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Mullanev.CentralHanoverBank&TrustCo.::339U.S.306(1950)::JustiaU.S.SupremeCourtCenter
Justia U.S.Law U.S.CaseLaw U.S.SupremeCourt Volume339

Mullanev.CentralHanoverBank&TrustCo. Case
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Mullanev.CentralHanoverBank&TrustCo.
339U.S.306(1950)
AnnotatethisCase
Opinion
Annotation
Syllabus | Case
U.S.SupremeCourt
Mullanev.CentralHanoverBank&TrustCo.,339U.S.306(1950)
No.378
ArguedFebruary&,1950
DecidedApril24,1950
339U.S.306
APPEALFROMTHECOURTOFAPPEALSOFNEWYORK
https://supreme.justia.com/cases/federal/us/339/306/case.html
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Syllabus
AtrustcompanyinNewYorkwhichhadexclusivemanagementandcontrolofacommon
trustfundestablishedbyitunder100coftheNewYorkBankingLawpetitionedunderthat
sectionforajudicialsettlementofaccountswhichwouldbebindingandconclusiveasto
anymattersetforththereinuponeveryonehavinganyinterestinthecommonfundorinany
participatingtrust.Inthiscommonfund,thetrustcompanyhadinvestedassetsofnumerous
smalltrustsofwhichitwastrusteeandofwhichsomeofthebeneficiarieswereresidents,
andsomenonresidents,oftheState.Theonlynoticeofthispetitiongivenbeneficiarieswas
bypublicationinalocalnewspaperpursuantto100c(12).
Held:
1.Whethersuchaproceedingforsettlementofaccountsbetechnicallyinpersonam,inrem,
orquasiinrem,theinterestofeachstateinprovidingmeanstoclosetruststhatexistbythe
graceofitslawsandareadministeredunderthesupervisionofitscourtsissuchasto
establishbeyonddoubttherightofitscourtstodeterminetheinterestsofallclaimants,
residentornonresident,provideditsprocedureaccordsfullopportunitytoappearandbe
heard.Pp.339U.S.311313.
2.Thestatutorynoticebypublicationissufficientastoanybeneficiarieswhoseinterestsor
addressesareunknowntothetrustee,sincetherearenoothermeansofgivingthemnotice
whicharebothpracticableandmoreeffective.Pp.339U.S.313318.
3.SuchnoticebypublicationisnotsufficientundertheFourteenthAmendmentasabasis
foradjudicationdeprivingofsubstantialpropertyrightsknownpersonswhosewhereabouts
arealsoknown,sinceitisnotimpracticabletomakeseriouseffortstonotifythematleastby
ordinarymailtotheiraddressesonrecordwiththetrustcompany.Pp.339U.S.318320.
299N.Y.697,87N.E.2d73,reversed.
Overrulingobjectionstothestatutorynoticetobeneficiariesbypublicationauthorizedby
100coftheNewYorkBankingLaw,aNewYorkSurrogate'sCourtenteredafinaldecree
acceptinganaccountingofthetrusteeof
Page339U.S.307
acommontrustfundestablishedpursuanttothatsection.75N.Y.S.2d397.Thisdecree
wasaffirmedbytheAppellateDivisionoftheSupremeCourtofNewYork(see274App.Div.
772,80N.Y.S.2d127),andtheCourtofAppealsofNewYork(229N.Y.697,87N.E.2d73).
OnappealtothisCourt,reversed,p.339U.S.320.
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Mr.JusticeJACKSONdeliveredtheopinionoftheCourt.
Thiscontroversyquestionstheconstitutionalsufficiencyofnoticetobeneficiariesonjudicial
settlementofaccountsbythetrusteeofacommontrustfundestablishedundertheNew
YorkBankingLaw,Consol.Laws,c.2.TheNewYorkCourtofAppealsconsideredand
overruledobjectionsthatthestatutorynoticecontravenesrequirementsoftheFourteenth
Amendment,andthat,byallowanceoftheaccount,beneficiariesweredeprivedofproperty
withoutdueprocessoflaw.299N.Y.697,87N.E.2d73.Thecaseishereonappealunder
28U.S.C.1257.
Commontrustfundlegislationisaddressedtoaproblemappropriateforstateaction.
Mountingoverheadshavemadeadministrationofsmalltrustsundesirabletocorporate
trustees.Inorderthatdonorsandtestatorsofmoderatelysizedtrustsmaynotbedeniedthe
serviceofcorporatefiduciaries,theDistrictofColumbiaandsome
Page339U.S.308
thirtystatesotherthanNewYorkhavepermittedpoolingsmalltrustestatesintoonefundfor
investmentadministration.*Theincome,capitalgains,lossesandexpensesofthe
collectivetrustaresharedbytheconstituenttrustsinproportiontotheircontribution.Bythis
plan,diversificationofriskandeconomyofmanagementcanbeextendedtothosewhose
capitalstandingalonewouldnotobtainsuchadvantage.
Statutoryauthorizationfortheestablishmentofsuchcommontrustfundsisprovidedinthe
NewYorkBankingLaw,100c,c.687,L.1937,asamendedbyc.602,L.1943andc.158,
L.1944.UnderthisAct,atrustcompanymay,withapprovaloftheStateBankingBoard,
establishacommonfundand,withinprescribedlimits,
Page339U.S.309
investthereintheassetsofanunlimitednumberofestates,trustsorotherfundsofwhichit
istrustee.Eachparticipatingtrustsharesratablyinthecommonfund,butexclusive
managementandcontrolisinthetrustcompanyastrustee,andneitherafiduciarynorany
beneficiaryofaparticipatingtrustisdeemedtohaveownershipinanyparticularassetor
investmentofthiscommonfund.Thetrustcompanymustkeepfundassetsseparatefrom
itsown,and,initsfiduciarycapacity,maynotdealwithitselforanyaffiliate.Provisionsare
madeforaccountingstwelvetofifteenmonthsaftertheestablishmentofafund,and
trienniallythereafter.Thedecree,ineachsuchjudicialsettlementofaccounts,ismade
bindingandconclusiveastoanymattersetforthintheaccountuponeveryonehavingany
interestinthecommonfundorinanyparticipatingestate,trustorfund.
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InJanuary,1946,CentralHanoverBankandTrustCompanyestablishedacommontrust
fundinaccordancewiththeseprovisions,and,inMarch,1947,itpetitionedtheSurrogate's
Courtforsettlementofitsfirstaccountascommontrustee.Duringtheaccountingperiod,a
totalof113trusts,approximatelyhalfintervivosandhalftestamentary,participatedinthe
commontrustfund,thegrosscapitalofwhichwasnearlythreemilliondollars.Therecord
doesnotshowthenumberorresidenceofthebeneficiaries,buttheyweremany,anditis
clearthatsomeofthemwerenotresidentsoftheStateofNewYork.
Theonlynoticegivenbeneficiariesofthisspecificapplicationwasbypublicationinalocal
newspaperinstrictcompliancewiththeminimumrequirementsofN.Y.BankingLaw100
c(12):
"Afterfilingsuchpetition[forjudicialsettlementofitsaccount],thepetitionershallcauseto
beissuedbythecourtinwhichthepetitionisfiledandshallpublishnotlessthanoncein
eachweek
Page339U.S.310
forfoursuccessiveweeksinanewspapertobedesignatedbythecourt,anoticeorcitation
addressedgenerally,withoutnamingthem,toallpartiesinterestedinsuchcommontrust
fundandinsuchestates,trustsorfundsmentionedinthepetition,allofwhichmaybe
describedinthenoticeorcitationonlyinthemannersetforthinsaidpetitionandwithout
settingforththeresidenceofanysuchdecedentordonorofanysuchestate,trustorfund."
Thus,theonlynoticerequired,andtheonlyonegiven,wasbynewspaperpublication
settingforthmerelythenameandaddressofthetrustcompany,thenameandthedateof
establishmentofthecommontrustfund,andalistofallparticipatingestates,trustsorfunds.
Atthetimethefirstinvestmentinthecommonfundwasmadeonbehalfofeach
participatingestatehowever,thetrustcompany,pursuanttotherequirementsof100c(9),
hadnotifiedbymaileachpersonoffullageandsoundmindwhosenameandaddresswas
thenknowntoitandwhowas
"entitledtoshareintheincometherefrom...(or)...whowouldbeentitledtoshareinthe
principaliftheeventuponwhichsuchestate,trustorfundwillbecomedistributableshould
haveoccurredatthetimeofsendingsuchnotice."
IncludedinthenoticewasacopyofthoseprovisionsoftheActrelatingtothesendingofthe
noticeitselfandtothejudicialsettlementofcommontrustfundaccounts.
Uponthefilingofthepetitionforthesettlementofaccounts,appellantwas,byorderofthe
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courtpursuantto100c(12),appointedspecialguardianandattorneyforallpersons
knownorunknownnototherwiseappearingwhohadormightthereafterhaveanyinterestin
theincomeofthecommontrustfund,andappelleeVaughanwasappointedtorepresent
thosesimilarlyinterestedintheprincipal.Therewerenootherappearancesonbehalfof
anyoneinterestedineitherinterestorprincipal.
Page339U.S.311
Appellantappearedspecially,objectingthatnoticeandthestatutoryprovisionsfornoticeto
beneficiarieswereinadequatetoafforddueprocessundertheFourteenthAmendment,and
thereforethatthecourtwaswithoutjurisdictiontorenderafinalandbindingdecree.
Appellant'sobjectionswereentertainedandoverruled,theSurrogateholdingthatthenotice
requiredandgivenwassufficient.75N.Y.S.2d397.Afinaldecreeacceptingtheaccounts
hasbeenentered,affirmedbytheAppellateDivisionoftheSupremeCourt,InreCentral
HanoverBank&TrustCo.,275App.Div.769,88N.Y.S.2d907,andbytheCourtofAppeals
oftheStateofNewYork,299N.Y.697,87N.E.2d73.
Theeffectofthisdecree,asheldbelow,istosettle"allquestionsrespectingthe
managementofthecommonfund."Weunderstandthateveryrightwhichbeneficiaries
wouldotherwisehaveagainstthetrustcompany,eitherastrusteeofthecommonfundoras
trusteeofanyindividualtrust,forimpropermanagementofthecommontrustfundduring
theperiodcoveredbytheaccountingissealedandwhollyterminatedbythedecree.See
MatterofHoaglund'sEstate,194Misc.803,811812,74N.Y.S.2d156,164,affirmed,272
App.Div.1040,74N.Y.S.2d911,affirmed,297N.Y.920,79N.E.2d746MatterofBankof
NewYork,189Misc.459,470,67N.Y.S.2d444,453MatterofSecurityTrustCo.of
Rochester,189Misc.748,760,70N.Y.S.2d260,271MatterofContinentalBank&Trust
Co.,189Misc.795,797,67N.Y.S.2d806,807808.
WearemetattheoutsetwithachallengetothepoweroftheStatetherightofitscourts
toadjudicateatallasagainstthosebeneficiarieswhoresidewithouttheStateofNewYork.
Itiscontendedthattheproceedingisoneinpersonam,inthatthedecreeaffectsneithertitle
tonorpossessionofanyres,butadjudgesonlypersonalrightsofthebeneficiariesto
surchargetheirtrusteefornegligenceorbreachoftrust.Accordingly,itissaid,underthe
strictdoctrineofPennoyerv.Neff, 95U.S.714,theSurrogate
Page339U.S.312
iswithoutjurisdictionastononresidentsuponwhompersonalserviceofprocesswasnot
made.
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Distinctionsbetweenactionsinremandthoseinpersonamareancient,andoriginally
expressedinproceduraltermswhatseemsreallytohavebeenadistinctioninthe
substantivelawofpropertyunderasystemquiteunlikeourown.BucklandandMcNair,
RomanLawandCommonLaw,66Burdick,PrinciplesofRomanLawandTheirRelationto
ModernLaw,298.Thelegalrecognitionandriseineconomicimportanceofincorporealor
intangibleformsofpropertyhaveupsettheancientsimplicityofpropertylawandtheclarity
ofitsdistinctions,whilenewformsofproceedingshaveconfusedtheoldprocedural
classification.Americancourtshavesometimesclassedcertainactionsasinrembecause
personalserviceofprocesswasnotrequired,and,atothertimes,haveheldpersonal
serviceofprocessnotrequiredbecausetheactionwasinrem.Seecasescollectedin
FreemanonJudgments,1517etseq.(5thed.).
Judicialproceedingstosettlefiduciaryaccountshavebeensometimestermedinrem,or,
moreindefinitely,quasiinrem,ormorevaguelystill,"inthenatureofaproceedinginrem."
ItisnotreadilyapparenthowthecourtsofNewYorkdidorwouldclassifythepresent
proceeding,whichhassomecharacteristics,andiswantinginsomefeaturesof,
proceedingsbothinremandinpersonam.But,inanyevent,wethinkthattherequirements
oftheFourteenthAmendmenttotheFederalConstitutiondonotdependupona
classificationforwhichthestandardsaresoelusiveandconfusedgenerally,andwhich,
beingprimarilyforstatecourtstodefine,mayanddovaryfromstatetostate.Without
disparagingtheusefulnessofdistinctionsbetweenactionsinremandthoseinpersonamin
manybranchesoflaw,oronotherissues,orthereasoningwhichunderliesthem,wedonot
restthepoweroftheStatetoresorttoconstructiveserviceinthisproceeding
Page339U.S.313
uponhowitscourtsorthisCourtmayregardthishistoricantithesis.Itissufficienttoobserve
that,whateverthetechnicaldefinitionofitschosenprocedure,theinterestofeachstatein
providingmeanstoclosetruststhatexistbythegraceofitslawsandareadministered
underthesupervisionofitscourtsissoinsistentandrootedincustomastoestablish
beyonddoubttherightofitscourtstodeterminetheinterestsofallclaimants,residentor
nonresident,provideditsprocedureaccordsfullopportunitytoappearandbeheard.
Quitedifferentfromthequestionofastate'spowertodischargetrusteesisthatofthe
opportunityitmustgivebeneficiariestocontest.Manycontroversieshaveragedaboutthe
crypticandabstractwordsoftheDueProcessClause,buttherecanbenodoubtthat,ata
minimum,theyrequirethatdeprivationoflife,libertyorpropertybyadjudicationbepreceded
bynoticeandopportunityforhearingappropriatetothenatureofthecase.
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Intwoways,thisproceedingdoesormaydeprivebeneficiariesofproperty.Itmaycutoff
theirrightstohavethetrusteeanswerfornegligentorillegalimpairmentsoftheirinterests.
Also,theirinterestsarepresumablysubjecttodiminutionintheproceedingbyallowanceof
feesandexpensestoonewho,intheirnamesbutwithouttheirknowledge,mayconducta
fruitlessoruncompensatorycontest.Certainlytheproceedingisoneinwhichtheymaybe
deprivedofpropertyrightsandhencenoticeandhearingmustmeasureuptothestandards
ofdueprocess.
Personalserviceofwrittennoticewithinthejurisdictionistheclassicformofnoticealways
adequateinanytypeofproceeding.ButthevitalinterestoftheStateinbringinganyissues
astoitsfiduciariestoafinalsettlementcanbeservedonlyifinterestsorclaimsof
individualswhoareoutsideoftheStatecansomehowbedetermined.Aconstructionofthe
DueProcessClausewhich
Page339U.S.314
wouldplaceimpossibleorimpracticalobstaclesinthewaycouldnotbejustified.
AgainstthisinterestoftheState,wemustbalancetheindividualinterestsoughttobe
protectedbytheFourteenthAmendment.Thisisdefinedbyourholdingthat"[t]he
fundamentalrequisiteofdueprocessoflawistheopportunitytobeheard."Grannisv.
Ordean, 234U.S.385,234U.S.394.Thisrighttobeheardhaslittlerealityorworth
unlessoneisinformedthatthematterispendingandcanchooseforhimselfwhetherto
appearordefault,acquiesceorcontest.
TheCourthasnotcommitteditselftoanyformulaachievingabalancebetweenthese
interestsinaparticularproceedingordeterminingwhenconstructivenoticemaybeutilized,
orwhattestitmustmeet.Personalservicehasnot,inallcircumstances,beenregardedas
indispensabletotheprocessduetoresidents,andithasmoreoftenbeenheldunnecessary
astononresidents.Wedisturbnoneoftheestablishedrulesonthesesubjects.Nodecision
constitutesacontrolling,orevenaveryilluminating,precedentforthecasebeforeus.Buta
fewgeneralprinciplesstandoutinthebooks.
Anelementaryandfundamentalrequirementofdueprocessinanyproceedingwhichisto
beaccordedfinalityisnoticereasonablycalculated,underallthecircumstances,toapprise
interestedpartiesofthependencyoftheactionandaffordthemanopportunitytopresent
theirobjections.Millikenv.Meyer, 311U.S.457Grannisv.Ordean, 234U.S.385Priest
v.LasVegas, 232U.S.604Rollerv.Holly, 176U.S.398.Thenoticemustbeofsuch
natureasreasonablytoconveytherequiredinformation,Grannisv.Ordean,supra,andit
mustaffordareasonabletimeforthoseinterestedtomaketheirappearance,Rollerv.Holly,
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supra,andcf.Goodrichv.Ferris, 214U.S.71.Butif,withdueregardforthepracticalities
andpeculiaritiesofthecase,theseconditions
Page339U.S.315
arereasonablymet,theconstitutionalrequirementsaresatisfied.
"Thecriterionisnotthepossibilityofconceivableinjury,butthejustandreasonable
characteroftherequirements,havingreferencetothesubjectwithwhichthestatutedeals."
AmericanLandCo.v.Zeiss, 219U.S.47,219U.S.67,andseeBlinnv.Nelson, 222U.
S.1,222U.S.7.
Butwhennoticeisaperson'sdue,processwhichisameregestureisnotdueprocess.The
meansemployedmustbesuchasonedesirousofactuallyinformingtheabsenteemight
reasonablyadopttoaccomplishit.Thereasonableness,andhencetheconstitutionalvalidity
of,anychosenmethodmaybedefendedonthegroundthatitis,initself,reasonablycertain
toinformthoseaffected,compareHessv.Pawloski, 274U.S.352,withWuchterv.
Pizzutti, 276U.S.13,or,whereconditionsdonotreasonablypermitsuchnotice,thatthe
formchosenisnotsubstantiallylesslikelytobringhomenoticethanotherofthefeasible
andcustomarysubstitutes.
Itwouldbeidletopretendthatpublicationalone,asprescribedhere,isareliablemeansof
acquaintinginterestedpartiesofthefactthattheirrightsarebeforethecourts.Itisnotan
accidentthatthegreaternumberofcasesreachingthisCourtonthequestionofadequacy
ofnoticehavebeenconcernedwithactionsfoundedonprocessconstructivelyserved
throughlocalnewspapers.Chancealonebringstotheattentionofevenalocalresidentan
advertisementinsmalltypeinsertedinthebackpagesofanewspaper,and,ifhemakeshis
homeoutsidetheareaofthenewspaper'snormalcirculation,theoddsthattheinformation
willneverreachhimarelargeindeed.Thechanceofactualnoticeisfurtherreducedwhen,
ashere,thenoticerequireddoesnotevennamethosewhoseattentionitissupposedto
attract,anddoesnotinformacquaintanceswhomightcallittoattention.Inweighingits
sufficiencyonthebasisofequivalencewithactualnotice,weareunabletoregardthisas
morethanafeint.
Page339U.S.316
Norispublicationherereinforcedbystepslikelytoattracttheparties'attentiontothe
proceeding.Itistruethatpublicationtraditionallyhasbeenacceptableasnotification
supplementaltootheractionwhich,initself,mayreasonablybeexpectedtoconveya
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warning.Thewaysofanownerwithtangiblepropertyaresuchthatheusuallyarranges
meanstolearnofanydirectattackuponhispossessoryorproprietaryrights.Hence,libelof
aship,attachmentofachattelorentryuponrealestateinthenameoflawmayreasonably
beexpectedtocomepromptlytotheowner'sattention.Whenthestatewithinwhichthe
ownerhaslocatedsuchpropertyseizesitforsomereason,publicationorpostingaffordsan
additionalmeasureofnotification.Astatemayindulgetheassumptionthatonewhohasleft
tangiblepropertyinthestateeitherhasabandonedit,inwhichcaseproceedingsagainstit
deprivehimofnothing,cf.AndersonNationalBankv.Luckett, 321U.S.233Security
SavingsBankv.California, 263U.S.282,orthathehasleftsomecaretakerunderaduty
tolethimknowthatitisbeingjeopardized.Ballardv.Hunter, 204U.S.241Hulingv.Kaw
ValleyR.Co., 130U.S.559,.AsphrasedlongagobyChiefJusticeMarshallinTheMary,
9Cranch126,13U.S.144,
"Itisthepartofcommonprudenceforallthosewhohaveanyinterestin[athing]toguard
thatinterestbypersonswhoareinasituationtoprotectit."
Inthecasebeforeus,thereis,ofcourse,noabandonment.Ontheotherhand,these
beneficiariesdohavearesidentfiduciaryascaretakeroftheirinterestinthisproperty.Butit
istheircaretakerwho,intheaccounting,becomestheiradversary.Theirtrusteeisreleased
fromgivingnoticeofjeopardy,andnooneelseisexpectedtodoso.Noteventhespecial
guardianisrequiredorapparentlyexpectedtocommunicatewithhiswardandclient,and,
ofcourse,ifsuchadutyweremerelytransferred
Page339U.S.317
fromthetrusteetotheguardian,economywouldnotbeservedandmorelikelythecost
wouldbeincreased.
ThisCourthasnothesitatedtoapproveofresorttopublicationasacustomarysubstitutein
anotherclassofcaseswhereitisnotreasonablypossibleorpracticabletogivemore
adequatewarning.Thus,ithasbeenrecognizedthat,inthecaseofpersonsmissingor
unknown,employmentofanindirect,andevenaprobablyfutile,meansofnotificationisall
thatthesituationpermits,andcreatesnoconstitutionalbartoafinaldecreeforeclosingtheir
rights.Cunniusv.ReadingSchoolDistrict, 198U.S.458Blinnv.Nelson, 222U.S.1and
seeJacobv.Roberts, 223U.S.261.
Thosebeneficiariesrepresentedbyappellantwhoseinterestsorwhereaboutscouldnot,
withduediligence,beascertainedcomeclearlywithinthiscategory.Astothem,the
statutorynoticeissufficient.Howevergreattheoddsthatpublicationwillneverreachthe
eyesofsuchunknownparties,itisnotinthetypicalcase,muchmorelikelytofailthanany
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ofthechoicesopentolegislatorsendeavoringtoprescribethebestnoticepracticable.
NordoweconsideritunreasonablefortheStatetodispensewithmorecertainnoticeto
thosebeneficiarieswhoseinterestsareeitherconjecturalorfutureor,althoughtheycould
bediscovereduponinvestigation,donot,induecourseofbusiness,cometoknowledgeof
thecommontrustee.Whateversearchesmightberequiredinanothersituationunder
ordinarystandardsofdiligence,inviewofthecharacteroftheproceedingsandthenatureof
theinterestshereinvolved,wethinkthemunnecessary.Werecognizethepractical
difficultiesandcoststhatwouldbeattendantonfrequentinvestigationsintothestatusof
greatnumbersofbeneficiaries,manyofwhoseinterestsinthecommonfundaresoremote
astobeephemeral,andwehavenodoubtthatsuchimpracticableandextendedsearches
arenotrequiredinthe
Page339U.S.318
nameofdueprocess.Theexpenseofkeepinginformedfromdaytodayofsubstitutions
amongevencurrentincomebeneficiariesandpresumptiveremaindermen,tosaynothingof
thefargreaternumberofcontingentbeneficiaries,wouldimposeasevereburdenonthe
plan,andwouldlikelydissipateitsadvantages.Thesearepracticalmattersinwhichwe
shouldbereluctanttodisturbthejudgmentofthestateauthorities.
Accordinglyweoverruleappellant'sconstitutionalobjectionstopublishednoticeinsofaras
theyareurgedonbehalfofanybeneficiarieswhoseinterestsoraddressesareunknownto
thetrustee.
Astoknownpresentbeneficiariesofknownplaceofresidence,however,noticeby
publicationstandsonadifferentfooting.Exceptionsinthenameofnecessitydonotsweep
awaytherulethat,withinthelimitsofpracticability,noticemustbesuchasisreasonably
calculatedtoreachinterestedparties.Wherethenamesandpostofficeaddressesofthose
affectedbyaproceedingareathand,thereasonsdisappearforresorttomeanslesslikely
thanthemailstoapprisethemofitspendency.
Thetrusteehasonitsbooksthenamesandaddressesoftheincomebeneficiaries
representedbyappellant,andwefindnotenablegroundfordispensingwithaseriouseffort
toinformthempersonallyoftheaccounting,atleastbyordinarymailtotherecord
addresses.Cf.Wuchterv.Pizzutti,supra.Certainlysendingthemacopyofthestatute
months,andperhapsyears,inadvancedoesnotanswerthispurpose.Thetrustee
periodicallyremitstheirincometothem,andwethinkthattheymightreasonablyexpect
that,withorapartfromtheirremittances,wordmightcometothempersonallythatsteps
werebeingtakenaffectingtheirinterests.
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Weneednotweighcontentionsthatarequirementofpersonalserviceofcitationoneven
thelargenumberofknownresidentornonresidentbeneficiarieswould,by
Page339U.S.319
reasonsofdelay,ifnotofexpense,seriouslyinterferewiththeproperadministrationofthe
fund.Ofcourse,personalservice,evenwithoutthejurisdictionoftheissuingauthority,
servestheendofactualandpersonalnotice,whateverpowerofcompulsionitmightlack.
However,nosuchserviceisrequiredunderthecircumstances.Thistypeoftrust
presupposesalargenumberofsmallinterests.Theindividualinterestdoesnotstandalone,
butisidenticalwiththatofaclass.Therightsofeachintheintegrityofthefund,andthe
fidelityofthetrustee,aresharedbymanyotherbeneficiaries.Therefore,noticereasonably
certaintoreachmostofthoseinterestedinobjectingislikelytosafeguardtheinterestsof
all,sinceanyobjectionssustainedwouldinuretothebenefitofall.Wethinkthat,under
suchcircumstances,reasonablerisksthatnoticemightnotactuallyreacheverybeneficiary
arejustifiable.
"Nowandthen,anextraordinarycasemayturnup,butconstitutionallaw,likeothermortal
contrivances,hastotakesomechances,and,inthegreatmajorityofinstances,nodoubt,
justicewillbedone."
Blinnv.Nelson,at222U.S.7.
Thestatutorynoticetoknownbeneficiariesisinadequatenotbecause,infact,itfailsto
reacheveryone,butbecause,underthecircumstances,itisnotreasonablycalculatedto
reachthosewhocouldeasilybeinformedbyothermeansathand.Howeveritmayhave
beeninformertimes,themailstodayarerecognizedasanefficientandinexpensivemeans
ofcommunication.Moreover,thefactthatthetrustcompanyhasbeenabletogivemailed
noticetoknownbeneficiariesatthetimethecommontrustfundwasestablishedis
persuasivethatpostalnotificationatthetimeofaccountingwouldnotseriouslyburdenthe
plan.
Insomesituations,thelawrequiresgreaterprecautionsinitsproceedingsthanthebusiness
worldacceptsforitsownpurposes.Infew,ifany,willitbesatisfiedwith
Page339U.S.320
less.Certainlyitisinstructive,indeterminingthereasonablenessoftheimpersonal
broadcastnotificationhereused,toaskwhetheritwouldsatisfyaprudentmanofbusiness,
countinghispenniesbutfindingitinhisinteresttoconveyinformationtomanypersons
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whosenamesandaddressesareinhisfiles.Wearenotsatisfiedthatitwould.Publication
maytheoreticallybeavailableforalltheworldtosee,butitistoomuch,inourday,to
supposethateachoranyindividualbeneficiarydoesorcouldexamineallthatispublished
toseeifsomethingmaybetuckedawayinitthataffectshispropertyinterests.Wehave
beforeindicated,inreferencetonoticebypublication,that"Greatcautionshouldbeused
nottoletfictiondenythefairplaythatcanbesecuredonlybyaprettycloseadhesionto
fact."McDonaldv.Mabee, 243U.S.90,243U.S.91.
WeholdthenoticeofjudicialsettlementofaccountsrequiredbytheNewYorkBankingLaw
100c(12)isincompatiblewiththerequirementsoftheFourteenthAmendmentasabasis
foradjudicationdeprivingknownpersonswhosewhereaboutsarealsoknownofsubstantial
propertyrights.Accordingly,thejudgmentisreversed,andthecauseremandedforfurther
proceedingsnotinconsistentwiththisopinion.
Reversed.
MR.JUSTICEDOUGLAStooknopartintheconsiderationordecisionofthiscase.
*Ala.CodeAnn.,1940,Cum.Supp.1947,tit.58,88to103,asamended,Laws1949,Act
262Ariz.CodeAnn.,1939,Cum.Supp.1949,511101to511104Ark.Stat.Ann.1947,
58110to58112Cal.Bank.CodeAnn.,Deering1949,1564Colo.Stat.Ann.,1935,
Cum.Supp.1947,c.18,173to178Conn.Gen.Stat.1949Rev.,5805Del.Rev.Code,
1935,4401,asamended,Laws1943,c.171,Laws1947,c.268(D.C.)Pub.LawNo.416,
81stCong.,1stSess.,c.767,Oct.27,1949,63Stat.938Fla.Stat.,1941,655.29to
655.34,F.S.A.Ga.CodeAnn.,1937,Cum.Supp.1947,109601to109622IdahoCode
Ann.,1949,Cum.Supp.1949,68701to68703Ill.Rev.Stat.,1949,c.161/2,57to
63Ind.Stat.Ann.,Burns1950,182009to182014Ky.Rev.Stat.,1948,287.230
La.Gen.Stat.Ann.,1939,9850.64,ActNo.81of1938,64Md.Ann.CodeGen.Laws,
1939,Cum.Supp.1947,art.11,62AMass.Ann.Laws,1933,Cum.Supp.1949,c.203A
Mich.Stat.Ann.,1943,Cum.Supp.1949,23.1141to23.1153,Comp.Laws1948,
555.101555.113Minn.Stat.,1945,48.84,asamended,Laws1947,c.234,M.S.A.
N.J.S.A.,1939,Cum.Supp.1949,17:9A36to17:9A46N.C.Gen.Stat.,1943,3647
to3652OhioGen.CodeAnn.(Page's1946),Cum.Supp.1949,715to720,722
Okla.Stat.1941,Cum.Supp.1949,tit.60,162Pa.Stat.Ann.,1939,Cum.Supp.1949,tit.7,
8191109to8191109dSo.Dak.Laws1941,c.20Vernon'sTex.Rev.Civ.Stat.Ann.,
1939,Cum.Supp.1949,art.7425b48Vt.Stat.,1947Rev.,8873Va.CodeAnn.,1950,
6569to6576Wash.Rev.Stat.Ann.,Supp.1943,3388to33886W.Va.CodeAnn.,
1949,4219(1)etseq.Wisc.Stat.,1947,223.055.
12/16
1/20/2016
MR.JUSTICEBURTON,dissenting.
Thesecommontrustsareavailableonlywhentheinstrumentscreatingtheparticipating
trustspermitparticipationinthecommonfund.Whetherornotfurthernoticetobeneficiaries
shouldsupplementthenoticeandrepresentationhereprovidedisproperlywithinthe
discretionoftheState.TheFederalConstitutiondoesnotrequireithere.
Disclaimer:OfficialSupremeCourtcaselawisonlyfoundintheprintversionoftheUnited
StatesReports.Justiacaselawisprovidedforgeneralinformationalpurposesonly,and
maynotreflectcurrentlegaldevelopments,verdictsorsettlements.Wemakenowarranties
orguaranteesabouttheaccuracy,completeness,oradequacyoftheinformationcontained
onthissiteorinformationlinkedtofromthissite.Pleasecheckofficialsources.
Contributors
ChrisSkelton
MountainView,CA
PrimaryHolding
Reasonablestepsmustbetakentogivepotentiallyinterestedpartiesnoticeofanaction
andanopp...
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