## Facts

- Salmon held a 20-year lease (1902–1922) for the Hotel Bristol property in Manhattan, requiring major conversion of the premises.
- Salmon and Meinhard entered a written joint venture to finance and operate the leasehold: Meinhard supplied half the capital; Salmon managed; profits were shared (40% to Meinhard for five years, then 50%), and losses were shared equally.
- Over time, the venture turned profitable, and both participants benefited.
- Near the end of the lease term, the reversion owner (Elbridge T. Gerry) planned a long-term redevelopment lease covering the Bristol parcel plus adjoining lots and approached Salmon about the project months before the original lease expired.
- Salmon, without informing Meinhard, secured the new long-term lease for a corporation he controlled (Midpoint Realty Co.); the new arrangement expanded the footprint and extended the potential duration far beyond the original term.
- Gerry did not know of the joint venture, and Salmon took the opportunity solely for himself.
- After learning of the new lease, Meinhard demanded a share as a joint-venture asset; Salmon refused.

## Issues

1. Whether a managing joint venturer breaches fiduciary duties of loyalty and disclosure by secretly taking for himself a lease opportunity arising from and closely connected to the joint venture’s business before the venture ends.
2. Whether equity should impose a constructive trust granting the non-managing co-venturer an equal beneficial interest in the new lease (at least as to the original premises).

## Decision

- The New York Court of Appeals affirmed the judgment (as modified) for Meinhard.
- The court held Salmon, as managing co-venturer, owed Meinhard a partner-like fiduciary duty of loyalty and disclosure during the life of the venture.
- The new lease opportunity was treated as an incident and extension of the venture’s subject matter, obtained through Salmon’s position as manager.
- Salmon’s secret acquisition of the lease through his controlled corporation breached fiduciary obligations.
- The court imposed a constructive trust giving Meinhard a 50% beneficial interest in the new lease to the extent attributable to the original Bristol premises (implemented through the leasehold interest or corresponding securities).

## Legal Principles

- Joint venturers owe fiduciary duties comparable to partners, including strict duties of loyalty and candor while the enterprise continues.
- A managing venturer must disclose and allow shared access to business opportunities that arise from the venture and are closely related to its subject matter.
- A fiduciary may not appropriate for personal benefit an opportunity obtained by virtue of the fiduciary position, especially where only the fiduciary had access to the opportunity.
- Fiduciary duties can extend to an opportunity presented before termination when it is functionally a continuation or expansion of the venture’s existing business.
- The appropriate remedy for usurpation of a venture opportunity may include a constructive trust and proportional allocation limited to the portion fairly tied to the venture’s subject matter.

## Conclusion

The court held that Salmon’s undisclosed acquisition of a redevelopment lease that grew directly out of the joint venture violated his fiduciary duty of loyalty, and equity required a constructive trust awarding Meinhard an equal beneficial interest in the lease opportunity as it related to the venture’s original premises.


Meinhard v. Salmon, 249 N.Y. 458, 164 N.E. 545 (N.Y. 1928)