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Words Speak Louder Than Numbers

The Court of Appeals of Texas held that the written words in loan documents prevail over contradictory numerals. In Charles R. Tips Family Trust v. PB Commercial LLC, 459 S.W.3d 147 (Tex. App. 2015), Patriot Bank loaned $1,700,000 to Charles R. Tips Family Trust and Hazel W. Tips Family Trust pursuant to a note, a deed of trust, and a guaranty agreement. Each document described the principal amount of the loan as "ONE MILLION SEVEN THOUSAND AND NO/100 ($1,700,000.00) DOLLARS." Id. at 150. The borrowers failed to repay the entire amount of the loan prior to maturity. Patriot Bank sought to collect the unpaid principal and interest. PB Commercial acquired the loan and documents from Patriot Bank and sold the property securing the note for $874,125. PB Commercial then sued the borrowers for the remaining deficiency and was granted an $815,214.50 judgment. The borrowers appealed the deficiency judgment. On appeal, the appellate court held that the deficiency judgment was improper because the principal balance owing under the loan documents was $1,007,000, not $1,700,000, citing the Uniform Commercial Code's provision that "words prevail over numbers." Tex. Bus. & Com. Code 3.114. The court refused to consider extrinsic evidence regarding the amount of money that Patriot Bank actually provided to the borrowers because the loan documents were not ambiguous after application of all relevant rules of construction. Id. at 156. As a result, the court reversed the trial court's deficiency judgment for PB Commercial, rendered a judgment that the principal amount of the loan was $1,007,000, and remanded the case to the trial court for further proceedings.

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