Professional Documents
Culture Documents
CENTRAL HANOVER
BANK & TRUST CO., TRUSTEE, ET AL.
399 US 306 (1950)
ANGELICA BELLADONNA C. LEONOR
2
REPORT CONTENTS
QUICK DEFINITIONS &
FACTS OF THE CASE ISSUES
BACKGROUND
Under this law a trust company may, with approval of the State
Banking Board, may establish a common fund and, within
prescribed limits, invest therein the assets of an unlimited
number of estates, trusts or other funds of which it is a
trustee. Each participating trust shares ratably in the common
fund, but exclusive management and control is in the trust
company as trustee, and neither a fiduciary nor any beneficiary
of a participating trust is deemed to have ownership in any
particular asset or investment of this common fund.
What is an action to settle a trustee's 7
account?
An action to settle a trustee's account is brought to
determine the propriety of the trustee's management of
the trust funds. If there has been any mismanagement,
the trustee is personally liable for resulting loss.
facts:
8
Mullane
A lawyer was appointed as guardian ad litem for the income
beneficiaries in an accounting for a common trust fund
established by the Central Hanover Bank and Trust Company,
challenged the constitutional validity of the judgment
purporting to bind beneficiaries who received no notice of the
proceeding.
11
Is notice by publication of a
it would usually be
impossible to settle a
To settle a trustee's trustee's account if total
account a court must jurisdiction in personam
have jurisdiction in were necessary because
personam of the trustee, there would be no one
but personal jurisdiction place where the trustee
of the beneficiaries is could get jurisdiction of
not necessary. all the beneficiaries.
15
HOWEVER…
common trust funds would not be required to send
notice to all beneficiaries, but would be required to
notify those whose names and addresses were in
their records
Likewise…
17
The Court recognized the practical difficulties and costs that would
be attendant on frequent investigations into the status of great
numbers of beneficiaries, many of whose interests in the common
fund are so remote as to be ephemeral; and the Court had no
doubt that such impracticable and extended searches are not
required in the name of due process.
But…
18
DOCTRINE ESTABLISHED
Judicial settlement of accounts required by the New York
Banking Law § 100-c(12) is incompatible with the
requirements of the Fourteenth Amendment as the
Supreme Court held that due process required notice by
mail to every beneficiary whose names and addresses are
known.
20
THANK YOU!
Any questions?
Don’t ask me! Just kidding.