Fiduciary or Foe? Revisiting Meinhard v. Salmon

Spring 2021


Most lawyers have read—and likely briefed—the staple cases that helped to shape American fiduciary law. In the business law and partnership context, it is difficult to imagine a more well-known case than Meinhard v. Salmon.

The famous New York opinion, written by Justice Cardozo, helped define the fiduciary duties that partners owe to one another and to the partnership. Although it has been nearly a century since Cardozo issued what has now become one of the most widely cited business law opinions in the U.S., the opinion continues to be relevant in modern-day partnership disputes.


Walter J. Salmon was an up-and-coming real estate developer focused on commercial real estate in midtown Manhattan. His strategy was simple: Seek out property owners and acquire long-term net leases of the fee interests.

Salmon was well on his way to success when another developer, the Gerrys—looking for a partner to develop a Manhattan property known as the Bristol Hotel—agreed to a 20-year lease at an annual rental of $55,000. But Salmon had one significant problem: He had no money to improve the property. Lucky for Salmon, Morton H. Meinhard entered the picture at just the right time.

Meinhard, who worked in finance, had cash on hand. And he and Salmon eventually struck a deal in 1902. Meinhard would contribute half the funds necessary to renovate the property, and Salmon would pay Meinhard 40% of the net profits for five years and 50% thereafter. In addition to sharing losses equally, the agreement also gave Salmon full authority to manage the property.


As we all know, good things often come to an end. At some point, Meinhard began questioning Salmon about charges that he was making for expenses and complained that Salmon was not informing him about management decisions. As these issues persisted, Salmon and Meinhard’s relationship continued to deteriorate. By 1917, the two had little or no contact.

The Bristol Hotel lease came up for renewal in 1922. At the time, it was one of the most valuable pieces of real estate in the world. The Gerrys awarded Salmon another 20-year lease in January 1922, three months before the old lease expired.

The new lease included adjoining lots owned by the Gerrys and was for annual rents beginning at $350,000 and increasing to $475,000 after 10 years. But as great as this new deal was for Salmon, it was not great for Meinhard, who was completely unaware of these negotiations. Upon learning of the new lease, Meinhard sued Salmon.


Both the trial court and the appellate division agreed that Meinhard was entitled to a share of the lease, but the amount that Meinhard was entitled to remained in dispute.

In 1928, Cardozo upheld the appellate division’s judgment in favor of Meinhard and awarded him half of the entire new lease. According to Cardozo, Salmon breached his fiduciary by not disclosing the new lease to Meinhard and by appropriating the benefit of the new lease to himself.

If you are still having difficulty remembering this case from law school, perhaps the way that Cardozo famously described the fiduciary duty owed by one “co-venturer” to another will jog your memory: The fiduciary duty is “something stricter than morals of the market place. Not honesty alone, but the punctilio of an honor most sensitive, is then the standard of behavior.” Indeed, “[j]oint adventurers, like copartners, owe to one another, while the enterprise continues, the duty of the finest loyalty.” Legal historians note that this opinion was of the most eloquent and memorable of Cardozo’s efforts to “implant a sense of honorable conduct into law.”1


Despite its reception, it turns out that Cardozo rarely ever mentioned the famous opinion that drew attention from scholars and commentators alike. In fact, Cardozo’s one and only recorded comment about the opinion was found in a letter to Felix Frankfurter, to whom he wrote, “Meinhard v. Salmon is one of the cases in which some of my colleagues think that my poetry is better than my law. I think its law is better than its poetry (which, indeed I cannot discover).” Despite Cardozo’s modesty, the opinion has been cited over a thousand times, according to Westlaw.

Still, Cardozo’s opinion had its critics. Some people believe that Salmon should have won the case. These commentators provide multiple reasons to support this conclusion, including that the contract between Meinhard and Salmon clearly contemplated an arrangement limited to the term of the original lease and that Meinhard had no experience in managing real estate. Others have noted that the opinion is remembered more for its rhetoric than for its facts.

Regardless of the side you take, we can all likely agree that Cardozo’s description of the fiduciary duties that partners owe to each other set the standard and continues to influence American business-partnership law.

1 Andrew L. Kaufman, Cardozo 241 (1998).

Denise S. Rahne


Co-Chair, Wealth Planning, Administration, and Fiduciary Disputes Group

Samia S. Young

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