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LEGAL ADVERTISING IN NORTH CAROLINA: Postal Classification Reform Makes Bad Situation Worse


August 18, 1996 Legal News

Michael J. Tadych and Hugh Stevens
(Note: Michael J. Tadych is a student at the CaseWestern Reserve School of Law who is a summer intern at Everett, Gaskins, Hancock & Stevens.)

Leave it to the U.S. Postal Service to make a bad situation worse.

For years, the North Carolina statutes that define which newspapers may print legal advertisements have been prolix, vague and well-nigh unfathomable. Now, thanks to changes to the U.S. Postal classification system that became effective on July 1, they are even more murky.

The primary purpose of legal advertisements is to inform the public of matters deemed important by the legislature. Be it a county publishing recently recorded property tax liens, the state letting contracts out to bid, a bank that is about to foreclose on real property, or a lawyer handling the probate of a will, the General Assembly requires a legally sufficient published notice.

Beginning in 1939 the General Assembly defined the criteria a newspaper must meet in order to be eligible to publish legal notices. By following the statutory criteria, those who were legally obligated to provide legal notices could be assured that they had met their obligation. In recent years, however, changes in the newspaper business and in federal postal regulations have rendered the statutes, which were never a model of clarity, increasingly ambiguous and confusing.

Legal advertising in North Carolina is regulated by 1-596 through 1-599 of the General Statutes. G.S. 1-596, which sets out the guidelines for pricing of legal advertising, provides that charges for legal ads may not exceed to the “local commercial rates” charged by the newspaper, and requires newspapers to file their commercial advertising rates with the county clerk before accepting or printing any legal advertisement. Failing to file commercial ad rates with the county clerk before accepting or printing legal ads can leave the “owner or manager” of a newspaper guilty of a Class 1 misdemeanor. In addition, failure to keep the filed rates current may result in the newspaper’s being required to accept payment for legal advertising at obsolete rates. A newspapers may, of course, establish rates for legal advertisements that are lower than its commercial rates.

The criteria for what newspapers qualify to accept legal advertising are outlined in N.C.G.S. 1-597 — two paragraphs of legal gobbledygook that would make any editor or fourth-grade English teacher cringe. As now written, G.S. 1-597 provides that the only newspapers eligible to accept and publish legal advertising are those (1) with a general circulation to actual paid subscribers, (2) which have been admitted to the United States mails as second-class matter in the county or political subdivision where the legal advertisement is required, and (3) which have been published at least one day per week in at least 25 of the 26 consecutive weeks immediately proceeding the first day of publication of the legal advertisement. G.S. 1-597 also provides that newspapers published in cities or towns that are located in more than one county (i.e., Rocky Mount or Mebane) may accept legal advertisements aimed at either county so long as the newspaper meets the other criteria.

Another exception in G.S. 1-597 permits required legal notices to be published in newspapers in adjoining counties if the clerk of the superior court in the county requiring the advertisement determines that no newspaper meeting all of the statutory criteria is published in his or her county.

North Carolina General Statute 1-598 declares that a newspaper manager’s sworn statement attesting to the newspaper’s compliance with the requirements for publishing legal advertisements constitutes prima facie evidence that the newspaper in fact meets those requirements. Finally, N.C.G.S. 1-599 lifts the requirements on newspapers from G.S. 1-597 and G.S. 1-598 in counties where only one newspaper is published, or where more than one newspaper is published but none of them meets all of the statutory requirements.

As all publishers and circulation managers must know by now, as of July 1, 1996, the U.S. Postal Service eliminated the familiar second-class mail classification. Newspapers and other periodicals are now classified in the Periodicals classification, which includes subclasses for Regular and Preferred publications. Although the Periodical classification appears to be the functional equivalent of second-class mail, no official statement or declaration of their equivalency has been issued. Therefore, since G.S. 1-597 specifically refers to “second-class mail,” there is no newspaper in North Carolina that can literally meet the statutory criteria for accepting and publishing legal advertisements, and no representative of a newspaper can truthfully swear that the newspaper meets the legal requirements. Does this mean that G.S. 1-599, which suspends the application G.S. 1-597 and 1-598 in counties where no newspaper meets the requirements, now applies to all North Carolina newspapers? Or should publishers view the second-class mail requirement as having been stricken while the paid circulation and frequency requirements of G.S. 1-597 remain in effect? In our opinion, the latter interpretation is the better one, but until the statute is amended or a court of competent jurisdiction declares what it means, no one can say for sure. Clearly, clarification is in order.

In sum, the Postal Service’s elimination of the second-class mail classification provides both the opportunity and the necessity for rewriting and simplifying the North Carolina statutes governing legal advertising. In addition to the issues raised by the elimination of second-class mail, a rewrite could address other ambiguities lurking in these laws. For example, the language pertaining to a newspaper’s place of publication, which in former times could easily be determined by looking for a newsroom and a printing press, has been rendered ambiguous by zoned editions, “wrap-arounds” and multiple mastheads.

To set the clarification process in motion, we have drafted a letter to the North Carolina General Statutes Commission on behalf of the NCPA, pointing out the problems associated with the existing statutes. The Commission, which is responsible for keeping the General Statutes up to date, may well respond by asking the NCPA and its members to suggest how the laws can be updated to reflect the modern newspaper industry in North Carolina while at the same time maintaining the rationale for legal advertising requirements in the first place — adequate public notice of governmental activities and legal matters. In the meantime, we recommend that NCPA member newspapers that were qualified to accept legal advertisements prior to July 1 continue to file their current commercial rates with the appropriate county clerk, and continue to provide advertisers with affidavits of publication. If you have specific questions, call the NCPA Hotline.

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