4. Therefore, under Section 5-116(2)(a), delivery of the credit to the assignee, irrespective of notice, is a prerequisite to the effectiveness and perfection of an assignment of the proceeds of a letter of credit. See N.Y.U.C.C. § 5-116(2)(a), comment 3 (McKinney Supp. 1995) ("[T]he special nature of the letter of credit as evidence of the right to proceeds is recognized by the . . . requirement of delivery of the letter to the assignee as a condition precedent to the perfection of the assignment."); see also Union Planters Nat'l Bank. v. World Energy Sys. Assocs., 816 F.2d 1092, 1095 (6th Cir. 1987); Weyerhaeuser v. Israel Discount Bank, 872 F. Supp. 44, 46-47 (S.D.N.Y. 1994) (Keenan, J.), amended, No. 92 Civ. 0431, 1994 WL 685487 (S.D.N.Y. Dec. 7, 1994). 5. With respect to what documents must be delivered to satisfy the delivery requirement of Section 5-116(a), in denying IDB's motion for summary judgment, the Court held:
See J. Dolan, The Law of Letters of Credit ¶ 10.04[b], at 10-24 (2d ed. 1991). Contrary to plaintiff's contention, Union Planters National Bank v. World Energy Systems Associates, 816 F.2d 1092 (6th Cir. 1987), is not on point. In Union Planters, the original letter of credit, which was held by the advising bank, was one of the documents that the beneficiary was required to present in order to obtain payment under the letter of credit.
(1d) Our determination is consistent with those of other jurisdictions that have considered the issue. (See, e.g., Supreme Mdse. v. Chemical Bank (1987) 70 N.Y.2d 344 [520 N YS.2d 734, 514 N.E.2d 1358] [beneficiary's interest in executory letter of credit is not attachable]; Union Planters Nat. Bank v. World Energy Systems (6th Cir. 1987) 816 F.2d 1092 [until conforming documents are presented to and accepted by issuing bank, the beneficiary's assignee has no attachable interest in the proceeds of the letter of credit];Sisalcords Do Brazil, Ltd. v. Fiacao Brasileira De Sisal, S.A. (5th Cir. 1971) 450 F.2d 419 [no writ of attachment may be enforced against an issuing bank to garnish the beneficiary's executory interest in a letter of credit]; Algemene Bank v. Soysen Tarim Urunleri Dis Ticaret, supra, 748 F. Supp. at p. 183, fn. 9 [creditor has only a narrow window during which to attach proceeds of letter of credit assigned to a third party — the attachment must occur after the beneficiary produces the documents, but before the beneficiary has notified the issuer of an assignment of proceeds]; Diakan Love, S.A. v. Al-Haddad Bros. Enterprises (S.D.N.Y. 1984) 584 F. Supp. 782 [beneficiary's executory interest in a letter of credit is not attachable].) The lower court in that case had stated, "Until its conditions have been performed, a
See Reibor International Ltd. v. Cargo Carriers (KACZ-CO.) Ltd., 759 F.2d 262 (2d Cir. 1985) (holding that Rule B attachment does not extend to after-acquired property); see also Union Planters National Bank v. World Energy Systems Associates, 816 F.2d 1092, 1098 (6th Cir. 1987). Although Reibor concerned an order of attachment under Rule B of the Supplemental Rules, the policy considerations that motivated the Court in Reibor apply with equal force to Rule C arrests. Cf. United States v. All Monies of Banco Cafetero International, 608 F. Supp. 1394, 1403-04 (S.D.N.Y. 1985) (applying Reibor rule to Rule C arrest in forfeiture action), aff'd, 797 F.2d 1154 (2d Cir. 1986).
A letter of credit remains wholly executory until the beneficiary has strictly complied with its terms. See Union Planters Nat'l Bank v. World Energy Sys. Assoc., 816 F.2d 1092, 1098 (6th Cir. 1987); Venizelos, S.A. v. Chase Manhattan Bank, 425 F.2d 461, 465 (2d Cir. 1970). The letter issued by Rafidain specified that the funds in the Rafidain account at BNY would revert to IMIM on February 1, 1991, unless Consarc had tendered documents proving shipment of the furnaces.
It is true that in Union Planters Nat. Bank v. World Energy Systems Associates and Diakan Love, S.A. v. Al–Haddad Bros. Enterprises, Inc., courts used the courts used the term “executory” to describe letters of credit. Union Planters, 816 F.2d 1092, 1098 (6th Cir.1987) (citing, inter alia, Diakan Love ) (applying Tennessee law and federal maritime law); Diakan Love, 584 F.Supp. 782, 784 (D.C.N.Y.1984) (applying New York law and maritime garnishment law). It is plain that the term was used in these cases in an effort to explain that the issuer of the letters need not make payment to the beneficiary until the beneficiary presents conforming documents.
Det Bergenske Dampskibsselskab v. Sabre Shipping Corp., 341 F.2d 50, 52-53 (2d Cir. 1965). See, e.g., Union Planters Nat'l Bank v. World Energy Sys. Assocs., 816 F.2d 1092, 1098 (6th Cir. 1987) (adopting and applying this rationale); Reibor Int'l Ltd. v. Cargo Carriers (KACZ-CO.) Ltd., 759 F.2d 262, 266 (2d Cir. 1985) (same). Winter Storm is also difficult to reconcile with the Supreme Court's established methodology for defining what interests create property rights under federal law.
Because Winter Storm cannot show that the wire transfer that TPI originated at the Bank of Ayudhya was TPI's property when being processed at BONY, the attachment must be vacated. See, e.g., Union Planters Nat'l Bank v. World Energy Sys. Assoc., 816 F.2d 1092 (6th Cir. 1987) (affirming a decision to quash a Rule B attachment because funds available under a letter of credit are not property subject to attachment); Oceanfocus Shipping, Ltd. v. Naviera Humbolt, 962 F. Supp. 1481 (S.D. Fla. 1996) (vacating attachment of secured line of credit because not "a good, chattel, credit or effect" subject to attachment under old Rule B); Ferrostal, 652 F. Supp. at 424 (vacating maritime attachment of open letter of credit because not property). Plaintiff argues that vacating this attachment would materially prejudice its rights under Rule B, see Pl. Opp. at 17-22, yet provides no support for the proposition that being able to attach wire transfer credits at an intermediary bank is a substantive right under Rule B. To the contrary, Rule B only permits attachment of tangible or intangible property.
A Rule B attachment only reaches assets in the hands of a garnishee at the time of the service of the writ of attachment. See Reibor Int'l, 759 F.2d at 265-66; Metal Transport Corp., 1990 WL 55687, at *2; see also Union Planters Nat'l Bank v. World Energy Systems Assocs., 816 F.2d 1092, 1098 (6th Cir. 1987). Since all four garnishees have responded that they are not in possession of any assets of Mizushima ( see Gutowski Aff. Exs. 9-12), and I have found that Limonium's service of a writ of attachment on RBS/New York was ineffective to reach Mizushima's account at RBS/London, the writs of attachment are void.
Once Bergerco made conforming presentment, Rasheed Bank was obligated to pay according to the terms of the Letter of Credit. See Union Planters National Bank v. World Energy Systems Assoc., 816 F.2d 1092, 1098 (6th Cir. 1987). This obligation was reflected in the default judgment that Bergerco obtained in this Court on July 26, 1994.