed as to the sale of personal property in cases of attachment.
(8 Del. C. 1953, § 324; 56 Del. Laws, c. 50; 59 Del. Laws, c. 106, §
17; 64 Del. Laws, c. 112, § 58; 71 Del. Laws, c. 339, §§ 68-70.)

§ 325. Actions against
officers, directors or stockholders to enforce liability of
corporation; unsatisfied judgment against corporation.

(a) When the officers, directors or
stockholders of any corporation shall be liable by the provisions of
this chapter to pay the debts of the corporation, or any part thereof,
any person to whom they are liable may have an action, at law or in
equity, against any 1 or more of them, and the complaint shall state
the claim against the corporation, and the ground on which the
plaintiff expects to charge the defendants personally.

(b) No suit shall be brought against any
officer, director or stockholder for any debt of a corporation of which
such person is an officer, director or stockholder, until judgment be
obtained therefor against the corporation and execution thereon
returned unsatisfied. (8 Del. C. 1953, § 325; 56 Del. Laws, c. 50; 71
Del. Laws, c. 339, § 71.)

§ 326. Action by officer, director or stockholder against corporation for corporate debt paid.

When any officer, director or stockholder
shall pay any debt of a corporation for which such person is made
liable by the provisions of this chapter, such person may recover the
amount so paid in an action against the corporation for money paid for
its use, and in such action only the property of the corporation shall
be liable to be taken, and not the property of any stockholder. (8 Del.
C. 1953, § 326; 56 Del. Laws, c. 50; 71 Del. Laws, c. 339, § 72.)

§ 327. Stockholder’s derivative action; allegation of stock ownership.

In any derivative suit instituted by a
stockholder of a corporation, it shall be averred in the complaint that
the plaintiff was a stockholder of the corporation at the time of the
transaction of which such stockholder complains or that such
stockholder’s stock thereafter devolved upon such stockholder by
operation of law. (8 Del. C. 1953, § 327; 56 Del. Laws, c. 50; 71 Del.
Laws, c. 339, § 73.)

§ 328. Effect of liability of corporation on impairment of certain transactions.

The liability of a corporation of this
State, or the stockholders, directors or officers thereof, or the
rights or remedies of the creditors thereof, or of persons doing or
transacting business with the corporation, shall not in any way be
lessened or impaired by the sale of its assets, or by the increase or
decrease in the capital stock of the corporation, or by its merger or
consolidation with 1 or more corporations or by any change or amendment
in its certificate of incorporation. (8 Del. C. 1953, § 328; 56 Del.
Laws, c. 50.)

§ 329. Defective organization of corporation as defense.

(a) No corporation of this State and no
person sued by any such corporation shall be permitted to assert the
want of legal organization as a defense to any claim.

(b) This section shall not be construed
to prevent judicial inquiry into the regularity or validity of the
organization of a corporation, or its lawful possession of any
corporate power it may assert in any other suit or proceeding where its
corporate existence or the power to exercise the corporate rights it
asserts is challenged, and evidence tending to sustain the challenge
shall be admissible in any such suit or proceeding. (8 Del. C. 1953, §
329; 56 Del. Laws, c. 50.)

§ 330. Usury; pleading by corporation.

No corporation shall plead any statute
against usury in any court of law or equity in any suit instituted to
enforce the payment of any bond, note or other evidence of indebtedness
issued or assumed by it. (8 Del. C. 1953, § 330; 56 Del. Laws, c. 50.)

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