Hillsdale Lawsuit: Mizzou Violated Donor Intent by Not Teaching Free Market Economics

Hillsdale College is suing the University of Missouri, claiming Mizzou accepted a donor's $5 million gift but refused to use the money according to his clear direction. The donor gave the money to establish six professorships to teach free market Austrian economics. In the event of his death, the donor named Hillsdale as the institution to guarantee that the gift was being used according to his wishes. He died in 2002. The lawsuit, filed in 2017, claims Mizzou violated his trust, so the money should be transferred to Hillsdale.

"Donor intent is really important. Donors appreciate that the commitment of their generosity lives beyond their time on earth," former Gov. Jay Nixon (D-Mo.), now a lawyer representing Hillsdale in the case, told PJ Media in an interview Monday. "When I looked at this, it was clear to me that the intent of Mr. Sherlock Hibbs was not being embraced or followed by the University of Missouri."

Hibbs, a 1926 University of Missouri graduate, made the bequest in his will before he died in 2002. He gave the money in order to establish three chairs, funded at $1.1 million each, and another three distinguished professorships, with two funded at $567,000 and another at $566,000. In each case, the professor must be a "dedicated and articulate disciple" of Austrian economics. Mizzou accepted the gift, yet more than a decade after his death, the express wishes of the bequest were not carried out, Nixon said.

"$5 million was bequested for six positions. They currently don't even have all of the positions filled: only four of the six are paid for," the former governor explained. Worse, Mizzou leadership "never even embraced or really followed the intent of Mr. Hibbs."

"Hillsdale was in charge of the bequest, to enforce these provisions of this bequest and to make sure it was carried on in a positive way," he explained.

As for Hibbs, "he felt strongly about the Austrian School of economics. He gave authority to Hillsdale to check on it, to make sure it was done. It's pretty clear that the University of Missouri has failed to actuate this specific bequest."

The Austrian School of economics follows the teachings of thinkers like Friedrich Hayek and Ludwig von Mises. It teaches that free markets working in an atmosphere of limited government and the rule of law will create more prosperity and spread it broadly. Many American conservatives subscribe to these teachings, and many Hillsdale professors teach it.

During the discovery phase of the lawsuit, Hillsdale uncovered emails demonstrating that University of Missouri administrators sought to avoid granting professorships to free-market economists. Instead, the university redirected the funds to current professors whom it "verified" on its own.

"There was a lot of tension about whether or not they even wanted to try, much less effectuate the bequest," Nixon argued. "Because Austrian economics differed from some of the other types of philosophies, there was clearly a concern among the dean and other administrators about this."

While violating donor intent is serious, the rejection of Austrian economics in this case also involves weakening the intellectual diversity on a college campus.

"College campuses are places where a lot of courses with different philosophies should be taught," the former Missouri governor argued. "Colleges should embrace that, and it's very clear that they didn't."

The field of economics is itself broadening, Nixon claimed. "You're also seeing other movements in psychological economics. There's a lot more in play these days, and a lot more belief that the free market is driving economics, not just government decisions. Allowing that more libertarian, conservative view of things is important. There needs to be a multitude of attitudes brought to the table in order to get the best solution to economic challenges," he said.

Although the case was filed in St. Louis County in 2017, Mizzou requested it be transferred to a court in Boone County, and the university also requested the case be transferred from a contract theory to a trust theory. The Missouri State Supreme Court agreed.

While Nixon argued that "this is not a trust, this is a bequest," he argued that under either theory, Hillsdale should prevail because Mizzou violated Hibbs' donor intent.

Mizzou spokesman Christian Basi told mLive.com that the university always spends gifts following the explicit wishes of its donors. "We pride ourselves on being very good fiscal stewards of the money that’s been entrusted to us, not just by the state and by our students’ tuition, but also by our private donors and industry partners," he said.

Follow Tyler O'Neil, the author of this article, on Twitter at @Tyler2ONeil.