In re Milton Hershey School Trust

A century ago, Milton and Catherine Hershey created the Milton Hershey School to house, care for, and educate orphaned children. The school was funded by the Milton Hershey School Trust. The same board (defendant) that managed the school also managed the trust assets. Over time, the trust grew to $5.5 billion, becoming the world’s largest residential childcare charity. A quarter century after the school and trust were created, the Hersheys created the Milton Hershey School Alumni Association (plaintiff). The association’s office was located on the school grounds. Alumni of the school made up the association’s membership. The association’s members were dedicated to promoting supplemental educational programs for the students and supporting, mentoring, and fostering comradery among the school’s graduates. As the trust grew, the association began noticing that the trust managers were deviating from the trust’s original charitable purpose. The association notified the state attorney general, who investigated and determined that reforms were needed in the trust’s management. The attorney general and trust managers executed a reform agreement to avoid litigation. An attempted sale of the Hershey Food Company led to reorganization of the trust’s management. The trust managers believed the reorganization obviated the need for reform and thereafter modified the reform agreement with the attorney general. The association sued to rescind the modified agreement. The trial court dismissed the suit for lack of standing. The association appealed.