Hanover
pooled a bunch of estates and trusts into one big fund for investment
purposes. In order for the trustees to get paid their fee, they had to get
certified that they did a good job.That requires notice to the people who own the money and give them
a chance to object.
In
some cases, Hanover had no idea who the trustees 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,
for notice, Hanover simply posted an ad in a local New York
newspaper.They also mailed
out notices to the owners of the trusts/estates, and for the ones they
couldn't find, the court appointed Mullane as the special guardian.A guy named Vaughn was also
appointed as a special guardian.
Mullane
immediately sued, claiming that the people he represented has been denied due
process under the 14th
Amendment because they had not received notification.
Trial
Court found that notice was sufficient.Mullane appealed.
Appellate
Court affirmed. Mullane appealed.
US
Supreme Court partially reversed the decision.
The
Court ruled that constructive notice
for unknown persons is constitutionally OK, but that constructive
notice for known persons is unconstitutional.
The
Court found that the requirements of the New York Banking Law were
incompatible with the requirements under the 14th Amendment.
A
fundamental requirement of due process of law in any proceeding which is to be accorded finality is
notice 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; and the notice must be of such
nature that it reasonably conveys the required information, and must
afford a reasonable time for those interested to make their appearance;
but if, with due regard for practicalities and peculiarities of the case,
those conditions are reasonably met, the constitutional requirements are
satisfied.
To
those beneficiaries who are known and represented by appellant, but whose
whereabouts cannot be ascertained by due diligence publication within the
statutory notice requirement is sufficient.Where the names and addresses of those affected by a
proceeding are at hand, the reasons disappear for resort to means less
likely than the mail to apprise them of its pendency.Notice reasonably certain to
reach most of those interested in objecting is likely to safeguard the
interest of the entire class of beneficiaries.
Hanover
unsuccessfully argued that a requirement of personal service on the large number of known resident or
non-resident beneficiaries would by reason of delay and increased
expense, seriously interfere w/ the proper administration of the fund.
The
basic idea that the Court is saying is that 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 trustees 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 is a legal fiction used in the
law of both common law and civil law systems to signify 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.
