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339 U.S. 306 (1950)
Brief Fact Summary. Appellee, a bank located in New York, set up a trust covering
113 participants and sent notice by publication to all known and unknown
beneficiaries regarding Appellee’s application for judicial settlement of the
trust, as required under a New York statute. Upon first distribution of the trust,
Appellee would mail notice to known beneficiaries that could benefit from the interest
or principal. Appellant, guardian of the beneficiaries, appealed, arguing that notice by
publication alone violated the beneficiaries’ due process rights under the Fourteenth
Amendment.
Synopsis of Rule of Law. Notice must be “reasonably calculated under all the
circumstances, to apprise interested parties of the action and give them an
opportunity to object.
Facts. Appellee, Central Hanover Bank & Trust, set up common fund pursuant to
a New York statute allowing the creation of common funds for distribution of judicial
settlement trusts. There were 113 participating trusts. Appellee petitioned for
settlement of its first account as common trustee. Some of the beneficiaries were
not residents of New York.
“Notice” was by publication for four weeks in a local newspaper. Appellee 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.
Appellant was 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. Appellee was appointed to
represent those interested in the principal.
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.
The New York Banking Law, however, that does not require notice to all
persons whose whereabouts are known, violates the due process clause of the
Fourteenth Amendment because contacting beneficiaries by mail at their last
known address is not particularly burdensome.
Discussion. The majority’s opinion illustrates that notice by publication will not
suffice only because it would be burdensome for the plaintiff to notify all parties
involved. If the plaintiff knows of a way to contact the parties, then the plaintiff must
bear that expense. Mailing notice to an address, if known, will suffice. Notice by
publication will suffice only if there is no practical way of knowing the identity or
location of the party.
No. 378
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:
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.