Case Summary $13\mathrm{.}3$: Meinhard v$.$ Salmon, $249$ N$.$Y$.458(1928)$

Salmon and Meinhard were partners who entered into a $20-$year leasing agreement to operate Hotel Bristol in midtown Manhattan. In exchange for his capital contribution, Meinhard would receive $40$ percent of the profits for the first five years and $50$ percent every year after until the $20$th year, when the lease ended. All losses would be born equally. Salmon alone would $$manage$,$ lease, underlet and operate$$ the hotel. At first, the two lost money, but after $20$ years the hotel was very profitable. Just before the lease was about to end, the owner of the hotel $($who also owned the five lots surrounding the hotel$)$ approached Salmon and encouraged him to lease the whole city block, including the hotel, for a term of $80$ years. Salmon agreed to the expansion plan and drafted the agreements so that the new arrangement began the day after the Meinhard$-$Salmon lease ended. Under the new arrangement, Salmon had sole control of the hotel and the rest of the block. Meinhard sued Salmon for breach of fiduciary duty. Salmon asserted that their original partnership had ended when the $20-$year lease expired and that he owed Meinhard no duty because they were not partners in the new venture. In its opinion, the court wrote: $$Many forms of conduct permissible in a workaday world for those acting at arm$$s length, are forbidden to those bound by fiduciary ties. A trustee is held to something stricter than the morals of the marketplace. Not honesty alone, but the punctilio of an honor the most sensitive$,$ is then the standard of behavior.$$

$1.$ Whom did the court side with?

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$2.$ What duty did Meinhard claim was breached?

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$3.$ Does fiduciary duty end when the partnership expires?

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