No. 86-577 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

CONSUMERS UNITED INSURANCE COMPANY, 

a foreign corporation, 

Plaintiff and Respondent, 

-vsROGER JOHN SYVERSON, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Joseph Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Landoe, Brown, Planalp, Kommers & Johnstone; Gene I. 

Brown argued, Bozeman, Montana 

For Respondent : 

Poore, Roth & Robinson; John P. Davis argued, Butte, 

Montana 

Submitted: May 1, 1987 

Decided: June 11, 1987 

- 

Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

We determine here that the tests of "traditional notions 

of fair play and substantial justice" (International Shoe Co. 

v. Washington (1945), 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 

95) are met to establish jurisdiction of a nonresident 

defendant in the Montana court stemming from a bank account 

in controversy between Consumers United Insurance Company 

(Consumers) and Roger John Syverson (Syverson) . Consumers, a Washington, D.C. corporation, brought suit 

in the District Court, Eighteenth Judicial District, Gallatin 

County, against Syverson, a Texas resident, by filing a 

complaint alleging Syverson, while an officer of Consumers, 

had made unauthorized loans of Consumers' funds to third 

persons and had accepted "kick-backs" or unauthorized 

commissions from the borrowing third persons. Consumers 

further claimed that the unauthorized funds had been 

deposited through wire transfer by Syverson in First Citizens 

Bank of Bozeman, Montana (not a party to this action). 

Consumers prayed for judgment covering the unauthorized funds 

and further damages, or in the alternative, a preliminary 

injunction or restraining order conserving the deposited 

funds pending the action. Consumers also sought a 

declaration that the deposits were subject to a constructive 

trust in favor of Consumers. 

On receiving the complaint, the District Court entered a 

temporary restraining order and show cause order addressed to 

Syverson. He appeared and moved to dismiss the action on the 

grounds that the District Court lacked jurisdiction of the 

action and his person. 
All sides concede that Syverson has "not set foot in 

Montana;" that Consumers has no contact within Montana; that 

an action is presently pending in the Texas courts between 

Consumers and Syverson over the same controversy. The 

District Court did determine, upon evidence, that the 

deposited funds in the Bozeman bank are traceable to the 

claimed unauthorized commissions or kick-backs received by 

Syverson while acting as an officer of Consumers. No other 

contact between Syverson and the forum state, Montana, 

appears in this case. 

The District Court, after hearing, entered judgment 

requiring (1) the funds on deposit in the Bozeman bank be 

retained (or invested by stipulation of the parties); (2) 

that upon receipt of a certified judgment from the Texas 

court, the deposited funds be disbursed in accordance with 

the Texas judgment to the prevailing party; and, (3) a 

sufficient bond of Consumers to abide the Texas result. The 

Montana judgment is final but without prejudice as to the 

claims of either party as between them personally. 

Syverson has appealed the judgment to this Court again 

on the grounds that the Montana courts have no jurisdiction 

over the person of Syverson nor the funds deposited in the 

Bozeman bank. 

Immediately brought into play by the facts of this case 

is a consideration of the jurisdiction, if any, of Montana 

state courts arising from a wire deposit of funds in a 

Montana bank by a nonresident defendant owner. 

The complete answer is found in Shaffer v. Heitner 

(1977), 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683. In that 

case, Heitner, a nonresident of Delaware, filed a 

shareholders derivative suit in a Delaware state court, 

naming as defendants the Greyhound Corporation and its 

subsidiary and 28 present or former corporate officers or 
directors. Heitner alleged that the individual defendants 

had violated their duties to the Greyhound Corporation by 

causing it and its subsidiary to engage in actions which 

occurred in Oregon that resulted in corporate liability for 

substantial damages in a private antitrust suit and a large 

fine in a criminal contempt action. Simultaneously Heitner, 

under a Delaware statute, filed a motion for sequestration of 

the Delaware corporate property of the individual defendants, 

all nonresidents of Delaware, accompanied by an affidavit 

identifying the property to be sequestered as stock, options, 

warrants and various corporate rights of defendants. Under 

the Delaware statute, a sequestration order was issued by the 

Delaware state court pursuant to which shares and options 

belonging to 21 defendants were "seized" and "stop transfer" 

orders were placed on the corporate books. Under the 

Delaware statute, the sequestration would remain in effect as 

to the nonresidents, to be released when the defendants came 

into the action by way of general appearance, thus completely 

subjecting themselves to the jurisdiction of the Delaware 

court. 

The nonresident defendants appeared specially in the 

Delaware state court, seeking to quash service of process and 

to vacate the sequestration order, contending that the - ex 

parte sequestration procedure did not accord them due 

process, that the property seized was not capable of 

attachment in Delaware and that they, the individual 

nonresident defendants, did not have sufficient contacts with 

Delaware to sustain jurisdiction of Delaware state courts 

under the rule of International Shoe, supra. 

The Delaware Court of Chancery asserted quasi in rem -- 

jurisdiction which the Delaware Supreme Court affirmed, 

ruling out the holding of International Shoe: 
There are significant constitutional questions at 

issue here but we say at once that we do not deem 

the rule of ~nternational Shoe to be one of them. . . . The reason, of course, is that jurisdiction 

under 5 366 [the Delaware sequestration statute] 

remains . . . quasi in rem founded on the presence 

of capital stock here, not on prior contact by 

defendants with this forum. Under 8 Del. C. 5 169 

the "situs of the ownership of the capital stock of 

all corporations existing under the laws of this 

state . . . [is] in this State", and that provides 

the initial basis for jurisdiction. Delaware may 

constitutionally establish situs of such shares 

here, [Citations omitted] it has done so and the 

presence thereof provides the foundation for S§ 366 

in this case. 

Greyhound Corp. v. Heitner (Del. 1976), 361 ~.2d 225, 229. 

As might be expected, the United States Supreme Court 

held that jurisdiction of the nonresident defendants could 

not be acquired in Delaware under its sequestration statute, 

saying: 

The Delaware courts based their assertion of 

jurisdiction in this case solely on the statutory 

presence of appellants' property in Delaware. Yet 

that property is not the subject matter of this 

litigation, nor is the underlying cause of action 

related to the property. Appellants1 holdings in 

Greyhound do not, therefore, provide contacts with 

Delaware sufficient to support the jurisdiction of 

that State's courts over appellants. If it exists, 

that jurisdiction must have some other foundation. 

Shaffer, 433 U.S. at 213, 97 S.Ct. at 2584, 53 L.Ed.2d at 

The corollary to the foregoing statement by the United 

States Supreme Court is that if the property in the state is 

the subject matter of the litigation or if it is related to 

the underlying cause of act,ions between the parties, 

jurisdiction over the nonresident owner could be acquired by 

the state court. The United States Supreme Court in Shaffer 
made the corollary clear, although the Delaware statute was 

held unconstitutional. 

The Supreme Court in Shaffer noted its holdings in the 

history of state court jurisdiction over nonresident 

defendants in - in personam, -- in rem and quasi -- in rem actions 

from Pennoyer v. Neff (1877), 95 U.S. 714, 5 Otto 714, 24 

L.Ed. 565, down to International Shoe. It noted that 

International Shoe departed from Pennoyer in that a state 

court could subject a nonresident defendant to a judgment - in 

personam even though the defendant was not present within the 

territory of the forum, but had certain minimum contacts with 

it such that the maintenance of the suit did not offend 

"traditional notions of fair play and substantial justice." 

Shaffer, 433 U.S. at 203, 97 S.Ct. at 2579, 53 L.Ed.2d at 

697. "Thus, the relationship among the defendant, the forum, 

and the litigation, rather than the mutually exclusive 

sovereignty of the States on which the rules of Pennoyer 

rest, became the central concern of the inquiry into personal 

jurisdiction." Shaffer, 433 U.S. at 204, 97 S.Ct at 2580, 53 

L.Ed.2d at 698. 

Not touched by International Shoe was the status of 

state court judgments over nonresident defendants based on 

jurisdiction -- in rem or quasi -- in rem. The Supreme Court in 

Shaffer questioned whether the presence of property in the 

state, standing alone, gave the state jurisdiction to 

adjudicate owner's rights to the property regardless of the 

relationship of the property or the underlying dispute and 

the property owner to the forum. Shaffer, 433 U.S. at 205, 

97 S.Ct. at 2580, 53 L.Ed.2d at 698. Recognizing that an 

adverse judgment -- in rem directly affects the property owner 

by divesting him of his rights before the court, the Supreme 

Court decided it was time to consider whether the standard of 
fairness and substantial justice set forth in International 

Shoe should govern actions -- in rem as well as - in personam: 

The case for applying to jurisdiction -- in rem the 

same test of "fair play and substantial justice" as 

governs assertions of jurisdiction in personam is 

simple and straightforward. It is premised on 

recognition that " [t] he phrase, ' judicial 

jurisdiction over a thing,' is a customary 

elliptical way of referring to jurisdiction over 

the interests of persons in a thing." Restatement 

(Second) of Conflict of Laws 56, Introductory 

Note (1971) (hereafter Restatement) . This 

recosnition - leads to the conclusion that in order 

to justify an exercise of jurisdiction -- in rem, the 

basis for jurisdiction must be sufficient to 

justify exercising "jurisdiction over the interests 

of persons in a thing." The standard for 

determining whether an exercise of jurisdiction 

over the interests of persons is consistent with 

the Due Process Clause is the minimum-contacts 

standard elucidated in International Shoe. 

Shaffer, 433 U.S. at 207, 97 S.Ct. at 2581, 53 L.Ed.2d at 

699-670. 

The Supreme Court in Shaffer recognized that 

difficulties may arise in applying International Shoe to 

jurisdiction quasi -- in rem. It solved the difficulty by 

stating that if the presence of property in a state was to be 

the basis of jurisdiction in that state for a judgment 

against a nonresident defendant, the property in the state 

must be the subject of the action or related to the 

underlying controversy. 

In the case at bar, we have clearly an item of personal 

property, though intangible, that is related to the subject 

in controversy, and is in fact the subject of the 

controversy. The District Court here specifically found that 

the deposited funds in the Bozeman bank were traceable to the 

alleged claims of kick-back asserted by Consumers. 
Applying the International Shoe factors to this case, as 

we must under Shaffer, we examine the relationship among the 

defendant, the forum, and the litigation to determine whether 

these factors meet the test of minimum contacts so as not to 

offend traditional notions of fair play and substantial 

justice. In the case at bar, the test is clearly met. There 

is a positive nexus between Syverson, who caused the funds to 

be deposited in his name in Montana, the forum, where the 

deposits are located, and the litigation, which concerns 

ownership of the deposits. Moreover, the judgment of the 

District Court supports traditional notions of fair play and 

substantial justice by effectively making the Bozeman bank a 

stakeholder of the deposited funds biding the determination 

of the controversy in the Texas courts. Syverson, a resident 

of Texas, can have no objection to the resolution of the 

underlying controversy in his home state. 

We note that the decision of this Court in Gassert v. 

Strong (1908), 38 Mont. 18, 98 P. 497, which was decided 

under principles of quasi -- in rem, following Pennoyer, would 

be the same if examined under the principles of International 

Shoe and Shaffer. 

Accordingly, we affirm the judgment of the District 

Court in this case. Because of this affirmance, discussion 

of the other issues raised by the parties is unnecessary. 

sbb e. 

Justice 

We Concur: ,/ 
District Judge, sittidfg for 

Justice Frank B. Morrison