Background
The plaintiffs advanced $300,000 in November 2020 for construction at 1719 Hylan Boulevard on Staten Island. The money went to the contractor, Mammoth Construction, Inc. A written document identified defendant Jhong Kim as the owner and bore his signature, but it did not mention the limited liability company that held title to the property.
The parties’ testimony showed they understood the advance to be a loan repayable soon, meaning within a few months. Kim admitted that the money was a loan he was obligated to repay, but no repayment followed. The plaintiffs demanded the full amount in September 2022 and then sued Kim personally for breach of contract.
After a nonjury trial, Supreme Court dismissed the amended complaint. The plaintiffs appealed, asking the Second Department to exercise its broad factual review power and enter the judgment supported by the trial record.
The Court’s Holding
The Second Department reversed on both the law and the facts and directed judgment for the plaintiffs in the principal amount of $300,000. The evidence established a definite repayment agreement, the plaintiffs’ performance by funding the project, Kim’s complete nonpayment, and resulting damages.
Kim could not avoid personal liability by asserting that he acted for 1719 Hylan, LLC. An agent for a disclosed principal generally is not personally bound, but the party relying on agency must show that both the agency relationship and the principal’s identity were disclosed at the time of contracting.
No evidence showed disclosure here. The document called Kim the owner and never named the LLC. The plaintiffs’ principal testified that Kim said he owned the property and never indicated the project or loan was for a company. Kim offered no contrary proof sufficient to carry his burden.
The court declined to add contractual interest because the evidence did not show that the parties agreed to it. The judgment therefore covered the $300,000 principal, with the formal amended judgment to be entered on remittal.
Key Takeaways
- A business owner signing without identifying the company risks personal liability as an agent of an undisclosed principal.
- Agency and the principal’s identity must be communicated at the transaction, not supplied later in litigation.
- Loan papers should state the borrower, signatory capacity, repayment date, interest, and project purpose expressly.
Why It Matters
The ruling is a drafting lesson for New York developers, lenders, contractors, and closely held companies. Entity ownership of the project property does not itself notify a counterparty that a signer acts only for that entity. Signature blocks should identify the company and the signer’s office, while the body of the agreement should state who receives the loan and who must repay it.
For litigators, the opinion shows that informal commercial transactions can still produce enforceable contracts when testimony and documents establish objective assent. But omitted economic terms have consequences: the plaintiffs recovered principal because repayment was proven, yet could not obtain agreed interest that was never shown to be part of the bargain.