Business Associations, Pages 216–224

Meinhard v. Salmon

Court of Appeals of New York, 1928


Gerry leased a hotel for 20 years to defendant and plaintiff, who were in a joint venture. They mostly split profit and losses equally, but defendant was to manage the building. When the lease was nearing its end, Gerry approached defendant and signed a new lease for 20–80 years and allowed for a the building to be torn down and replaced with a bigger building. Defendant did not tell plaintiff about this, who did not find out until after the lease was signed. Plaintiff then demanded that the new lease be held as an asset of their venture, but defendant refused and insisted upon holding the lease alone. Plaintiff then sued.

Procedural History:

  • A referee gave judgment for plaintiff but limited his interest to 25% on the theory that defendant contributed more in acquiring the larger building.

  • The Appellate Division enlarged plaintiff's interest to 50% of the lease.


Did defendant have a duty to disclose the new lease?


  • Joint adventures owe to one another the duty of the finest loyalty.

  • A co-adventurer has a duty to disclose and concede any opportunities that come by virtue of his agency.


A partner cannot appropriate to his own use a renewal of a lease, but the new lease here was not exactly a renewal of the previous one. A dictum supports that it would still be inappropriate anyway, but it is merely a dictum.

Defendant was more than just a coadventurer; he was a managing coadventurer. He had a duty of loyalty to plaintiff, but disregarded this when he used the benefit of his managing the property to acquire a personal lease for the property for his own benefit, and not his partners.

As for how much of an interest plaintiff should get, it should be half so that his expected measure of dominion is preserved. The building cannot be physically divided along the old boundary, and dividing the interests and burdens is also impracticable.


Yes, defendant had a duty to disclose the new lease. Affirmed as modified by providing defendant an option to replace a trust attached to the lease with a trust attached to the shares of stock.

Dissenting Opinion:

Andrews: There is no offshoot of the original lease here. Defendant should only be held as a trustee if the transaction was unfair and inequitable. This was not a general partnership, merely a joint venture for the limited object of renting the building for a fixed time. The new lease goes beyond that purpose and differed in many ways.

If this were a general partnership, the new lease would be an offshoot of the old, but in a joint enterprise, their fiduciary relationship is limited to the scope of their joint enterprise.

No claim of fraud has been made; only that the new lease should have been disclosed, but the joint venture was to end with their lease. With it ending, defendant satisfied his agreed-upon obligation to plaintiff. Plaintiff had no right to demand that their venture be extended. When it expired, any value in the lease reverted to defendant. There was nothing unfair in defendant's conduct.

This was not even a renewal. It it was distinct and different transaction which defendant purchased. Just the fact that plaintiff did not know about it is not enough to give him an interest in the new lease.