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I cannot speak to English law, but this seems to be the principle that we have in the United States in Meinhard v. Salmon, 164 N.E. 545 (N.Y. 1928) (Cardozo, J.), that a joint venturer may not keep property or benefits from an opportunity belonging to or deriving from the joint venture, and holds the property or benefits in constructive trust for the other joint venturer. That enrichment was unjust because it was obtained in violation of the fiduciary duties arising from the joint venturers' business relationship (and in Meinhard, B's reliance on A's management of the joint venture, as a result of which A received the opportunity).

Meinhard cited only New York cases. One of those was Mitchell v. Reed, 61 N.Y. 123 (1874), which cites both United States and English authorities for what again seems to be the same proposition. I can't parse the old reporter abbreviations, but there is a "Lond." here and a "Lord" there, suggesting English provenance. I also can't speak to whether those old cases lie on the side of A's enrichment rather than B's detriment, but the Mitchell court seems to think they did, and certainly both Meinhard and Mitchell are premised on A's enrichment rather than B's detriment, and both use the constructive trust. Given the necessary (and salutary) reliance by United States courts on English authorities during the early 19th century, were one to read around in the earlier decisions cited in Mitchell and its primary New York authorities, one would find English law in those earlier decisions.

I am sure there are others who can be more directly responsive to Professor Hopkins' question, but I hope this is helpful. If your access to early United States authorities is as limited as my access to early English authorities, I will be happy to help anyone who wants them get copies.

Best wishes,
 

Ed Brewer

At 08:24 AM 1/12/01 +0000, you wrote:

Dear all,

are you aware of the CA decision in Banner Homes v Luff Developments [2000] 2 All ER 117, (with a judgment on the remedy reported at [2000] 2 WLR 772)? Briefly, it involved a failed joint venture for the acquisition of land between A and B. A and B were negotiating a joint venture, under which land would be bought by a third company, X, in which the parties would then be shareholders. X had been bought off the shelf for the purpose, and pending final agreement was wholly owned by A. Between contract and completion of the sale of land, A withdrew from the joint venture. The land was then acquired by X, with A as sole shareholder.

Decision: A was held to hold the shares in X on constructive trust for A and B equally, charged for the payment by B of half the cost of the acquisition of the shares (ie, presumably half the purchase price of the land). The basis of the constructive trust was not necessarily that B had suffered any detriment, but that A had obtained an advantage from B. A's advantage being that B was kept out of the market as a potential rival purchaser.

I have two queries arising from this.

Is this a constructive trust imposed as a response to unjust enrichment?

Is there authority (in English law, in particular) for a constructive trust based on advantage to the trustee, rather than detriment by the beneficiary?

Regards

Nick Hopkins