Salmon (defendant) executed a 20-year lease (Bristol Lease) for the Bristol Hotel which he intended to convert into a retail building. Concurrent with his execution of the Bristol Lease, Salmon formed a joint venture with Meinhard (plaintiff). The joint venture’s terms provided that Meinhard would pay Salmon half the amount required to manage and operate the property, and Salmon would pay Meinhard 40 percent of the net profits for the first five years, and 50 percent thereafter. Both parties agreed to bear any losses equally. The joint venture lost money during the early years, but eventually became very profitable. During the course of the Bristol Lease another lessor acquired rights to it. The new lessor, who also owned tracts of nearby property, wanted to lease all of that land to someone who would raze the existing buildings and construct new ones. When the Bristol Lease had four months remaining, the new lessor approached Salmon about the plan. Salmon executed a 20-year lease (Midpoint Lease) for all of new lessor’s property through Salmon’s company, the Midpoint Realty Company. Salmon did not inform Meinhard about the transaction. Approximately one month after the Midpoint Lease was executed, Meinhard found out about Salmon’s Midpoint Lease, and demanded that it be held in trust as an asset of the joint venture. Salmon refused, and Meinhard filed suit. The referee entered judgment for Meinhard, giving Meinhard a 25 percent interest in the Midpoint Lease. On appeal, the appellate division affirmed, and upped Meinhard’s interest in the Midpoint Lease to 50%.