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. Mullane appealed.
  • 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 unconstitutional.
      • 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.