Notice must be reasonably calculated under the circumstances to inform interested parties of a pending action and give them an opportunity to respond. Notice by publication may be insufficient if the names and addresses of the parties are known. To promote the efficient and economical administration of funds in a trust, New York allowed corporate trustees to pool the assets of multiple small trusts that they administered.
While each trust shared in the common fund, the trustees completely controlled all of the assets but were required to submit periodic accountings of profits, losses, and assets to the courts for approval. Beneficiaries had the right to object to irregularities in the administration of the common fund after they were notified of the accounting. They no longer could object, however, once the court approved the accountings.
Central Hanover Bank consolidated small trusts into a single common fund, and it notified all interested parties of the fund and the law that gave rise to its actions. It used a local New York newspaper to provide notice. Mullane, who was the appointed guardian for all parties with an interest in the trust's income, objected on the grounds that this type of notice was insufficient to meet due process requirements.
He pointed out that out-of-state beneficiaries and other interested parties would not be likely to be informed through publication of the impact on their rights. Out-of-state residents cannot be expected to be informed by statements in a local New York newspaper. The notice provision is important because it provides beneficiaries with information on their rights to contest an accounting.
However, notice by publication is the most practical alternative if the location of beneficiaries or future interest holders is unknown. It is a supplemental method that may be appropriate when alternatives are not feasible or not likely to provide actual notice. When the beneficiaries are known, it is generally inappropriate because it would be practical to use a form of notice more likely to reach the intended recipients.
