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attorneytrialtrust

jurisdictiontrust

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In re Milton Hershey School, 590 Pa. 35, 911 A.2d 1258, 215 Ed. Law Rep. 84

Facts

In 1909, Milton and Catherine Hershey established the Milton Hershey School, funded by the Milton Hershey School Trust. The alumni association, formed in 1930, believed the Trust's resources were being misused and sought legal action after the Attorney General modified an agreement governing the Trust's administration. The association claimed it had a special interest in the Trust's enforcement, but the trial court dismissed their petition for lack of standing.

In 1909, Milton and Catherine Hershey established the Milton Hershey School, a charitable institution, funded by the Milton Hershey School Trust. The deed of trust is the original agreement between the Hersheys, the Hershey Trust Company as Trustee, and the Managers of the Trust. The deed, as amended in 1976, provides that the Trust Company and the Board of Managers (which consists of members of the Board of Directors of the Trust Company), are to administer the Trust and have responsibility for all aspects of running the School and for managing the Trust's assets.

Issue

Did the alumni association have standing to challenge the modification of the agreement governing the administration of the Milton Hershey School Trust?

Rule

Private parties generally lack standing to enforce charitable trusts unless they can demonstrate a special interest in the enforcement of the trust.

Private parties generally lack standing to enforce charitable trusts. In re Pruner's Estate, 390 Pa. 529, 136 A.2d 107, 109 (1957). Since the public is the object of the settlor's beneficiaries in a charitable trust, private parties generally have insufficient interest in such trusts to enforce them.

Analysis

The court applied a five-part test to determine whether the alumni association had a special interest in the Trust. It found that the association's relationship with the Trust did not provide it with the necessary standing, as the Trust specifically excluded the association and its members from being beneficiaries. The court emphasized that standing requires a substantial, direct, and immediate interest, which the association lacked.

Applying this test, the court found the circumstances here to be extraordinary, citing the need for reform administration of Trust assets, the decrease in the number of children the School served vis à vis over $5 billion in Trust assets, and the Association's instrumental role in addressing problems in the Trust's administration.

Conclusion

The Supreme Court concluded that the alumni association did not have standing to bring the action, reversing the Commonwealth Court's decision.

We hold the Association did not have standing to bring this action. Order reversed. Jurisdiction relinquished.

Who won?

The Milton Hershey School and the Trust Company prevailed because the Supreme Court found that the alumni association lacked the necessary standing to challenge the Trust's administration.

The Supreme Court, Nos. 137, 138 MAP 2005, Eakin, J., held that alumni association did not have a special interest sufficient to vest it with standing.

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