Kronovet v. Lipchin

Rodowsky, J., delivered the opinion of the Court. This appeal presents questions between developers-mortgagors and the permanent lender arising out of two actions by the lender to enforce remedies on default. The instant actions are but part of the panoply of litigation brought in the wake of the collapse of a multi-million dollar real estate venture. After trial the Circuit Court for Prince George’s County found for the lender.

Certiorari was issued prior to consideration of the developers’ appeal by the intermediate appellate court. In affirming the decree below, we shall hold in response to the contentions raised that: 1. The transaction is not usurious under Maryland law, which the parties chose by contract as controlling the interest aspects of their transaction; 2. There was no error in the admission of certain expert testimony; 3.

The principal debt carries interest at the contract rate after default and without reduction to 6% following the decree here appealed; and ³³ 4. The modified stay of proceedings entered by a federal bankruptcy court, which permitted determination of the issues below, but not enforcement of that determination, does not deprive the issues of "justiciability.” The real estate project, "Presidential Towers,” is a 509 unit highrise apartment house, consisting of two 20-story towers connected at ground level by a one-story common lobby. Presidential Towers is located at the intersection of Metzerott Road and New Hampshire Avenue in Prince George’s County, Maryland. Appellants are the owners, in the form of limited partnerships, of the leasehold and reversionary interests, and their managing agent.

Appellees are the permanent lender, Jamaica Savings Bank ("Jamaica”), a New York mutual savings bank, and its substituted trustees under consolidated deeds of trust securing notes purchased by Jamaica on August 25, 1971 in the roll over to permanent financing. On December 22, 1976 Jamaica, alleging default and relying on provisions in the deeds of trust, brought an action on the equity side of the court below to obtain possession of the project and control of the rent collections (the "Possession Action”). 1 On December 28, 1976 Jamaica followed up by docketing foreclosure proceedings (the "Foreclosure Action”). These actions were consolidated. The defendants asserted usury and that Jamaica had agreed to forbear exercising its remedies for default.

A bifurcated trial of the forbearance issue resulted in dismissal of that defense on December 5, 1977. That determination is not questioned on this appeal. The owners of the project then sought the protection afforded under the Federal Bankruptcy Act. On December 20,1977 each filed petitions under Chapter XII in the United States District Court for the Southern District of New York, ³⁴ resulting in stays of the Possession and Foreclosure Actions. 2 On March 10, 1978 the stay was modified "to permit the completion of the Possession Action.” 3 Our scene shifts back to Maryland for trial of the usury issue.

The August 25,1971 permanent financing by Jamaica carried interest at 8.375% per annum. Borrowers asserted that New York law applied under which the interest ceiling was 7.5%. 4 Jamaica argued that Maryland law applied and, because the loan was for the purpose of carrying on a commercial enterprise or investment, there was no statutory limit. 5 The parties start from a common premise, i.e., that the law applicable to interest and usury has been contractually chosen in the consolidation and extension agreement (the "C&E”) of August 25, 1971. It provides in immediately successive paragraphs as follows: The parties hereto agree that this Agreement has been negotiated in the State of New York and that this agreement shall be enforced under, and in accordance with the laws of the State of New York, and all the parties for all purposes hereunder do hereby agree and do hereby submit to the ³⁵ jurisdiction of the Courts of the State of New York. [The "New York Clause”]. The Note secured hereby is transacted solely for the purpose of carrying on or acquiring a business or commercial investment within the meaning of Section 7 of Article 49 of the Maryland Code, Annotated, and this instrument is not a purchase money deed of trust. [The "Maryland Clause”].

The court below on May 7, 1979 held that the transaction was not usurious; made findings as to the amount of indebtedness, with interest, due to Jamaica as of January 1, 1979; granted "a permanent order of possession with respect to the mortgaged property”; and decreed that the plaintiffs may prosecute and complete the Foreclosure Action. The decree further provided that the portionls] of this Decree granting the Permanent Order of Possession and permitting the prosecution and completion of the Foreclosure Action, are subject only to further lawful directives and orders of the Bankruptcy Court and the granting of such relief herein is not intended to be in contravention of any order of the Bankruptcy Court. . .. A somewhat detailed statement of the facts is required to set forth the reasons which support the trial court’s conclusions. History Of The Transaction The project was originally a venture of Realty Equities Corporation of New York ("Realty Equities”) which in 1968 held the subject, then unimproved, property through its subsidiary, R.E. Americana Land Corporation, a Maryland corporation ("Land Corp.”).

A $400,000 land loan had been made to Land Corp. on December 11, 1968 by Benjamin C. Cohen of New York. The note, made and payable in New York, provided that New York law should govern. It was ³⁶ payable in one year and carried 18% per annum interest. 6 This note was secured by a deed of trust to Edward W. Nylen, Esq. and John D. Gilmore, Jr., Esq. of Maryland. We shall refer to this $400,000 secured indebtedness as "Loan A”.

In 1969 a representative of Realty Equities approached one of the appellants, Saul D. Kronovet ("Kronovet”), concerning investment in the project. Kronovet is a member of the New York Bar. Negotiations resulted in participation by a group of investors led by Kronovet (the "Kronovet Group”). 7 A Maryland limited partnership, Twin Towers Associates ("Twin Towers”), was formed. A ground lease was created from Land Corp. to Twin Towers on December 16, 1969.

Loan A was subordinated to the ground lease. The Kronovet Group comprised the limited partners of Twin Towers and made an initial capital contribution, in installments, of $1,500,000. The general partner of Twin Towers was R.E.C. Americana Corporation ("Americana”), a Maryland corporation and a subsidiary of Realty Equities. Under its Articles of Limited Partnership the sole purpose of Twin Towers was to construct, manage and otherwise deal in the project, and its initial principal place of business was in Maryland.

Construction financing by American Security and Trust Company ("AS&T”), a District of Columbia trust company, had been arranged by Realty Equities. Initial closing of the $6,500,000 construction loan was on December 29,1969. The note was made by Twin Towers and is dated in Maryland. This loan ("Loan B”) carried interest at 8.75% per annum and was due December 31,1971 or earlier, upon assignment to the then contemplated interim take out lender, I.F.C. Collateral Corporation.

The note for Loan B provided it "shall be governed by and construed according to the laws of the State of Maryland,” and also contained the following paragraph: ³⁷ Borrower stipulates and warrants that the purpose of the loan evidenced hereby is for the purpose of a business or commercial investment within the meaning of Section 7 Chapter 453 of the Laws of Maryland 1968. Borrower further stipulates and warrants that all proceeds of said loan will be used for said business or commercial investment purpose. The note was secured by a deed of trust made by Twin Towers in which Land Corp. joined for the purpose of extending the lien to its fee simple estate. Paragraph 25 of this deed of trust provided: That the property herein mortgaged being located in the State of Maryland, this Deed of Trust and the rights and indebtedness hereby secured shall, without regard to the place of contract or payment, be construed and enforced according to the laws of the State of Maryland.

It appears from Kronovet’s testimony that construction commenced utilizing equity capital, and that advances under the construction loan could not be obtained because of the outstanding lien of Loan A which Realty Equities had not paid. On August 13, 1970 Kronovet arranged for the holder of the Loan A note to be paid and the note was assigned to Kronovet. At that time the lien securing Loan A was subordinated to the construction loan. As part of the overall transaction a contract was made between the Realty Equities’ interests and the Kronovet Group under which the latter could acquire at least part of the Realty Equities’ position in the project.

In late December 1970 Twin Towers refinanced Loan A with, and borrowed an additional $100,000 from, the trustees of Guardian Mortgage Investors ("Guardian”), a Massachusetts business trust with its principal office in Jacksonville, Florida. A new note from Twin Towers and a new deed of trust by Twin Towers and Land Corp. were created for the $100,000 additional advance, due December 31, 1971 ("Loan C”). The deed of trust note from Loan A, by ³⁸ assignment from Kronovet to Guardian, was used to evidence and secure the $400,000 refinancing. A novation was effected under which Land Corp. was released as maker of the note on Loan A and Twin Towers assumed the note obligation.

That note was modified to provide for interest at 14% and extended to December 31, 1971. Twin Towers conveyed of record its leasehold interest to Nylen and Gilmore, as trustees of the deed of trust securing Loan A. The note and deed of trust from Loan A were further modified to conform to the terms of the note and deed of trust utilized for Loan C. As a result, the notes for Loan A, as modified, and for Loan C contain the following provision: 8 The laws of the state where the property is located shall govern the construction and enforcement of this Note and the deed of trust which secures the same. The deeds of trust for Loan A, as modified, and for Loan C then each provided that [t]he Note hereby secured is transacted solely for the purpose of carrying on or acquiring a business or commercial investment within the meaning of Section [7] of Article 49 of the Annotated Code of Maryland and this instrument is not a purchase money deed of trust. Thus, at the end of 1970, the project was subject to $7,000,000 of principal amount of mortgage debt represented by the first lien of the construction loan from AS&T of $6,500,000 (Loan B), the $400,000 second lien of Loan A, now held by Guardian, and the $100,000 third lien of Loan C from Guardian. 9 ³⁹ The $7,000,000 of debt was due December 31, 1971.

The members of the shaky alliance between Realty Equities and the Kronovet Group had breathing room to shop against the standby take out commitment from I.F.C. Collateral Corporation which, as part of the December 1970 debt restructuring, had been amended to increase the interest rate to the greater of 15%% or nine points over prime at certain New York banks. At this point Jamaica enters. On February 11, 1971 Twin Towers, acting through its general partner, Americana, accepted a commitment from Jamaica under which Jamaica would "purchase by assignment a permanent first leasehold mortgage loan, with the fee subordinate to [the] first mortgage lien” in the amount of $7,500,000 for a term of twenty-three years with interest at the annual rate of 8.375%. The commitment contained the following provision which was to survive closing: The parties agree that this commitment has been negotiated in the State of New York and that this commitment shall be enforced under, and in accordance with the laws of the State of New York, and all the parties for all purposes hereunder do hereby agree and do hereby submit to the jurisdiction of the Courts of the State of New York.

The commitment also provided that "[s]ince this loan is to be originated in Maryland by a Maryland interim lender it will be necessary for ... a Three Party Purchase and Sale Agreement” to be executed. Armed with the Jamaica commitment, Twin Towers returned to AS&T to comply with the commitment and to realize on the additional $500,000 of borrowing capacity. On April 8, 1971 an agreement of purchase and sale was made between Twin Towers and Land Corp. as borrowers, AS&T and Jamaica. AS&T in essence agreed to lend an additional $500,000 and Jamaica agreed to purchase by assignment notes secured by deeds of trust up to a full amount of ⁴⁰ principal advanced of $7,500,000, subject to conditions including the execution of a consolidation and extension agreement.

While Guardian was not a signator, the agreement recognized the existence of $500,000 of debt on the property secured by mortgages held by one other than AS&T. The roll over to the permanent loan was closed at Jamaica’s offices in New York commencing August 25,1971. Twin Towers borrowed from AS&T $500,000 evidenced by a deed of trust note dated August 24,1971 and on its face made in .Maryland. This note ("Loan D”) contains the same Maryland choice of law provision and the same warranty of business purpose under Ch. 453 as did the note on Loan B. The Loan D note was secured by a deed of trust made by Land Corp. and Twin Towers which contains the same Maryland choice of law provision as did the deed of trust for Loan B. Guardian assigned without recourse to Jamaica the notes from Loans A and C and AS&T assigned without recourse to Jamaica the notes from Loans B and D. Jamaica paid for the notes by wire transfer of $7,000,000 directly to the account of AS&T and of $500,000 directly to the account of Guardian. In connection with the August 25, 1971 closing, the C&E, containing the New York Clause and Maryland Clause, was executed by all parties 10 except Jamaica which delayed signing until July 1972. 11 The principal purposes of the C&E were to modify the interest rates of the four notes to 8.375%, to extend the due dates to August 25,1994, to consolidate the liens of the four deeds of trust so that they should constitute but one deed of trust, a single lien, securing the $7,500,000 with interest, and to make uniform the provisions of the deeds of trust.

The latter was accomplished principally by the attachment as an exhibit of the printed form of mortgage provisions, with ⁴¹ modifications, utilized by Jamaica and by providing that the printed form would control in the event of conflict over the typewritten portions of the C&E. In January of 1972 Kronovet became the sole general partner of Twin Towers. In April of 1972 the C&E was modified to permit Twin Towers to defer interest for a limited period. At the time of this modification the title to the reversion was held by Presidential Towers Land Associates, a New York limited partnership ("Presidential”) through a nominee. Presidential had been formed to take title to the reversionary interest when Realty Equities was unable to perform under the agreement made with the Kronovet Group in connection with the refinancing of note A. 12 Presidential is composed of persons who are limited partners in Twin Towers.

Its general partners are Kronovet and R.L.U. Realty Corporation, a New York corporation. The deed from the nominee to Presidential of the reversionary interest was recorded March 20, 1973. After the Kronovet Group gained control of the project they borrowed on a second mortgage and there is evidence that they embarked on a program of rehabilitation. However, on April 5, 1975, Presidential Towers was struck by a wind storm of a velocity which appellants say had never previously been recorded in the Washington, D.C. metropolitan area. 13 A 200-square foot panel of bricks on the 19th and 20th floors of one of the towers fell onto and collapsed the connecting lobby.

As a result, tenants vacated. Tenants failed to renew. Tenants could not be attracted or retained by rent reductions. Twin Towers’ income shrank.

The loan from Jamaica went into default. The Possessory Action and the Foreclosure Action were brought. The foregoing convolutions have resulted in the party alignments of the instant litigation. In the Possession Action the defendants were Kronovet as sole general partner of ⁴² Twin Towers and as a general partner of Presidential, R.L.U. Realty Corp. as a general partner of Presidential and Jerome Z. Lorber, the managing agent of the apartments.

In the Foreclosure Action Twin Towers, Land Corp. and Land Corp.’s successor in title, Presidential, were defendants. The usury defense presented here relates to the C&E of August 1971 which was signed by Twin Towers as leasehold owner when its general partner was Americana, a subsidiary of Realty Equities, and also signed by Land Corp., a Realty Equities subsidiary, when it was the fee owner. The Usury Issue Turning to the law applicable to the rate of interest called for by the C&E, 14 we agree with the approach of the parties that this question may, within certain limits, be resolved by contract. This Court has previously given recognition, in effect, to party autonomy in conflict of laws relating to contracts.

In Williams v. New York Life Insurance Co., 122 Md. 141 , 89 A. 97 (1913) we applied internal New York law to determine the amount of cash payable to the owner under an option of a paid-up life insurance policy and said: Nor is this situation relieved by the fact that the contract was a Maryland one, for it was expressly stipulated in the application, that the contract contained in the application and policy "shall be construed according to the law of the state of New York,’’ an agreement which it was perfectly competent for the parties to make. [Id. at 147, 89 A. at 99 ]. ⁴³ Judge Prescott, writing for the Court in a case involving conflict of laws as to checks, observed that "fi]t seems generally to be conceded that the proper law governing a bill or note is the law which the parties to the instrument intended to govern.” John Hancock Mutual Life Insurance Company v. Fidelity-Baltimore National Bank & Trust Company, 212 Md. 506, 511 , 129 A.2d 815, 819 (1957). An employment contract in Globe Slicing Machine Company v. Murphy, 161 Md. 667 , 158 A. 26 (1932) provided that its validity, construction, interpretation or performance should be governed by the laws of New York. The defendant employer argued that the plaintiffs case failed for lack of proof of New York law. In rejecting that argument we observed that the "express adoption of the foreign law by the parties has the same effect as adoption by rule of law” but that, absent proof of the foreign law, this Court would look to the law of the forum.

Id. at 671-72 , 158 A. at 28 . However, we have refused to apply the contractual choice of law where it was contrary to the public policy of this state. Mutual Life Insurance Co. v. Mullan, 107 Md. 457 , 69 A. 385 (1908) (Maryland statute making statements in an application for life insurance representations and not warranties applied over common law of the chosen state which considered application statements to be warranties). 15 It is now generally accepted that the parties to a contract may agree as to the law which will govern their transaction, even as to issues going to the validity of the contract. 16 The ⁴⁴ rule has been adopted by Restatement (Second) of Conflict of Laws § 187 (1971), which in subsection (2) provides: (2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either (a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or ⁴⁵ (b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188, would be the state of the applicable law in the absence of an effective choice of law by the parties. The comment on subsection (2) clarifies that an "issue ... which the parties could not have resolved by an explicit provision” is illustrated by capacity, formality and substantial validity.

Appellants contend, as a legal matter, that the Maryland Clause cannot reflect an intent that Maryland law govern interest and usury because Maryland lacks the necessary substantial relationship to the contract. They point out that the C&E was negotiated and made in New York, and is to be performed by payment in New York at Jamaica’s principal place of business. In the view which we take, there are other contacts which mount up to a sufficiently substantial relationship with Maryland for the parties effectively, under Maryland conflict of laws principles, to have chosen the law of this state as to interest. The real estate which secures the debt has its situs here. 17 The maker of Note A, as modified, and of Notes B, C and D is Twin Towers.

Twin Towers is a Maryland limited partnership. More importantly, its purpose and its sole business activity were the construction and operation of Presidential Towers in Maryland. Its general partner at the time of the C&E was Americana, a Maryland corporation. At a minimum, $6,500,000 of the original indebtedness to Jamaica arises out of the construction loan, the purpose of which was to build Presidential Towers.

The co-grantor ⁴⁶ under each of the four deeds of trust was Land Corp., a Maryland corporation. The contractual choice of the law of the state which is both the domicile of the borrower and the situs of the security, but which was not the state of contract formation or performance by payment, has been applied to determine usury questions. Armstrong v. Alliance Trust Co., 88 F.2d 449 (5th Cir. 1937); Kellogg v. Miller, 13 Fed. 198 (D. Neb. 1881); McDougall v. Hachmeister, 184 Ark. 28 , 41 S.W.2d 1088 (1931); Lanier v. Union Mortgage Banking & Trust Co., 64 Ark. 39 . 40 S.W. 466 (1897); Dugan v. Lewis, 79 Tex. 246 , 14 S.W. 1024 (1891); see also Harvard v. Davis, 145 Ga. 580 , 89 S.E. 740 (1916); Arnold v. Potter, 22 Iowa 194, 200 (1867). We hold that the transaction presented here has sufficiently substantial contacts with Maryland to permit the parties effectively to have chosen Maryland law to apply to the issue of interest and usury. 18 Under § 187 of the Restatement, a contractual choice of law may not be violative of the fundamental policy of a state having a materially greater interest in determining the issue and which would be the state having the "most significant” (as contrasted with a "substantial”) relationship to the transaction, absent the contractual choice.

If it is assumed here that New York is that state, it is our opinion that legal efficacy is not denied to a selection of Maryland law, since decision of the usury issue under Maryland law would not be contrary to a fundamental policy of New York. It is for the forum to "apply its own legal principles in determining whether a given policy is a fundamental one ....” Restatement, supra, § 187, at Comment g. Initially, we ⁴⁷ note that the New York statutes were amended, effective June 7,1974, to remove any interest rate ceiling from a loan of $250,000 or more, secured by other than a one or two family residence. 19 Such a substantial change in statutory law indicates that the New York policy in August 1971 was not a fundamental one with respect to the type of large commercial transaction presented here. Further under the internal law of New York, the individual guarantor of a loan made to a shell corporation is precluded from pleading usury if the proceeds are applied in a business enterprise and not to satisfy personal obligations.

Schneider v. Phelps, 41 N.Y.2d 238 , 242-3, 391 N.Y.S.2d 568 , 571, 359 N.E.2d 1361 , 1364 (1977); Jenkins v. Moyse, 254 N.Y. 319 , 172 N.E. 521 (1930). 20 In addition, under the New York conflict of laws decisions involving usury, New York’s internal usury policy is not treated as so fundamental that it prevents New York courts from applying the law of another state which will validate the transaction or impose a lesser penalty on a transaction invalid under both laws. Speare v. Consolidated Assets Corp., 367 F.2d 208 (2d Cir. 1966); Wiltsek v. Anglo-American Properties, Inc., 277 F. Supp. 78 (S.D.N.Y. 1967); Crisafulli v. Childs, 33 App. Div. 2d 293, 307 N.Y.S.2d 701 (1970); Pioneer Credit Corp. v. Catalano, 51 Misc. 2d 407 , 273 N.Y.S.2d 310 (1966), aff'd mem., 28 App. Div. 2d 595, 282 N.Y.S.2d 214 (1967). Even though the parties could, with legal effectiveness, have chosen Maryland law as to the interest aspect of their transaction, the question remains whether the parties did in fact intend by their contract to have Maryland law apply to that issue. Appellants contend that the limited purpose of the Maryland Clause in the C&E was to consolidate and make uniform the provisions of the notes and deeds of trust ⁴⁸ for the four loans, some of which did not contain the reference to the Maryland usury statute prior to modification by the C&E. 21 While the Maryland Clause has the effect ascribed to it by appellants, it is still necessary to determine why there is any reference at all to the Maryland statutory exclusion from usury for certain commercial loans if the New York Clause is intended to carry within its terms the New York interest limitations.

For purposes of this analysis we shall assume that the New York Clause refers us to the internal law of New York for principles of contract interpretation. However, we perceive no substantial difference between it and the law of this state relative to the interpretation of the two clauses. 22 The court below rendered findings of fact including finding the ultimate fact that "the parties intended all matters of interest and usury pertaining to the secured indebtedness ... to be governed by the laws of the State of .Maryland.” The findings of the trial court are fully supported by evidence relating to pre-closing, closing and post-closing conduct of the parties and by the expert testimony. Shortly after Jamaica had committed, John Bond ("Bond”), the attorney for Jamaica, contacted Franklin Bass ("Bass”), the attorney for Twin Towers. Bond told Bass that an opinion of Maryland counsel would be required, at the expense of Twin Towers, since "this was a Maryland ⁴⁹ transaction involving Maryland law — as to interest Bass replied, according to Bond, that Bass understood, inasmuch as it was a Maryland transaction.

The opinion of Maryland counsel was by letter dated March 9, 1971 which stated, in part, that the proposed transaction "does not constitute a usurious transaction under the Law of Maryland.” A similar opinion from Maryland counsel was obtained one week before closing. Bond also sent to Bass and his legal colleague, Bernard Jacobs ("Jacobs”), a draft of the C&E containing the Maryland Clause. Bond testified that in a subsequent discussion Bond told Jacobs that the Maryland Clause was "for the purpose of making it absolutely clear that this was not a usurious transaction but rather excepted therefrom by Section 7 of Article 49 ...”, and that Jacobs responded by saying that he understood the inclusion was because of the usury factor of Maryland law. At the closing, Bond became involved in a discussion with the representative of the mortgagee title insurer who was conducting the closing.

The proposed form of title policy contained an exclusion for usury. Bond was urging removal of the exclusion so that coverage would be consistent with the form of policy in use in New York. Jacobs, and Ronald Unger, an attorney at Kronovet’s law firm who was representing the limited partners of Twin Towers at the closing, interrupted the discussion. Bond testified they in effect said to him as follows: What the hell are you objecting to, Jack?

You know damn well this is a Maryland transaction. We want to close the damn thing, and being a Maryland transaction, we have already got the Article 49 statement in the Consolidation and Extension Agreement regarding what portion of the Maryland law it falls under. You’ve got an opinion of counsel telling you it is not usurious, and this is a Maryland transaction on Maryland real estate. So, would you stop arguing ⁵⁰ and please let’s get on with the closing utilizing the ALTA form.

On April 25, 1972 the trustees under the deeds of trust securing Loans A through D, the nominee for Presidential, Twin Towers and Jamaica entered into a modification of the C&E in order to permit Twin Towers to defer interest up to $100,000. The deferred interest was to bear interest at an increased rate over the 8.375% of the C&E. In connection with the modification, Bond requested of Ronald Unger, representing Twin Towers, that an opinion of Maryland counsel on the question of usury be obtained. Bond states Unger agreed that the opinion was necessary because it was a Maryland transaction. Maryland counsel opined that the modification was not usurious under Maryland law.

Appellants also received from Jamaica annual statements of mortgage account, without making objection on the ground of usury. The trial court also held that the parties to the transaction "by which Jamaica purchased by assignment the existing indebtedness ... intended that the existing indebtedness ... would be valid and binding in all respects and there was no intention on the part of the parties to enter into or to create an invalid or usurious transaction.” That finding is supported not only by the admissions reviewed above, but also by the form of the transaction. Motivated at least in part by the desire to avoid recordation and transfer taxes, 23 Jamaica purchased existing notes secured by existing deeds of trust. The note for Loan A, as modified, and the other three notes, all contained provisions adopting Maryland law under which the loans were not usurious.

The trial court could properly infer that the parties did not intend to make invalid that which was previously valid or intend that the New York Clause prevail over the more specific Maryland Clause in the C&E. When one considers that Twin Towers under the C&E was obtaining an extension from December 31, 1971 to August 25, 1994 during which to pay the ⁵¹ indebtedness, and was achieving a reduction to 8.375% in the rate of interest from the 8.75% under the AS&T loans and from the 14% under the Guardian loans, the trial court’s finding was entirely permissible. Expert testimony also supported the decree. The Expert Testimony Jamaica called Frank T. Gray, a member of the bar of this Court, who qualified as an expert in mortgage transactions. He described certain practices in commercial lending.

Appellants assign as error that the witness was allowed, over objection, to express an opinion on the precise issue before the court. When asked what he concluded from the presence of the Article 49 provision in the C&E, Mr. Gray said "that the parties understood clearly and intended that the Maryland law should govern usury questions and that the transaction would fall within the qualifications of Article 49, Section 7 pertaining to commercial transactions . . . Even if it is assumed that this testimony was not admissible, it is clear that there is no prejudice warranting reversal in the circumstances of this case. Beahm v. Shortall, 279 Md. 321, 332 , 368 A.2d 1005, 1012