The court holds that the fiduciary duty of communication was breached where a partner in a joint venture failed to inform his co-partner of a profitable opportunity that was offered by a third-party who was ignorant of the partnership.

Meinhard claimed that his former business partner, Salmon, had violated a fiduciary duty by taking an opportunity to renew a lease in his own name without sharing the benefits.

In 1902, Salmon bought a 20-year lease for the Hotel Bristol, owned by Elbridge Thomas Gerry, at 5th Avenue and 42nd Street in New York.

Meinhard argued the new opportunity belonged to the joint venture and sued to have the lease transferred to a constructive trust.

As Chief Judge Benjamin Cardozo said, A trustee is held to something stricter than the morals of the market place.

Specifically, the court held that he was obligated by the fiduciary duty of communication to notify the venture of profits obtained during the course of his agency.

However, the court held that a joint venture created a fiduciary relationship in which each member is bound to a higher standard.

It determined that in such a relationship, loyalty must be undivided and unselfish, and that a breach of fiduciary duty can occur by something less than fraud or intentional bad-faith.

The court observed that, by contract, Salmon was simply exercising his sole ability to execute a lease and may have assumed that he owed no further duty.