Mizzou Sued Over Alleged Violation Of Legacy Gift

There is a fascinating filing against the University of Missouri this month. Hillsdale College has filed a lawsuit against Mizzou for violating the agreement that it had with 1926 Mizzou graduate Sherlock Hibbs. The filing is a novel arrangement with Hibbs that not only stipulates the academic views of appointed faculty but gives the default (and incentive for monitoring) to a rivaling academic institution. For Mizzou, the lawsuit is the latest controversy over its political leanings, though this is a more academic dispute over economic theory. While admissions appear to have risen at Mizzou (though numbers remain overall down), a controversy over gifts could not come at a worse time.

As an academic, I am uncomfortable with gifts that specify intellectual positions or values of the faculty. I would not have signed on to this language of being an adherent as opposed to academics who teach the underlying theories and materials. Donors often complain about a bait-and-switch on legacy agreements where their wishes are eventually ignored. In 2002, Mizzou was delighted to receive a $5 million legacy from Hibbs, who wanted to fund six professor positions at the Trulaske College of Business for free market economics academics.

Here is how the brief describes the grant:

“Sherlock Hibbs was an adherent of the Ludwig von Mises (Austrian) School of Economics. The Austrian School emphasizes free markets, private property, and limited government, and differs in significant respects from Keynesian and other schools of economic thought. In 2002, Mr. Hibbs, a 1926 graduate of MU, donated $5,000,000 to fund three Chairs and three Distinguished Professorships at MU’s Trulaske College of Business (“TCB”). The Hibbs Will required that the bequest be divided into six separate funds. This included three separate sums of $1,100,000 to be used to establish and fund (1) a Chair of Money, Credit and Banking, (2) a Chair of Business and Economics, and (3) a Chair of Entrepreneurship, and three additional amounts ($567,000, $567,000, and $566,000) to establish and fund three Distinguished Professorships. (Id. at Ex. A, page 4, ¶ 9.) The Will also required that each appointee to a Chair and Distinguished Professorship be a dedicated and articulate disciple of theLudwig von Mises Austrian School of Economics.”

What is interesting is that Hibbs inserted a novel provision that stipulated that, if Mizzou violated its agreement, Hillsdale College would get the remaining funds. It also allowed Hillsdale to monitor the compliance with the agreement.

Now Hillsdale is demanding the money under the forfeiture provisions. It is citing the Dean’s own statement against his institution’s interest:

“Rather than decline the bequest or comply with its specific conditions, however, the Dean of the TCB appointed individuals to the Chairs and Distinguished Professorships whom he knew were not Austrian economists, much less “dedicated and articulate disciples” of the Ludwig von Mises. Indeed, in the Dean’s own words, “the Austrian School of Economics is quite controversial. We didn’t want to wade into that controversy, so we focused on some Austrian tenets that are compatible with what we do in our business school.” MU has never appointed a dedicated and articulate disciple of the Ludwig von Mises (Austrian) School of Economics to a Chair or Distinguished Professorship funded by Mr. Hibbs’ gift. Instead, MU provided millions of dollars over 15 years to individuals who were not Austrian economists. In doing so, MU violated the terms of contracts that established the Chairs and Distinguished Professorships, and Hillsdale seeks to recover damages as the third-party beneficiary of those contracts.”

It is rare to see a university stipulate academic viewpoints as a condition for a legacy gift. The incentive given to Hillsdale also is novel and clearly successful in guaranteeing the monitoring of the university. If successful, this could be a model used by others to demand a commitment in the appointment of academics from a particularly ideological or intellectual school of thought.

17 thoughts on “Mizzou Sued Over Alleged Violation Of Legacy Gift”

  1. Where is Hillsdale College? Is it in Missouri?
    There is a song out there:
    (music)
    Good Ol boys from Ol Missou…
    Huslting round Columbia in their alligator shoes..
    Drunk on the weekends at the bar be que..
    Keeping the Hillside Down!

    We’re Rednecks, Rednecks…
    We don’t know our arse from a hole in the ground…
    etc

    1. Liberty2nd – Hillsdale College is a private college in Michigan. Not sure what Mizzou is doing with their money.

      1. Rah Rah Ree
        Kick ’em in the knee
        Rah Rah Rass
        Kick ’em in the other knee

        Hillsdale, Hillsdale!!!

        Don’t forget the interest !!!

  2. Controlling others thoughts and learning on the economy after death is not a new idea — witness the collapsed Marxist regimes, the erosion of Rosevelt’s reforms (you choose which one) and the living legacy of the Koch brothers.

    I could see it as reasonable to endow ONE chair but, to control a whole department through a legacy “gift” seems contrary to academic principles of freedom of thought and the challenge of ideas.

    There had better be a judge named “Solomon” to handle this.

    1. And yet, Mizzou accepted the funds on those terms, thus creating a contract which they then violated the terms of. If they were unwilling to accept the terms of the gift/contract then they should have declined it. They accepted the gift and the terms and then violated those terms, breaching the contract.

      1. Absolutely should have declined it. Academe is treated quite indulgently by courts most of the time and it’s a reasonable wager that they made an actuarial calculation that they could misappropriate the money and the courts would let them get away with it, because that’s what happens in this country. The donor likely anticipated that and gave Hillsdale a pathway to assert an interest. Of course, taking the money is going to give Hillsdale a peculiarly large and eccentric economics department (presuming they can find six Austrians to fill the seats on those endowed chairs).

      2. They seem to have no downside, other than harm to their reputation in the realm of honoring agreements.

  3. The donor is pushing on a string. Economists in this country have a general respect for markets (with some exceptions, like Joseph Stiglitz). However, specifically Austrian conceptions of economic life are quite unusual among economists. They’re an odd minority even among economists whose views on normative questions are libertarian. It’s going to be challenging for Mizzou or Hillsdale to fill those positions with economists (as opposed to, say, historians who fancy Austrian economics, like Thos. Woods). The Independence Institute and the the von Mises Institute. There’s that guy at Grove City and that other guy at St. Lawrence…

  4. The lawyers will tie this one up in knots for years, bill thousands of dollars and millions of dollars and UM will still keep the money simply via attrition. And it will be a loss for both institutions, each of which will spend more in litigation costs than the original value of the gift.

  5. “the Austrian School of Economics is quite controversial. We didn’t want to wade into that controversy, so we focused on some Austrian tenets that are compatible with what we do in our business school.”

    Free market economics are controversial in a free market economy? Limiting the instruction of theory and/or philosophy in an institute of scholars?

    Congratulations Frankfurter School.

    Parents of future university students are taking note.

    1. Again, ‘Austrian economics’ is not ‘free-market economics’. Its a particular subset thereof. And it really belongs in an academic faculty, not at the business school. If the man wanted to endow a professorship in the economics department, that would be OK. Six professorships to the business school is de trop and it would be challenging for any institution to fulfill the terms of the gift. The best solution would be to distribute this portion of his bequests to his relatives, per stirpes. (If the estates, powers, and trust law in his state allows a surrogate’s court that discretion).

  6. The will was clear. MU should have declined the gift if it would not satisfy its requirements.

    The money should go to Hillsdale.

    For those making their wills, take note. It is clear that Mr Hibbs had some level of mistrust in MU, and rightly so. He should have given the money to Hillsdale in the first place. He was probably trying to diversify the university, which tends to be intolerant of opposing ideas.

    The moral of the story – bequeath your money on institutions like Hillsdale that will honor your intentions.

    Hillsdale is in the right, but now it has to spend its own money to fight in court.

    1. these are rare but the leading case was based on promissory estoppel. some other university, an ivy, I cant remember the case name. maybe a decade ago

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