On an idyllic spring evening, in a stately quadrangle framed by red-brick buildings with white pillars, former U.S. Senate Majority Leader Bill Frist delivered the commencement address to the 2007 graduating class of Montgomery Bell Academy, an aristocratic prep school in Nashville. Founded in 1867, Montgomery Bell is the South’s oldest boys school; it aims to develop each of its 700 students into a “gentleman, scholar, athlete.” Alumnus Tom Schulman, who won an Oscar for his screenplay for Dead Poets Society, modeled the hidebound school in that 1989 film on Montgomery Bell and the Robin Williams character on an inspirational teacher there.

A 1970 graduate to whom a campus monument is dedicated, Frist reminded the crowd that his family’s connection to the elite institution spans three generations. His late father, Thomas Frist, was personal physician to five Tennessee governors and served on the academy’s board for more than four decades. “He sat where you parents sit today on seven occasions, for three sons and four grandsons,” Bill Frist said.

Over the years, the Frists have donated handsomely to Montgomery Bell, which named its dining hall for the family. Bill, who joined the school’s board last year, has given at least $1 million. But an even bigger supporter has been Bill’s oldest brother, Tommy Frist, the 70-year-old billionaire co-founder of Hospital Corporation of America, the nation’s largest for-profit hospital chain. Tommy is a legend at Montgomery Bell, where he was a star quarterback on a state-championship football team. Graduating in 1956, he joined M.B.A.’s board in 1971, donated at least $5 million, and sent both of his sons there.

Unmentioned during Bill’s commencement speech was Tommy’s dramatic break with M.B.A. after a failed, never-before-reported philanthropic power play. In 2001, he had offered Montgomery Bell at least $100 million—a record amount at the time—on one condition: Tommy, who has seven granddaughters under the age of 15, stipulated that the school would have to admit girls. The board rejected his offer.

But Tommy didn’t just walk away. After quitting the board, he financed the construction of a new coed high school and campus, an extension of the elementary and middle school that for years had sent most of its male eighth-grade graduates to Montgomery Bell. Thus, in one stroke, Tommy not only created an instant rival to his alma mater but also deprived it of its biggest source of students. Other tycoons have famously balked when recipients didn’t comply with their terms or offended them in other ways. Texas billionaire Lee Bass withdrew a $20 million gift to Yale for Western-civilization studies after some faculty members urged that the money be spent on multicultural curriculums.

Nike founder Phil Knight suspended payments on his $30 million gift to the University of Oregon until the school backed away from criticizing the company’s overseas labor practices. But Tommy has taken this type of controlling approach even further; his strong-arm tactics are reminiscent of fierce corporate struggles in which a spurned executive exacts revenge by luring away employees and siphoning off promising new talent.

The new Ensworth High, which opened in 2004 and graduated its first class in May, immediately began poaching Montgomery Bell’s faculty. It even paid a six-figure salary to snare Montgomery Bell’s state-championship-winning football coach—no small triumph in a state that matches Texas’ passion for teenage football games under Friday-night lights. In October 2007, when the schools clashed on the gridiron for the first time before an overflow crowd in Montgomery Bell’s stadium, Tommy—who had paid for the statue of his former coach that stands near the main gate—shed his longtime allegiance and took his seat on the visitors’ side of the field.

“It’s widely said in Nashville that there are three ways to do things,” says one longtime observer of local philanthropy. “The right way, the wrong way, and the Frist way—‘Do what I tell you or I’ll take my marbles and go home.’”

The street signs in the affluent Nashville suburb of Belle Meade are topped with wrought-iron mare-and-colt sculptures, a reference to the horse corrals lining the vast lawns of its stately mansions. Tommy and Bill Frist own homes there, as does Al Gore. For many Belle Meade families, the choice between Montgomery Bell and Ensworth High has become as defining as which church they worship at or which Republican they vote for. As they drive down Belle Meade Boulevard on weekday mornings, they turn right on Harding Road to go to M.B.A. or left to go to Ensworth High.