Waller v. Maryland National Bank

²⁰³ HARRELL, Judge. On 30 April 1987, appellants, Earthtech, Inc. (Earthtech) and its president and chief executive officer, Muriel Jennings Waller (Waller), filed a six count complaint against Maryland National Bank (MNB), appellee, in the Circuit Court for Baltimore City. The action was removed to the United States District Court for the District of Maryland on MNB’s petition. Ultimately the entire action was remanded to the Circuit Court for Baltimore City on 22 July 1988.

On 4 January 1989, appellants filed an amended complaint. Several of the counts were brought by both appellants, others were brought individually. For clarity of discussion, we simply list the counts and the party or parties who brought them: Count I: Earthtech and Waller alleged breach of contract for violation by MNB of its duty of good faith and fair dealing; Count II: Earthtech and Waller alleged “negligent breach of contract;” Count III: Earthtech and Waller alleged conversion; Count IV: Earthtech alleged breach of contract, claiming a breach of alleged forbearance and workout agreements; Count V: Earthtech alleged intentional interference with contractual and business relations; and Count VI: Waller alleged intentional infliction of emotional distress. On 6 February 1989, MNB filed a motion to dismiss for failure to state a claim upon which relief can be granted, pursuant to Md.Rule 2-322(b)(2), and a motion for summary judgment under Md.Rule 2-501.

On 9 May 1989, the circuit court (Ward, J.) granted MNB’s motion to dismiss the claim for punitive damages under Count I and dismissed Count VI in its entirety. All other motions were denied. MNB filed a motion for summary judgment on 22 March 1991. The circuit court (Heller, J.) in a Memorandum Opinion and Order dated 25 July 1991 granted the following ²⁰⁴ relief: (1) MNB’s motion for summary judgment was granted as to Counts I and II; (2) the motion was denied as to Counts IV and V; and (3) the motion was granted, in part, as to Count III.

On 16 January 1992, appellants filed a motion for reconsideration and MNB filed a second motion for summary judgment as to all remaining claims. On 21 February 1992, the circuit court (Hammerman, J.), after hearing argument on appellants’ motion for reconsideration, denied the motion. The circuit court then heard arguments on MNB’s second motion for summary judgment and delivered an oral opinion from the bench granting MNB’s motion as to all of appellants’ remaining claims. Appellants noted this appeal on 10 March 1992.

Facts Earthtech is a Maryland corporation with technical expertise in earth measurement systems. In the early 1980s, Earthtech sought to develop two pieces of sophisticated equipment. In order to achieve this goal, Earthtech required additional working capital. On 16 February 1983, Earthtech obtained a loan from MNB for $50,000 evidenced by a Revolving Note which provided for a continuing line of credit.

This. Revolving Note also stated that it was payable “on demand.” This note was executed by Earthtech’s officers: Waller,, President; John Millhiser, Vice-President; and Jeffrey Bloom, Vice-President. Each officer also personally and unconditionally guaranteed payment of Earth-tech’s obligations to MNB. On 20 May 1983, Earthtech obtained a second loan for $5000 from MNB.

This loan was evidenced by an Installment Note and was payable in thirty-five equal monthly installments. The parties’ relationship appeared to run smoothly until late April 1984 when Earthtech requested an additional loan from MNB to cover its May payroll. MNB denied Earthtéch’s request. Subsequently, during the afternoon of 30 ²⁰⁵ April 1984, Gary Tyrrell, an MNB officer, arrived at Earth-tech’s offices and requested that Earthtech’s officers execute indemnity deeds of trust (IDOTs) on their residences in favor of MNB.

Earthtech’s officers were surprised and reminded Tyrrell that MNB already possessed adequate security for its loans. The officers refused to sign the IDOTs and, after much discussion, Tyrrell agreed to return the next morning in order to give the officers additional time to consider MNB’s request. The following day, 1 May 1984, Tyrrell arrived at Earth-tech’s offices by mid-morning and immediately presented Earthtech’s officers with a letter demanding repayment of the outstanding balance on the Revolving Note. Earthtech was unable to meet this demand.

As a consequence, on 9 May 1984, MNB advised Earthtech that it was also in default of the Installment Note because it included a cross default provision, which provided that a default by Earth-tech under any agreement with MNB could result in default under all agreements between Earthtech and MNB. MNB, therefore, was invoking its right under the agreement to accelerate and demand payment of the outstanding principal and accrued interest of the Installment Note. In early May 1984, Waller learned that she required an emergency hysterectomy. She entered the hospital on 8 May and underwent surgery the following day.

Waller resumed active involvement in Earthtech, on a part-time basis, on 5 June 1984 and began working full-time on 11 June 1984. Appellants claim that MNB agreed to forbear from taking any action against Earthtech for the period of Waller’s recovery. MNB, in contrast, claims that the forbearance agreement was contingent upon Earthtech’s officers executing IDOTs on their residences in favor of MNB. On 7 June 1984, MNB filed confessed judgment actions against Earthtech and its officers.

Subsequently, Earth-tech and MNB entered into a Workout Agreement. Under the Workout Agreement, Earthtech agreed to repay the full balance of the outstanding loans by mid-October 1984. In return, MNB agreed to dismiss the confessed judgment ²⁰⁶ actions. For some reason, not clear from the record extract, the Workout Agreement was never signed by both parties, but they operated as if the agreement had full effect.

Earthtech voluntarily accelerated the repayment period and MNB was repaid in full by 21 August 1984. Approximately three weeks later, on 13 September 1984, MNB dismissed the confessed judgment actions. MNB, however, had actually been overpaid by $582.31. The overpayment was remitted to Earthtech on 12 September 1984.

In addition, MNB did not release a $433.57 balance in Earthtech’s corporate account until 26 September 1984. We will include additional facts as necessary in our discussion of the issues presented. Issues Appellants present five issues and sub-issues, which we have slightly recast as follows: I. Whether the circuit court erred in concluding that MNB was exempt from the common law duties of good faith and fair dealing in its contractual relations with appellants; A. Whether MNB was required to exercise good faith in its performance and enforcement of the Revolving Note; B. Whether the trial court erred in considering the Official Comment to § 1-208 of the Commercial Law Article in its decision to grant MNB’s motion for summary judgment; C. Whether Maryland’s common law required MNB to exercise its discretionary right to call the Revolving Note in a commercially reasonable manner; D. Whether the circuit court erred in refusing to consider evidence on the terms of the Revolving Note; E. Whether there was a genuine dispute of a material fact as to whether the bank had a good faith basis for demanding immediate repayment of the Installment Note; ²⁰⁷ II. Whether the circuit court erred in granting MNB’s motion for summary judgment as to appellants’ claim for negligent breach of contract; III.

Whether the circuit court erred in finding no genuine dispute of a material fact as to the existence and breach of the alleged oral forbearance agreement; IV. Whether the circuit court erred in finding no genuine dispute of a material fact as to whether MNB breached the Workout Agreement; and V. Whether the circuit court erred in holding that appellant Waller failed to state a claim for intentional infliction of emotional distress. Entry of the Final Judgment In the case sub judice, following the hearing on MNB’s final motion for summary judgment on 21 February 1992, the circuit court delivered an oral opinion from the bench granting MNB’s motion as to the remaining claims. At no time did the judge either direct the parties to submit a written order or inform the courtroom clerk that he would later submit such an order.

Yet, the docket entry for 21 February 1992 states: Defendant’s Second Motion for Summary Judgment heard & “Granted” as to remaining Counts III, IV, and V. Order to be filed. The record extract contains no Order granting MNB’s Second Motion for Summary Judgment. We, therefore, must face the initial question of whether this appeal was properly taken. Ordinarily, an appeal will lie only from a final judgment.

An oral opinion is not a final judgment and not subject to appeal when the court directs that a written order be submitted. Kearns v. Kearns, 78 Md.App. 461, 465 , 553 A.2d 1291 (1989). In Rohrbeck v. Rohrbeck, 318 Md. 28 , 566 A.2d 767 (1989), the Court of Appeals set forth the three attributes a ruling must possess if it is to constitute a final judgment: ²⁰⁸ it must be intended by the court as an unqualified, final disposition of the matter in controversy, (2) unless the court acts properly pursuant to Md.Rule 2-602(b), it must adjudicate or complete the adjudication of all claims against the parties, and (3) the clerk must make proper record of it in accordance with Md.Rule 2-601. Id. at 41 , 566 A.2d 767 .

The duties of the clerk of the court in recording the court’s ruling are outlined in Md.Rule 2-601, which provides, in pertinent part: Rule 2-601. ENTRY OF JUDGMENT (a) When entered. — Upon ... a decision by the court ... denying all relief, the clerk shall forthwith enter the judgment, unless the court orders otherwise. (Emphasis supplied). The entry of the judgment on the docket is a ministerial function and the clerk possesses no discretion in this matter.

Corey v. Carback, 201 Md. 389, 402 , 94 A.2d 629 (1953); Director of Fin. of Baltimore City v. Harris, 90 Md.App. 506, 513 , 602 A.2d 191 (1992). See also 15A Am.Jur.2d Clerks of Court § 21 (1976); 46 Am.Jur.2d Judgments §§ 154, 156 (1969). We believe the ruling by the circuit court on MNB’s second motion for summary judgment has all the attributes of a final judgment. A careful examination of the circuit court’s oral ruling from the bench reveals that the court intended the ruling to be a final disposition of the matter in controversy.

In addition, the circuit court’s ruling completed the adjudication of all the claims between the parties. MNB’s motion for summary judgment was granted as to all of the remaining claims; therefore, appellants had no further claims to present in the circuit court. Finally, the clerk made a record of the ruling by writing on the docket, “Defendant’s Second Motion for Summary Judgment heard & “Granted” as to remaining Counts III, IY, and V.” We believe the clerk’s final notation, “Order to be filed[,]” was a unilateral act by the clerk without any direction from the ²⁰⁹ circuit court. We will not allow such an entry, written in error by the clerk of the court, to defeat the finality of the judgment entered.

See Harris, 90 Md.App. at 512-15 , 602 A.2d 191 . Consequently, the circuit court’s ruling on 21 February 1992, which was recorded on the docket on that date, constitutes a final judgment from which this appeal may be taken; the clerk’s addition “Order to be filed” was unauthorized and unnecessary surplusage. See Rohrbeck, 318 Md. at 41-46 , 566 A.2d 767 . Standard of Review A trial court may grant a motion for summary judgment when there is no genuine dispute as to any material fact and the moving party is entitled to judgment as a matter of law.

Md.Rule 2-501(e). This procedure “is not a substitute for a trial, but a means by which the trial court may determine, summarily, whether a trial is necessary.” Wash. Homes, Inc. v. Interstate Land Dev. Co., 281 Md. 712, 716 , 382 A.2d 555 (1978).

In reviewing a disposition by summary judgment, we must decide whether a material factual issue exists, and in doing so, will resolve all factual inferences against the moving party. King v. Bankerd, 303 Md. 98, 110-12 , 492 A.2d 608 (1985); Syme v. Marks Rentals, Inc., 70 Md.App. 235, 237-39 , 520 A.2d 1110 (1987). A material fact is one which will affect the outcome of the case in some way; therefore, “a dispute over a non-material fact will not preclude summary judgment.” Bankerd, 303 Md. at 111 , 492 A.2d 608 . In addition, the party opposing the motion for summary judgment “must proffer material facts which would be admissible in evidence.” Seaboard Sur.

Co. v. Richard F. Kline, Inc., 91 Md.App. 236, 243 , 603 A.2d 1357 (1992). When the moving party has set forth sufficient grounds for summary judgment, the opposing party must demonstrate, in some degree of detail, that there is a dispute as to a material fact. Bankerd, 303 Md. at 112 , 492 A.2d 608 . General denials and allegations are insufficient to defeat a motion for summary judgment.

Id. Finally, if there are no material factual disputes, then ²¹⁰ we must decide whether the trial court was legally correct because the trial court decides issues of law, not fact, when granting summary judgment. Heat & Power Corp. v. Air Prods. & Chems., Inc., 320 Md. 584, 591-92 , 578 A.2d 1202 (1990). The standard of review which we apply to appellant Waller’s Issue V is separately set forth in our discussion, infra, at 234.

Discussion I. Earthtech and Waller argue that the circuit court erred in concluding that MNB was exempt from the common law duty of good faith and fair dealing in its contractual relations with them. Appellants present five arguments attacking the circuit court’s ruling that appellee was exempt from this duty. We will address each argument separately, as appellants have done in their brief. A. Appellants first argue that the circuit court erred because it failed to consider that MNB, as a party to a contract, was subject to a good faith duty not only in the enforcement of the Revolving Note, but also in its performance.

Appellants claim that MNB breached its duty of good faith in the performance of the contract by engaging in “collection activities” prior to MNB explicitly demanding payment of the Revolving Note. Appellants point to several examples of these alleged collection activities, including: (1) MNB sought the IDOTs as additional collateral at a time when MNB had already decided it would demand repayment of the Revolving Note the very next day; (2) MNB froze Earthtech’s checking account one day before demanding payment; (3) MNB advised Earthtech’s independent payroll service not to process the payroll one day before demanding payment; (4) an MNB officer acted in bad faith by withholding certain information from and misrepresenting other ²¹¹ information to his superior; and (5) MNB acted to hinder Earthtech and Waller in their performance of their obligations under the Revolving Note. In summary, appellants claim that by engaging in collection activities prior to demanding repayment and by withholding material facts, MNB interfered with Earthtech’s ability to repay the Revolving Note and, therefore, failed to perform its obligations under the Revolving Note in good faith. We disagree with appellants contentions and explain.

Initially, we observe that the circuit court clearly addressed whether MNB must be held to a good faith standard in the performance as well as the execution of the Revolving Note. In its Memorandum Opinion and Order of 25 July 1991, the circuit court engaged in a lengthy discussion of the law applicable to demand notes, both in this State and in other jurisdictions. The circuit court discussed the impact of the good faith standard upon the terms of an express contract, finding that this implied duty cannot vary the standard established by an express contract. Therefore, we believe that the circuit court adequately addressed appellants’ contentions.

Next, we consider whether the circuit court was correct in its legal analysis and ultimate conclusion. Maryland law implies a duty of good faith and fair dealing in certain contracts. Food Fair Stores, Inc. v. Blumberg, 234 Md. 521, 534 , 200 A.2d 166 (1964); Parker v. Columbia Bank, 91 Md.App. 346, 366 , 604 A.2d 521 , cert, denied, 327 Md. 524 , 610 A.2d 796 (1992); E. Savs. Bank, F.S.B. v. Nardo, 85 Md.App. 702, 712 , 584 A.2d 1301 (1991); P.V. Properties, Inc. v. Rock Creek Village Assocs.

Ltd. Partnership, 77 Md.App. 77, 86 , 549 A.2d 403 (1988). In Columbia Bank, supra, Judge Motz, writing for this Court, outlined the boundaries of this implied duty of good faith and fair dealing, stating: [T]his duty simply prohibits one party to a contract from acting in such a manner as to prevent the other party from performing his obligations under the contract____ Thus, the duty of good faith merely obligates a lender to ²¹² exercise good faith in performing its contractual obligations; it does not obligate a lender to take affirmative actions that the lender is clearly not required to take under its loan documents. Id. 91 Md.App. at 366, 604 A.2d 521 (citations omitted). The implied duty of good faith does not change the terms of the contract.

In addition, when the language of a contract is plain and unambiguous, there is no room for construction by the court. “[T]he clear and unambiguous language of an agreement will not give way to what the parties thought that the agreement meant or intended it to mean.” Gen. Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261 , 492 A.2d 1306 (1985). The actual contract, therefore, is the starting point for our analysis. In the case sub judice, appellants and MNB entered into a loan agreement on 2 February 1983 that was evidenced by the Revolving Note.

The clear and unambiguous language of the Revolving Note provides, in pertinent part: ON demand, the Undersigned (whether one or more than one) promises (jointly and severally, if more than one) to pay to the order of MARYLAND NATIONAL BANK (the “Bank”) the principal sum of Fifty thousand and 00/100 Dollars (the “Principal Sum”) or so much thereof as shall have been actually advanced by the Bank to the Undersigned____ (Emphasis supplied). The Revolving Note is clearly a demand note or loan. Section 3-108 of the Commercial Law Article states, in part, that a demand note is one “in which no time for payment is stated.” A demand note “expressly states that it is payable on demand, on presentation or at sight.” Black’s Law Dictionary 224 (5th ed. 1983). A demand loan “may be called by lender at any time because there is no fixed maturity date.” Id.

In addition, the circuit court had before it the deposition testimony of Waller and Earthtech’s Vice-President Bloom, which indicated that they understood the terms and potential harshness of the Revolving Note. ²¹³ The Court of Appeals has interpreted demand notes as payable immediately, without demand. Billingsley v. Kelly, 261 Md. 116, 128 , 274 A.2d 113 (1971); Continental Oil Co. v. Horsey, 177 Md. 383, 385 , 9 A.2d 607 (1939); Blick v. Cockins, 131 Md. 625, 630 , 102 A. 1022 (1917). In addition, the Revolving Note executed by the parties states, in part: Each obligor [Earthtech and Waller] ... hereby waives demand, presentment for payment, protest, notice of dishonor and of protest____ (Emphasis supplied). Appellants waived any requirement that MNB demand repayment prior to engaging in collection activities.

See Billingsley, 261 Md. at 127-28 , 274 A.2d 113 . Notwithstanding this waiver, appellants now seek to impose an obligation upon MNB that it did not assume under the Revolving Note. This Court, under the guise of an implied duty of good faith, will not impose such an affirmative obligation upon MNB. The implied duty of good faith may not be used to extend or add to the obligations a party has accepted under a contract.

See Columbia Bank, 91 Md. App. at 366 , 604 A.2d 521 . MNB had no contractual obligation to demand payment from appellants before engaging in collection activities. Thus, the circuit court did not err in granting MNB’s motion for summary judgment as to Count I. Appellants place great reliance upon a bankruptcy case, In re Martin Specialty Vehicles, Inc. v. Bank of Boston W. Mass., N.A., 87 B.R. 752 (Bankr.D.Mass.1988), rev’d, 97 B.R. 721 (D.Mass 1989), in which, they claim, a bank’s foreclosure on a debtor’s demand note before demanding repayment was found to be actionable bad faith. While we hesitate to discuss this case because it was ultimately reversed on jurisdictional grounds, we do so because of its apparent importance to appellants’ position.

We disagree with appellants’ reading of this case because the bankruptcy court found that the notes in question were “not true demand instruments.” Id. at 765 . In contrast, the Revolving Note at issue in the present case is a true demand ²¹⁴ instrument; therefore, appellants reliance on this case is misplaced. 1 B. Appellants next attack the circuit court’s references to the Official Comment of Md.Com.Law I Code Ann. § 1-208 (1992). Appellants claim that the circuit court based its grant of summary judgment as to Count I on the Comment. 2 They argue that a comment to the section in question cannot be used to preempt the common law of this State. Appellants then go on to argue that the implied duty of good faith and fair dealing was breached by MNB in the performance and enforcement of the Revolving Note.

We address only appellants’ claim attacking the circuit court’s reliance on the Comment to the Commercial Law Article. Appellants’ argument relating to the good faith performance of the note was discussed in Issue I.A., supra, and the argument relating to the good faith enforcement of the note is discussed in Issue I.C., infra. Earthtech and Waller are correct in that “Maryland courts adhere to the policy that statutes are not to be construed to alter the common-law by implication.” Hardy v. State, 301 Md. 124, 131 , 482 A.2d 474 (1984). They also refer this Court to § 1-103 of the Commercial Law Article which provides, in pertinent part: ²¹⁵ Unless displaced by the particular provisions of Titles 1 through 10 of this article, the principles of law and equity ... shall supplement its provisions____ These arguments, however, are of little help to appellants because they misconstrue the circuit court’s reliance on the Official Comment.

Section 1-208 and its official comment provide, in part: § 1-208. Option to accelerate at will. A term providing that one party or his successor in interest may accelerate payment or performance or require collateral or additional collateral “at will” or “when he deems himself insecure” or in words of similar import shall be construed to mean that he shall have power to do so only if he in good faith believes that the prospect of payment or performance is impaired. OFFICIAL COMMENT Sjí S(! jfc Jfe i}!

S*! Obviously this section has no application to demand instruments or obligations whose very nature permits call at any time with or without reason. This section applies only to an agreement or to paper which in the first instance is payable at a future date. An official comment cannot be used to alter the plain language of a statute, but it may be used as an aid in determining the legislature’s intent.

Jefferson v. Jones, 286 Md. 544, 548 , 408 A.2d 1036 (1979). In addition, the Court of Appeals and this Court have often used the official comments as an aid in interpreting the Commercial Law Article. See, e.g., Mercantile-Safe Deposit & Trust Co. v. Baltimore County, 309 Md. 668, 674 , 526 A.2d 591 (1987); Weast v. Arnold, 299 Md. 540, 550-51 , 474 A.2d 904 (1984); Rezapolvi v. First Nat’l Bank of Md., 296 Md. 1, 14 , 459 A.2d 183 (1983); Fico, Inc. v. Ghingher, 287 Md. 150 , 152 n. 1, 154 n. 3, 157 & n. 4, 158 & n. 5, 411 A.2d 430 (1980); John J. Kirlin, Inc. v. Gaco Sys., Inc., 80 Md.App. 506, 512-13 , ²¹⁶ 565 A.2d 114 (1989), cert, denied, 318 Md. 310 , 568 A.2d 21 (1990). Based on our review of the circuit court’s Memorandum Opinion and Order we believe the court used the Official Comment in the manner in which it was intended to be used.

The Official Comment was merely given consideration in helping the court understand the nature of a demand note. Appellants’ implication that the Official Comment was the circuit court’s sole basis for not imposing an implied duty of good faith and fair dealing is clearly without merit. The circuit court carefully discussed the law in this State and in other jurisdictions and its references to the Official Comment to § 1-208 were but a small part of its discussion of its decision to grant summary judgment as to Count I. We do not believe that the circuit court committed any error by considering the Official Comment in reaching its decision. C. Appellants further argue that Maryland’s common law required MNB to exercise its discretionary right to call the Revolving Note in a commercially reasonable manner.

They contend that “if the demand note does not spell out any standard for calling the loan, then the implied covenant of good faith and fair dealing should imply a reasonableness standard.” Appellants, therefore, claim that the circuit court erred in granting summary judgment as to Count I because MNB breached the implied duty of good faith and fair dealing in its enforcement of the Revolving Note. We disagree with appellants’ contentions and explain. As discussed in Issue I.A., supra, the Revolving Note was clearly a demand note. As a demand note it was payable immediately, without demand.

Billingsley v. Kelly, 261 Md. 116, 128 , 274 A.2d 113 (1972); Continental Oil Co. v. Horsey, 177 Md. 383, 385 , 9 A.2d 607 (1939); Blick v. Cockins, 131 Md. 625, 630 , 102 A. 1022 (1917). A demand loan may be called at any time by the lender because there is no fixed date of maturity. Black’s Law Dictionary 224 ²¹⁷ (5th ed. 1983). Although § 1-208 of the Commercial Law Article imposes a general requirement of good faith in an option to accelerate at will, the Official Comment states, “Obviously this section has no application to demand instruments or obligations whose very nature permits call at any time with or without reason.” In addition, the weight of authority in other jurisdictions holds that the good faith requirement does not apply to a lender’s decision to call a demand note.

See, e.g., Kham & Nate’s Shoes No. 2, Inc. v. First Bank of Whiting, 908 F.2d 1351, 1357-58 (7th Cir.1990); Taggart & Taggart Seed, Inc. v. First Tenn. Bank Nat’l Ass’n, 684 F.Supp. 230, 235-36 (E.D.Ark.1988), aff'd, 881 F.2d 1080 (8th Cir.1989); Dominion Bank, N.A. v. Moore, 688 F.Supp. 1084, 1086-87 (W.D.Va.1988); Spencer Cos. v. Chase Manhattan Bank, N.A., 81 B.R. 194, 199 (D.Mass 1987); Pavco Indus., Inc. v. First Nat’l Bank of Mobile, 534 So.2d 572, 576-77 (Ala. 1988); Flagship Nat’l Bank v. Gray Distribution Sys., Inc., 485 So.2d 1336, 1340 (Fla.Dist.Ct.App.1986), review denied, 497 So.2d 1217 (Fla.1986); Fulton Nat’l Bank v. Willis Denney Ford, Inc., 154 Ga.App. 846 , 269 S.E.2d 916, 918-19 (1980); Centerre Bank of Kansas City, N.A. v. Distribs., Inc., 705 S.W.2d 42, 46-48 (Mo.App.1985); Simon v. N.H. Savs. Bank, 112 N.H. 372 , 296 A.2d 913, 915 (1972); Allied Sheet Metal Fabricators, Inc. v. Peoples Nat’l Bank of Washington, 10 Wash.App. 530 , 518 P.2d 734, 738 , cert, denied, 419 U.S. 967 , 95 S.Ct. 231 , 42 L.Ed.2d 183 (1974). But see K.M.C. Co. v. Irving Trust Co., 757 F.2d 752, 760 (6th Cir.1985).

Appellants refer us to a Court of Appeals decision, Julian v. Christopher, 320 Md. 1 , 575 A.2d 735 (1990), for the proposition that a discretionary contractual right must be exercised in good faith and in accordance with fair dealing. Id. at 9 , 575 A.2d 735 . In Julian, a lease contained a “silent consent” clause which prohibited assignment or subletting of the premises without the prior written consent of the landlord. The Court of Appeals, in reversing an earlier decision, Jacobs v. Klawans, 225 Md. 147, 169 A.2d 677 ²¹⁸ (1961), addressed the effect of the implied duty of good faith and fair dealing upon the lease agreement, stating: [T]his Court has recognized that in a lease, as well as in other contracts, “there exists an implied covenant that each of the parties thereto will act in good faith and deal fairly with the others.” Food Fair v. Blumberg, 234 Md. 521, 534 [ 200 A.2d 166 ] (1964).

When the lease gives the landlord the right to exercise discretion, the discretion should be exercised in good faith, and in accordance with fair dealing; if the lease does not spell out any standard for withholding consent, then the implied covenant of good faith and fair dealing should imply a reasonableness standard. Id. (emphasis supplied). Appellants’ reliance on this case is misplaced for two reasons.

First, the Court of Appeals based its decision in Julian partly on the public policy against restraints on alienation and not on factors relevant to commercial law. Second, and most damaging to appellants’ position, the Revolving Note in question clearly spells out the standard to be applied in enforcing the note, i.e., it is payable on demand. Appellants next direct our attention to Jacques v. First Nat’l Bank of Md., 307 Md. 527 , 515 A.2d 756 (1986). They point out that banks have traditionally “been held to a high degree of integrity and responsiveness to their public calling.” Id. at 542 , 515 A.2d 756 .

Appellants contend that “public policy requires that when a bank calls a loan it should do so reasonably.” They argue that allowing MNB arbitrarily to demand payment would, in essence, nullify the borrower’s access to the loan proceeds. Again, we must respond that this Court will not imply a reasonableness term that cannot be found in the Revolving Note. In summary, the Revolving Note was clearly a demand note, as evidenced by its clear and unambiguous language. A demand note by its very nature may be called at any time by the holder, with or without reason.

Therefore, the ²¹⁹ circuit court did not err in holding that MNB was not required to act in good faith and thereby impose a reasonableness standard upon MNB’s conduct. Instead, MNB could enforce the plain terms of the contract and call the demand note at anytime, with or without reason. The circuit court’s grant of summary judgment as to Count I was proper. D. Next, appellants argue that the circuit court improperly refused to consider evidence regarding the terms of the Revolving Note when it held that the evidence set forth by appellants violated the parol evidence rule.

Appellants claim that the parties orally modified the Revolving Note into a term note and thereby subjected MNB to an implied duty of good faith. In addition, appellants contend that they presented evidence of an oral modification that would not violate the parol evidence rule. Finally, appellants argue that the “on demand” provision of the Revolving Note directly contradicted the security agreement, which listed an event of default as “the determination in good faith by the Bank [MNB] that the prospect of payment of any of the Obligations is impaired for any reason.” (Emphasis supplied). The clear and unambiguous language of the Revolving Note stated that it was payable “on demand.” There is no room for construction of a contract by a court when its language is plain and unambiguous.

Gen. Motors Acceptance Corp. v. Daniels, 303 Md. 254, 261 , 492 A.2d 1306 (1985). Therefore, the circuit court was correct in holding as a matter of law that the loan agreement, at the time it was signed, was in fact a demand note. The circuit court then refused to consider what it believed was parol evidence to vary the terms of the Revolving Note.

It is a basic principle of the common law that absent fraud, duress or mistake, “parol evidence is inadmissible to vary or contradict the terms of a written instru ²²⁰ ment.” Freeman v. Stanbern Constr. Co., 205 Md. 71, 77 , 106 A.2d 50 (1954). Therefore, all prior and contemporaneous negotiations and conversations are merged in the written instrument. Id.

We agree with appellants that the circuit court erroneously excluded Waller’s affidavits as parol evidence. In her affidavits, Waller stated that many of the conversations in question took place after the Revolving Note was signed. We believe, however, that the error committed by the circuit court was harmless. This Court will not reverse a lower court for harmless error.

See Beahm v. Shortall, 279 Md. 321, 330-31 , 368 A.2d 1005 (1977); I.W. Berman Properties v. Porter Bros., Inc., 276 Md. 1, 11-12 , 344 A.2d 65 (1975). To explain our position, we quote liberally from Waller’s affidavits and deposition testimony, none of which violated the parol evidence rule: In her 19 April 1991 affidavit, Waller stated, in part: Although the Revolving Note states that it was payable on demand, I had several conversations with Ann Canty, an officer of the Bank [MNB], after the loan was made in which she advised me that the loan was in fact payable in one year. In accordance with that oral agreement, Earth-tech repaid the loan in its entirety in late 1983, and later drew down against the credit line once more. (Emphasis supplied).

Waller’s 15 July 1991 affidavit provides, in part: Ms. Canty advised me that the note would effectively be a term note; that is, for 60 days out of every 365 days, Earthtech must repay the Bank and not owe it any amount____ Ms. Canty reiterated that position after the loan was made. In her 14 January 1992 affidavit, Waller stated, at paragraphs six and seven: 6. After Earthtech opened the line of credit with the Bank, I had conversations with Ms. Canty in which we agreed that the loan would be repayable in one year. ²²¹ 7. If Earthtech was “out of the Bank” for 60 days during the next 360 calendar days, the loan would be automatically renewed.

In her deposition, taken on 5 November 1990, Waller testified as follows: A. ... we paid off the loan in full at least once and probably several times in that time frame. Q. ... Do you remember when Earthtech paid off the loan in full? A. We were out of the bank for 120 days.

Q. When was that?