Meinhard v. Salmon- Forming Businesses & Governing Corporations

Question 1

Facts

Answer 1

Meinhard was financial backer for and co-venturer with Salmon (sharing profits and losses), who leased Hotel from Gerry. Salmon was the sole active manager; Meinhard was silent partner. Before 20 yr lease ended, Salmon signed a new 20-80yr lease for a larger tract that included the hotel site on behalf of new entity owned solely by Salmon, but did not tell Meinhard about it. Because he was excluded from the new lucrative transaction, Meinhard sued Salmon.

Question 2

Issue

Answer 2

Did Salmon owe a fiduciary duty to tell & include Meinhard of the new lease?

Question 3

Holding/Reasoning

Answer 3

Yes. Joint venturer (like a general partner) owes a fiduciary duty of loyalty to fellow partners, while the venture continues, to give him the opportunity to be included in the new lease. Especially since Salmon was the active manager and operated as fiduciary of Meinhard.

Joint ventures have fiduciary duties to each other even beyond the original lease agreement
“Duty of loyalty” Also Duty of Care

Question 4

Additional reasoning

Answer 4

In addition to Duty of Loyalty, partners generally also owe each other and the partnership a Duty of Care