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Business Organizations Keyed to Bauman
Meinhard v. Salmon
CaseCast™ – "What you need to know"
In April 1902, Salmon leased the Hotel Bristol from Louisa M. Gerry for a term of 20 years. Salmon undertook the duty of altering the hotel building for use as shops and offices. Salmon entered into an agreement with Meinhard to finance the business including paying half the money required to reconstruct, manage, and operate the property. In return, Meinhard received 40% of the profit for the first five years, and 50% for the years thereafter. Salmon held the sole power to “manage, lease, underlet and operate” the building.
Near the end of the lease, Elbridge T. Gerry became the owner of the Hotel Bristol. Gerry also owned a number of other properties surrounding the Hotel Bristol. Gerry sought to lease all the properties for a long term to someone who would destroy and replace the buildings. Gerry unsuccessfully presented the proposal to a number of investors before approaching Salmon. A new 20 year lease was entered with Salmon’s realty company, Midpoint, covering all the properties. Under the Midpoint lease, the existing buildings were to remain unchanged for 7 years at which point they would be torn down and replaced. Meinhard did not learn of the existence of the deal until February 1922 just prior to termination of the original lease.
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