National City Corp.'s Pennsylvania bank is embroiled in a battle royal over its stewardship of a $610 million charitable foundation in Pittsburgh.
National City Bank of Pennsylvania and its predecessors have been trustee of the McCune Foundation since it was established in 1979 by the will of Charles McCune.
The philanthropist's descendants are putting political and public relations pressure on the bank, trying to get it to share its trustee role.
Banks are increasingly finding themselves at the center of such disputes, often when there is a lack of explicit instructions from the benefactor.
"These cases tend to arise because of anger not at the bank trustee but at a founder who didn't want family members involved," said James E. Hughes Jr., a New York trust lawyer not involved in the McCune matter. "When people leave family members out, it is generally done with some thought."
The late Mr. McCune's family has formed a 25-member Committee of Legitimate Concern to persuade the bank to "fix the governance problem," according to a press release, and make James Edwards, a descendant of Mr. McCune, co-trustee.
The committee is putting enormous public pressure on National City to consider the idea. Its members include some big names in Pittsburgh business, society, and politics, such as Richard Mellon Scaife, chairman of the conservative Scaife Foundation and publisher of the Pittsburgh Tribune Review; William Block Sr., chairman of the Pittsburgh Post-Gazette; Andrew Mathieson, retired vice chairman of the Richard K. Mellon Foundation; and Westmoreland County Commissioner Terry Marolt.
Mr. Edwards, his family, and supporters say Charles McCune intended for a family member to share the role of trustee. National City says there is nothing in writing indicating such a wish, while Mr. Edwards claims there is no documentation stating otherwise.
Trial and appeals courts have sided with the bank.
The foundation awarded 133 grants worth $28 million in 1998. In focusing on governance, the dispute has no bearing on the charitable distributions.
Mr. Edwards, a grandnephew of Mr. McCune, takes issue with the concentration of investment in National City stock-about 27% of the foundation's worth. The bank argues it has done a good job, increasing the foundation's value from $85 million in 1979 to more than $600 million.
Mr. Edwards is the brother of Michael Edwards, another committee member and president of Standard Mill Supply, who has said, "Our family is amazed by the circumstances which have forced us to shed our long tradition of giving without talking about it. But we are also excited and gratified that community leaders believe we are doing the right thing."
The McCune interests have obtained resolutions of support from Green and Westmoreland counties and the Pittsburgh City Council, and one is pending in Butler County. "I think it is important the community understand what a fiduciary does and understand the intentions of Mr. McCune," said Thomas W. Golonski, president and chief executive officer of National City Pennsylvania.
"James Edwards sues us for seven years, he loses, then he turns around and says, 'Make me a co-trustee,'" said Terrance J. Degnan, senior vice president and assistant general counsel for the Pittsburgh bank.
National City got the trust account in its acquisition of Integra Financial Corp. of Pittsburgh, which in turn took it over from Union National Bank.
"The succession of the corporate trustee has not been conducive to a resolution," said James Roddey, managing general partner of Allegheny Media. "I believe in this instance good corporate citizenship requires National City to be sensitive to the needs of the community it serves."
National City says it is simply honoring the request of Mr. McCune. After winning a long legal battle over the trusteeship of the foundation, National City's lawyers say naming a second trustee would create a "myriad of legal issues."
The case has been acrimonious. The litigation instigated by Mr. Edwards and his family accused former bank officials, including friends of Mr. McCune, of self-dealing.
During court proceedings, the bank referred to Mr. McCune's descendants as "reptiles".
Richard K. Danforth, executive director of the Committee of Legitimate Concern, said it is time to put ill feelings aside.
