TITLE 8

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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