## Facts

- Florida Gas Company issued $15 million of 5 3/4% convertible subordinated debentures due 1989, governed by an indenture naming Citibank, N.A. as trustee.
- The debentures were redeemable at any time, and holders could convert to common stock at a specified conversion price.
- The indenture required redemption notice by first-class mail, sent 30–60 days before the redemption date, to each holder at the last address shown in the debenture register.
- Florida Gas agreed to merge with Continental Resources Co. and decided to redeem all outstanding debentures, giving holders a deadline to convert before redemption.
- Citibank mailed redemption notices to registered holder addresses and submitted affidavits and records describing its standard mailing procedures and their use for this redemption.
- Some debenture holders (customers of J & W Seligman & Co.) did not convert by the deadline and were redeemed for cash; they asserted they did not receive notice.
- The Seligman partners sued the issuer’s successor entities and Citibank, alleging deficient notice under the indenture/debentures and violations of federal securities law.
- The district court granted summary judgment to defendants; plaintiffs appealed.

## Issues

1. Whether evidence of Citibank’s routine mailing procedures and records established proper mailing as a matter of law, despite some holders’ claims of non-receipt.
2. Whether providing notice by first-class mail to registered addresses, as required by the indenture, could constitute an actionable violation under federal securities law when some holders allegedly did not receive or act on the notice.

## Decision

- The Second Circuit affirmed summary judgment for the issuer’s successor entities and Citibank.
- The court held that defendants’ evidence of regular office mailing practices and compliance created a sufficient showing that notice was mailed as required.
- The court held that individual non-receipt did not, by itself, raise a genuine dispute as to whether mailing occurred.
- The court held that compliance with the indenture’s specified notice method satisfied contractual notice duties and did not support federal securities-law liability absent misrepresentation or concealment.

## Legal Principles

- Proof of a regular office practice for mailing, coupled with evidence the practice was followed, supports an inference that notices were mailed; denials of receipt generally go to receipt, not mailing, and do not alone create a triable issue.
- When an indenture defines the method and timing of notice (first-class mail to the address in the register within a specified window), compliance discharges the notice obligation; actual receipt is not required unless the contract so provides.
- Mailing redemption notice in conformity with disclosed contractual terms, without additional deceptive conduct, does not constitute securities fraud merely because some holders failed to receive or timely act on the notice.
- Summary judgment is proper where the nonmovant offers only evidence of non-receipt to counter unrebutted evidence of mailing pursuant to established procedures.

## Conclusion

The court upheld summary judgment because the trustee’s evidence established that redemption notices were mailed as the indenture required, and the issuer and trustee had no duty to ensure actual receipt or take extra-contractual steps; non-receipt alone did not defeat mailing proof or create federal securities-law liability.


Meckel v. Cont’l Res. Co., 758 F.2d 811 (2d Cir. 1985)