An agreement that would have allowed Fisk University to settle a longtime legal battle over its valuable collection of modern and European art has been rejected by a judge who wrote that “the settlement is not in the best interest of the people of the state of Tennessee,” according to The Tennessean, a Nashville newspaper.

Under the agreement, Fisk would have given the Georgia O’Keeffe Museum — which represents the estate of the painter, who donated the collection to the university — a painting called “Radiator Building — Night, New York” in exchange for $7.5-million. The financially struggling university would then have been able to sell another painting from the collection on the open market.

The judge, Chancellor Ellen Hobbs Lyle of the Davidson County Chancery Court, agreed with the museum that selling paintings from the collection would violate Ms. O’Keeffe’s wishes.

In her order, Chancellor Lyle said that the settlement was not as “advantageous” as a recently announced offer from the Crystal Bridges Museum of American Art, in Arkansas, to split ownership of the collection with Fisk for $30-million. That offer, which the newspaper said is not yet formal, would let the collection be displayed in Nashville half the time and in Bentonville, Ark., half the time.

However, before Fisk can discuss the offer, it must meet the O’Keeffe museum in court on September 18. —Audrey Williams June