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Delaware Court of Chancery

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Delaware Court of Chancery
Established1792
Authorised byDelaware Constitution art. IV
Appeals toDelaware Supreme Court
Judge term length12 years
Number of positions7
WebsiteOfficial website
Courthouse in Georgetown, Delaware, one of the court's three locations

The Delaware Court of Chancery is a court of equity in the U.S. state of Delaware. It is one of Delaware's three constitutional courts, along with the Supreme Court and Superior Court. Since 2018, the court consists of seven judges. The court is known for being a hub for corporate governance litigation in the United States, as two-thirds of Fortune 500 companies are incorporated in Delaware. It is among the preeminent business courts in the world.[1]

Connection to corporate law

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Many companies prefer to incorporate in Delaware because of the state's corporate-friendly tax system and the Court's historical expertise in business litigation. The Court's judges tend to be longtime members of the Delaware State Bar Association who have spent their careers doing corporate litigation.[2]

Because of the extensive experience of the Delaware courts, Delaware has a more well-developed body of case law than other states, which serves to give corporations and their counsel greater guidance on matters of corporate governance and transaction liability issues. More than two thirds of Fortune 500 companies are incorporated in the state.[3] Delaware is the home to more than 1.8 million corporations, more than the number of residents in the state.

The Court of Chancery handle corporate internal affairs litigation (such as shareholder disputes and merger disputes) according the Delaware General Corporation Law, the statute governing corporations in Delaware. As a result, it is a hub for corporate litigation in the United States.

Judges

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The chief judge is called the Chancellor, and the other six judges are called Vice Chancellors. The chancellor and vice chancellors are nominated by the governor and confirmed by the state senate for 12-year terms. The Court is subject to the "major-party" rule in the Delaware constitution. Also known as the political balance requirement, this requires that the bare majority of the court "shall be of one major political party", and the other judges "shall be of the other major political party".[4] As a result, any person not affiliated with either the Republican or Democratic Party is not able to serve on the court.[5]

Jurisdiction

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The Court's jurisdiction is a hybrid of constitutional provisions, statutes, and case law.

According to the Delaware Judicial Information Center:

The Court of Chancery has jurisdiction to hear and determine all matters and causes in equity. The general equity jurisdiction of the Court is measured in terms of the general equity jurisdiction of the High Court of Chancery of Great Britain as it existed prior to the separation of the American colonies. The General Assembly may confer upon the Court of Chancery additional statutory jurisdiction. In today's practice, the litigation in the Court of Chancery consists largely of corporate matters, trusts, estates, and other fiduciary matters, disputes involving the purchase and sale of land, questions of title to real estate, and commercial and contractual matters in general. When issues of fact to be tried by a jury arise, the Court of Chancery may order such facts to trial by issues at the Bar of the Superior Court of Delaware. (10 Del. C., 369).[6]

Article IV, Section 10 of the Delaware Constitution establishes the Court and provides that it "shall have all the jurisdiction and powers vested by the laws of this State in the Court of Chancery."[7]

Equitable jurisdiction

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Title 10, Section 341 of the Delaware Code states that the Court "shall have jurisdiction to hear and determine all matters and causes in equity."[8] Subsequent decisions have held that the Court's equitable jurisdiction is the same as that held by the English High Court of Chancery at the time of American independence in 1776.[citation needed]

The Court's most significant power is its ability to issue preliminary and permanent injunctions and temporary restraining orders. This is frequently exercised in the context of disputes involving mergers and acquisitions or sales of corporations, wherein a corporate suitor or a shareholder will attempt to enjoin—that is, prevent—the sale or merger of a corporation, claiming that their stock value has been diluted or that they have superior rights to purchase the corporation. In a typical sale or merger dispute, a plaintiff will seek a temporary restraining order, sometimes on an ex parte basis, to prevent the transaction from taking place and preserve the status quo. If the Court grants that relief, the plaintiff will then seek a preliminary injunction to maintain the current state of affairs until a trial can take place.

Title 10, Section 342 of the Delaware Code provides that the Court shall not hear any matters for which an adequate remedy exists at law or which can be heard by any other Delaware court.[8] As a practical matter, this means that the Court cannot grant relief in the form of money damages to compensate a party for a loss or where another court has coterminous jurisdiction. However, under the rules of equity, the court can grant monetary relief in the form of restitution by ruling that another party has unjustly gained money that belongs to the plaintiff.

Apart from its general equitable jurisdiction, the Court has jurisdiction over a number of other matters. First, the Court has sole power to appoint guardians of the property and person for mentally or physically disabled Delaware residents. Similarly, the Court may also appoint guardians for minors, although the Family Court has coterminous jurisdiction over such matters. Will contests and disputes over interpretations of trusts are also heard by the Court.

In 1952, the Court of Chancery held in Gebhart v. Belton that the operation of segregated school systems in Delaware was unlawful, two full years before the U.S. Supreme Court would do so in Brown v. Board of Education.

Procedure

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The Chancellor is responsible for appointing a judge on the court to preside over a case.

The Court sits without a jury. All issues of fact are determined by the presiding Chancellor or Vice Chancellor. The Court has the discretion to appoint an advisory jury if it so desires, but this power is practically never exercised.

The Court of Chancery's decision can be appealed to the Delaware Supreme Court, whose decision is final unless appealed to the Supreme Court of the United States.

History

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The history of the Court of Chancery stems back to the English common law system, in which separate courts were established to hear law and equity matters. English law courts included the Court of King's Bench (or Queen's Bench when the monarch was female), the Court of Common Pleas, and the Court of the Exchequer. The sole English court of equity was the Court of Chancery.

Along with the remainder of the original Thirteen Colonies, Delaware imported the English concept of common law. This included establishing a separate Court of Chancery. As the legal system evolved in England, the English Court of Chancery was eventually abolished by the Judicature Act 1873-75 and its powers merged into what was then called 'The Supreme Court of Judicature' (comprising the High Court and the Court of Appeal) which exercised jurisdiction in both common law and equity. This was prompted in part by similar reforms which had taken place elsewhere, notably the abolition of the New York Court of Chancery in 1847. Most American jurisdictions followed the reforms in New York and England.

In its first Constitution, the Delaware Constitution of 1776, there was no special provision for a court of equity. However, when the constitution was revised in the Delaware Constitution of 1792 a separate Court of Chancery was established. This constitution was heavily influenced by thinking of John Dickinson and George Read. William T. Quillen and Michael Hanrahan in their Short History of the Delaware Court of Chancery repeat the "folklore of the Delaware bench and bar, saying that the impetus for creating a Court of Chancery was to provide a new judicial seat for Delaware's first Chancellor, William Killen." Killen was the elderly and highly respected incumbent Chief Justice of Delaware, and when George Read was considered to be the new Chief Justice of Delaware, he refused unless adequate provisions were made for Killen. A separate Court of Chancery under Killen was the solution.[6]

Constitution of 1792

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There was one chancellor, appointed by the governor for life.

Chancellors of Delaware
Name Took office Left office Residence Party
William Killen October 6, 1793 December 6, 1801 Kent County Democratic-Republican
Nicholas Ridgely December 6, 1801 April 1, 1830 Kent County Democratic-Republican
Kensey Johns Sr. June 21, 1830 January 18, 1832 New Castle County Whig

Constitution of 1831

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There was one chancellor, appointed by the governor for life.

Chancellors of Delaware
Name Took office Left office Residence Party
Kensey Johns Jr. January 18, 1832 March 28, 1857 New Castle County Whig
Samuel M. Harrington May 4, 1857 November 28, 1865 Kent County Democratic
Daniel M. Bates December 12, 1865 October 1873 New Castle County Democratic
Willard Saulsbury Sr. November 14, 1873 April 6, 1892 Sussex County Democratic
James L. Wolcott May 5, 1892 September 5, 1895 Kent County Democratic
John R. Nicholson September 5, 1895 June 10, 1897 Kent County Democratic

Constitution of 1897

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There is one chancellor, appointed by the governor for a 12-year term. There were also created over the years, additional vice chancellors, the first in 1939, a second in 1961, a third in 1984, and a fourth in 1989. Since 2018, there are six vice chancellors.[9] They are also appointed by the governor for a 12-year term. They are required to be equally divided between the major political parties, so that among all the chancellors no party has a majority of more than one person.

Chancellors of Delaware
Name Took office Left office Residence Party
John R. Nicholson June 10, 1897 June 10, 1909 Kent County Democratic
Charles M. Curtis June 10, 1909 July 2, 1921 Republican
Josiah O. Wolcott July 2, 1921 November 11, 1938 Kent County Democratic
William W. Harrington December 7, 1938 1950
Daniel F. Wolcott 1950 1951 Democratic
Collins J. Seitz 1951 July 17, 1966
William Duffy July 17, 1966 1973
William T. Quillen 1973 1976
William Marvel September 1976 May 1, 1982
Grover C. Brown 1982 1985
William T. Allen 1985 1997
William B. Chandler, III 1997 2011 Sussex County Republican
Leo E. Strine Jr. 2011 2014 New Castle County Democratic
Andre Bouchard[10] 2014 2021 Democratic
Kathaleen McCormick May 6, 2021 present
Vice chancellors of Delaware
Name Took office Left office Residence Party Seat
George B. Pearson Jr. 1939 1946 1st
Collins J. Seitz 1946 1951
Howard W. Bramhall 1951 1954
William Marvel 1954 1976
Maurice A. Hartnett 1976 1994
Myron T. Steele 1994 2000
John W. Noble November 2000 February 2016 Kent County Democratic
Joseph R. Slights III March 28, 2016 2022 Kent County Democratic
Nathan A. Cook July 21, 2022 present
Isaac D. Short 1961 1973 2nd
Grover C. Brown 1973 1982
Joseph J. Longobardi 1982 1984
Joseph T. Walsh 1984 1985
Jack B. Jacobs 1985 2003
Donald F. Parsons 2003 2015 Democratic
Tamika Montgomery-Reeves November 2015 November 2019 New Castle County Democratic
Paul Fioravanti Jr. January 15, 2020 present
Carolyn Berger 1984 1994 3rd
Bernard S. Balick 1994 1998
Leo E. Strine Jr. 1998 2011 New Castle County Democratic
Sam Glasscock III 2011 present Sussex County Republican
William B. Chandler III 1989 1997 Sussex County Republican 4th
Stephen P. Lamb 1997 2009 New Castle County
J. Travis Laster October 9, 2009 present New Castle County Republican
Morgan Zurn October 4, 2018 present New Castle County Republican 5th
Kathaleen McCormick November 1, 2018 May 6, 2021 New Castle County Democratic 6th
Lori W. Will May 26, 2021 present

The Court also employs three full-time Magistrates in Chancery (formerly known as Masters in Chancery), appointed by the Chancellor under Court of Chancery Rule 144. The Magistrates adjudicate cases assigned to them by the Court, with a particular focus on "the people's concerns in equity," such as guardianships, property disputes, and trust and estate matters.[11] The current Magistrates in Chancery are Selena E. Molina, Loren Mitchell, and Bonnie W. David.[12]

See also

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Notes

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  1. ^ Bach, Mitchell L.; Applebaum, Lee. "A History of the Creation and Jurisdiction of Business Courts in the Last Decade, 60 Bus. Law. 147 (2004)" (PDF).
  2. ^ Gura, David (July 13, 2022). "A centuries-old court in Delaware will decide if Elon Musk has to buy Twitter". NPR.
  3. ^ Semuels, Alana (October 3, 2016). "The Tiny State Whose Laws Affect Workers Everywhere". The Atlantic. Retrieved June 17, 2023.
  4. ^ Epps, Garrett (March 28, 2020). "Delaware's Weird—and Constitutionally Suspect—Approach to Judicial Independence". The Atlantic. Retrieved June 17, 2023.
  5. ^ "Judge won't toss suit over Delaware court political balance". AP NEWS. September 25, 2022. Retrieved June 17, 2023.
  6. ^ a b "Welcome to the Delaware Court of Chancery". Delaware State Courts. Retrieved November 30, 2011.
  7. ^ "§ 10. Composition and jurisdiction of Court of Chancery; initiation and decisions in causes and proceedings". State of Delaware Constitution: Article IV Judiciary. Online Delaware Code. Retrieved November 30, 2011.
  8. ^ a b "CHAPTER 3. COURT OF CHANCERY Subchapter III. General Jurisdiction and Powers". Title 10 Courts and Judicial Procedure. Online Delaware Code. Retrieved September 19, 2011.
  9. ^ Hals, Tom (September 20, 2018). "Delaware governor nominates two for state's corporate court". Reuters.
  10. ^ Melson, Brett (April 22, 2014). "Andre Bouchard: Delaware Court of Chancery Chief". Retrieved April 27, 2016.
  11. ^ "THE DELAWARE JUDICIARY ANNOUNCES A NEW MASTER IN CHANCERY". May 19, 2017. Archived from the original on May 28, 2017.
  12. ^ "Judicial Officers - Court of Chancery - Delaware Courts - State of Delaware". courts.delaware.gov. Retrieved June 14, 2018.

References

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  • Munroe, John A. (1993). History of Delaware. Newark, Delaware: University of Delaware Press. ISBN 0-87413-493-5.
  • Conrad, Henry C. (1908). History of the State of Delaware, 3 vols. Lancaster, Pennsylvania: Wickersham Company.
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