Trustees of the Spee Club, a Harvard final club, will soon reach an out-of-court settlement of libel charges arising from a recent article in Town and Country magazine, Peter L. Scully '57, an alumnus close to the negotiations, said yesterday.

The article, entitled "Ivy League Clubs: Has Skull and Bones Walked the Plank?", appeared in the August issue of the magazine, a monthly publication of the Hearst Corp.

It alleged that the Spee Club, the "prestigious" dining club of undergraduates such as the late President John F. Kennedy '40, "has fared badly" in the past five years by admitting a "strange element" and becoming a center of drug traffic at Harvard.

The trustees claim that the article has permanently damaged the club's reputation. "It's rife with inaccuracies, and we're concerned that former members who live elsewhere around the country do not think this is what's going on in Cambridge," Scully, treasurer and secretary of the trustees, said.

Letter of Retraction

The trustees expect to negotiate a settlement within a week or ten days, Scully said. "The magazine has already conceded to print a letter of retraction, and the only thing left to decide on is the amount of a monetary settlement," he added.

"It's strange that they printed such a story, because William Randolph Hearst III was a member of Spee, and graduated within the last five years the story referred to," Scully said.

Spee Club president Elliot F. Gerson '74 said yesterday that "the information in the article probably came from two or three individuals in two or three clubs," and may have been influenced by interclub rivalries.

Officials of the Hearst Corp. refused yesterday to comment on Adams' article or on their plans for a settlement. "All I will say is that he's a free-lancer, and we bought his story," Sherman H. Saiger, an attorney for the corporation, said yesterday.

Gerald May, the Boston attorney representing Town and Country in the negotiations, said yesterday the magazine has "a reasonable expectation that the matter will be resolved without a court suit."

Adams could not be reached for comment yesterday