Mullane v. Central Hanover Bank & Trust Co.
339 U.S. 306 (1950)

Annotate this Case

U.S. Supreme Court

Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950)

Mullane v. Central Hanover Bank & Trust Co.

No. 378

Argued February &, 1950

Decided April 24, 1950

339 U.S. 306

Syllabus

A trust company in New York which had exclusive management and control of a common trust fund established by it under §100-c of the New York Banking Law petitioned under that section for a judicial settlement of accounts which would be binding and conclusive as to any matter set forth therein upon everyone having any interest in the common fund or in any participating trust. In this common fund, the trust company had invested assets of numerous small trusts of which it was trustee and of which some of the beneficiaries were residents, and some nonresidents, of the State. The only notice of this petition given beneficiaries was by publication in a local newspaper pursuant to §100-c(12).

Held:

1. Whether such a proceeding for settlement of accounts be technically in personam, in rem, or quasi in rem, the interest of each state in providing means to close trusts that exist by the grace of its laws and are administered under the supervision of its courts is such as to establish beyond doubt the right of its courts to determine the interests of all claimants, resident or nonresident, provided its procedure accords full opportunity to appear and be heard. Pp. 339 U. S. 311-313.

2. The statutory notice by publication is sufficient as to any beneficiaries whose interests or addresses are unknown to the trustee, since there are no other means of giving them notice which are both practicable and more effective. Pp. 339 U. S. 313-318.

3. Such notice by publication is not sufficient under the Fourteenth Amendment as a basis for adjudication depriving of substantial property rights known persons whose whereabouts are also known, since it is not impracticable to make serious efforts to notify them at least by ordinary mail to their addresses on record with the trust company. Pp. 339 U. S. 318-320.

299 N.Y. 697, 87 N.E.2d 73, reversed.

Overruling objections to the statutory notice to beneficiaries by publication authorized by §100-c of the New York Banking Law, a New York Surrogate's Court entered a final decree accepting an accounting of the trustee of

Page 339 U. S. 307

a common trust fund established pursuant to that section. 75 N.Y.S.2d 397. This decree was affirmed by the Appellate Division of the Supreme Court of New York (see 274 App.Div. 772, 80 N.Y.S.2d 127), and the Court of Appeals of New York (229 N.Y. 697, 87 N.E.2d 73). On appeal to this Court, reversed, p. 339 U. S. 320.

Disclaimer: Official Supreme Court case law is only found in the print version of the United States Reports. Justia case law is provided for general informational purposes only, and may not reflect current legal developments, verdicts or settlements. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or information linked to from this site. Please check official sources.

Primary Holding

Reasonable steps must be taken to give potentially interested parties notice of an action and an opportunity to respond, and notice by publication may be insufficient if the names and addresses of non-resident parties are available.

Facts

To promote the efficient and economical administration of funds in a trust, New York allowed corporate trustees to pool the assets of multiple small trusts that they administered. While each trust shared in the common fund, the trustees completely controlled all of the assets but were required to submit periodic accountings of profits, losses, and assets to the courts for approval. Beneficiaries had the right to object to irregularities in the administration of the common fund after they were notified of the accounting. They no longer could object, however, once the court approved the accountings.

Central Hanover Bank consolidated 113 small trusts into a single common fund, and it notified all interested parties of the fund and the law that gave rise to its actions. It used a local New York newspaper to provide notice. Mullane, who was the appointed guardian for all parties with an interest in the trust's income, objected on the grounds that this type of notice was insufficient to meet due process requirements. He pointed out that out-of-state beneficiaries and other interested parties would not be likely to be informed through publication of the impact on their rights.

Opinions

Majority

  • Robert Houghwout Jackson (Author)
  • Frederick Moore Vinson
  • Hugo Lafayette Black
  • Stanley Forman Reed
  • Felix Frankfurter
  • Tom C. Clark
  • Sherman Minton

Out-of-state residents cannot be expected to be informed by statements in a local New York newspaper. The notice provision is important because it provides beneficiaries with information on their rights to contest an accounting. However, notice by publication is the most practical alternative if the location of beneficiaries or future interest holders is unknown. It is a supplemental method that may be appropriate when alternatives are not feasible or not likely to provide actual notice. When the beneficiaries are known, it is generally inappropriate because it would be practical to use a form of notice more likely to reach the intended recipients. The use of publication notice violates the Fourteenth Amendment Due Process Clause because it creates the possibility that parties will be deprived of their property without the opportunity to be heard. By contrast, it does not raise due process concerns with regard to unknown and future interest holders.

Dissent

  • Harold Hitz Burton (Author)

The state should be allowed to determine whether the beneficiaries should receive further notice procedures beyond what was provided. The instruments that created the underlying trusts that were merged into the fund provided that participation in the common fund was a possibility.

Recused

  • William Orville Douglas (Author)

Case Commentary

A state must have a legitimate interest in asserting jurisdiction over a party, and the means by which it does must not violate due process. Publication notice generally is appropriate only when other forms of notice are not feasible, which was not the case here because the location of the interested parties could be readily identified.

Disclaimer: Justia Annotations is a forum for attorneys to summarize, comment on, and analyze case law published on our site. Justia makes no guarantees or warranties that the annotations are accurate or reflect the current state of law, and no annotation is intended to be, nor should it be construed as, legal advice. Contacting Justia or any attorney through this site, via web form, email, or otherwise, does not create an attorney-client relationship.