Mullane v. Central Hanover Bank & Trust Co.
338 U.S. 306, 70 S. Ct. 652, 94 L. Ed. 865 (1950)
Hanover pooled a bunch of
estates and trusts into one big fund for investment purposes. Under New
York law, in to get paid their fee, Hanover had to get certified that they
did a good job. That required them to send notice to the all the people
who had money in the fund and give them a chance to object.
In some cases, Hanover had
no idea who those people were, since someone might have set up a trust
"for their children." The number of children can change and
they don't bother notifying the bank.
So, in order to meet the
notice requirement Hanover did three things:
They posted an ad in a
local New York newspaper.
They also mailed out
notices to the people they could find, and
For the ones they couldn't
find, the court appointed Mullane and Vaughn as the special guardians.
Mullane immediately sued,
claiming that the people he represented has been denied due process under
the 14th Amendment because they
had not received notification.
The Trial Court found for
Hanover. Mullane appealed.
The Trial Court found that
the notice Hanover sent out was sufficient.
The Appellate Court affirmed.
The US Supreme Court partially
reversed the decision.
The US Supreme Court ruled
that constructive notice for
unknown persons is constitutionally OK, but that constructive
notice for known persons is
The Court found that the
requirements of the New York Banking Law were incompatible with the
requirements under the 14th Amendment.
The Court noted that due
process requires that notice be
"reasonably calculated under all the circumstances to apprize
interested parties of the pendency of the action and afford them an
opportunity to present their objections."
Basically, you can't ever
get to everybody in a situation like this, so you can't be required to
get to everybody. You do the best you can. The theory is that since all
of the people with money in the fund have basically the same interest, as
long as you get to most of them, you will likely get to the ones that
will care, and if you are doing something shady, the people you did get
to will sue and represent the interest of the people who don't care or
you can't find.
Constructive notice means that a person or entity is legally
presumed to have knowledge of something, even if they have no actual
knowledge of it.
For example, one benefit of
registering a trademark with the Federal government is that the
registration gives nationwide constructive notice that the trademark is
owned by the registrant. Therefore, if another entity uses the mark, they
will be treated as though they knew their use of it was an infringement,
even if they had no actual knowledge of the registration, or the
registrant's use of the mark.