Court Enforces Loan Agreement Even Though Some Funds Were Issued To Borrower’s CEO Rather Than Borrower Itself

Posted: August 19, 2026 / Written by: Jeffrey M. Eilender, Thomas A. Kissane, Samuel L. Butt, Joshua Wurtzel, Channing J. Turner / Categories Summary Judgment, Breach of Contract, Commercial

Court Enforces Loan Agreement Even Though Some Funds Were Issued To Borrower’s CEO Rather Than Borrower Itself

On August 6, 2026, in Kelly v Munn Works, LLC, Index No. 64177/2026, Justice Gretchen Walsh of the Westchester County Commercial Division granted plaintiff’s motion for summary judgment in lieu of complaint.

Plaintiff, a former employee of defendant Munn Works, LLC, advanced the company $200,000 in two $100,000 installments and sued on a promissory note in that amount, guaranteed by Max Munn, the company’s chief executive officer, and Laurie Munn. The second installment was paid by a check made payable to Max Munn individually rather than to the company. Defendants argued that the company therefore never received the loan proceeds, that the loan was non-existent as to the company, and that the Munns could not be held liable as guarantors of a debt the borrower never incurred. In rejecting that argument, the Court explained:

[T]he Court rejects Defendants' argument that Defendant Munn LLC, as Borrower, never received consideration for the agreement and that the loan is non-existent, as belied by the September 10, 2024 check made payable to Defendant Munn LLC and the surrounding circumstances of this matter, where Mr. Munn was the CEO of Defendant Munn LLC and, after receiving the first $100,000.00 check from Plaintiff, Mr. Munn, as CEO of Defendant Munn LLC, continued to email Plaintiff and negotiate the balance of the loan . . . . Merely because the second check for $100,000.00 was made payable to “Max Munn” does not, as Defendants argue, prove that there was no loan agreement between Plaintiff and Defendant Munn LLC. . . . Furthermore, even if Munn LLC did not receive the benefit of the second check that was made payable to Max Munn, the Note would still be enforceable under GOL § 5-701 as it constitutes a written agreement signed by the party to be charged (i.e., Munn LLC) to answer for the debt of another (i.e., Max Munn). (citations omitted)

The Court awarded plaintiff $200,000.00 against the borrower and the guarantors.

The attorneys at Schlam Stone & Dolan LLP frequently litigate claims for recovery on promissory notes and guaranties. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.

To read more about who is liable on a note when the loan proceeds do not go directly to the named borrower, see Schlam Stone & Dolan’s related Commercial Division Blog posts on a decision holding that a lender’s failure to show that the loan proceeds were disbursed to the defendant did not establish a lack of consideration, where the money had been lent through another company and a decision rejecting a signatory’s argument that the LLC he managed, rather than he, was the sole borrower on a note.