UNIVERSITY OF SANTO TOMAS

FACULTY OF CIVIL LAW

CFL – Atty. Ismael Sarangaya

Mullane v. Central Hanover Bank and Trust Co., et al.

339 U.S. 306 (1950)

Notice must be “reasonably calculated under all the circumstances,” to apprise interested parties of the action and
give them an opportunity to object.
Facts:
This controversy questions the constitutional sufficiency of notice to beneficiaries on judicial settlement of
accounts by the trustee of a common trust fund established under the New York Banking Law.
In January 1946, Central Hanover Bank and Trust Company (CHBT) established a common fund pursuant to
Section 100(c) of the New York Banking Law allowing the creation of common funds for distribution of judicial
settlement trusts. During the accounting period a total of 113 trusts participated in the common trust fund.
The appellee then petitioned for settlement of its first account as common trustee. Some of the beneficiaries
were not residents of New York.
The only notice given beneficiaries of this specific application was by publication in a local newspaper in strict
compliance with the minimum requirements of Section 100(c) of the New York Banking Law. After filing such
petition (for judicial settlement of its account), the petitioner shall cause to be issued by the court in which the
petition is filed and shall publish not less than once in each week for four successive weeks in a newspaper to
be designated by the court a notice or citation addressed generally without naming them to all parties
interested in such common trust fund and in such estates, trusts or funds mentioned in the petition. Thus, the
only notice required, and the only one given, was by newspaper publication setting forth merely the name and
address of the trust company, the name and the date of establishment of the common trust fund, and a list of all
participating estates, trusts or funds.
At the time the first investment in the common fund was made on behalf of each participating estate, however,
the trust company, pursuant to the requirements of Section 100(c), had notified those people by mail that were
of full age and sound mind who would be entitled to share in the principal if the interest they held became
distributable.
Upon the filing of the petition for the settlement of accounts, the appellant was, by order of the court pursuant
to Section 100(c) of the New York Banking Law, appointed as special guardian and attorney for all persons
known or unknown not otherwise appearing who had or might thereafter have any interest in the income of
the common trust fund. The appellee, Vaughan, was appointed to represent those interested in the principal.
There were no other appearances on behalf of any one interested in either interest or principal.
The appellant appeared specially, objecting that notice and the statutory provisions for notice to beneficiaries
were inadequate to afford due process under the Fourteenth Amendment, and therefore that the court was
without jurisdiction to render a final and binding decree.
Issue:
Whether or not the notice by publication to all of the beneficiaries of a common trust whose residences are
known constitute reasonable notice under the due process requirement of the Fourteenth Amendment.
Ruling:
NO. Whether or not the action is in personam or in rem, the court can determine the interests of all claimants as
long as there is a procedure allowing for notice and an opportunity to be heard.
Notice must be reasonably calculated, under all circumstances, to apprise interested parties of the pendency of
the action and afford them an opportunity to present their objections. Notice must be of such nature as
reasonably to convey the required information, and it must afford a reasonable time for those interested to
make their appearance. The means employed must be such as one that reasonably might inform the absent
party. Adjudications resulting in the deprivation of life, liberty or property must be preceded by notice
and an opportunity for a hearing appropriate to the nature of the case. Personal service of written notice
within the jurisdiction is always adequate in any type of proceeding.
There has to be notice and opportunity for a hearing appropriate to the nature of the case. The claimants at
issue could potentially be deprived of property here, as the proposed disposition cuts off their rights to sue for
negligent or illegal impairments of their interests. In addition, the court’s decision appoints someone who,
without their knowledge, could use the trust to obtain the fees and expenses necessary for a sham proceeding.
There need not be personal service because the state has an interest in settling trusts. “Notice has to be
reasonably calculated, under all the circumstances, to apprise interested parties of the pending action and
afford them an opportunity to present their objections.” You do not have to notify all the beneficiaries when the
trust concerns many small interests. Sending notice to most of them will protect their interests sufficiently.