Article

Note: To assure completion of a road in a residential land development, Developer obtained a standby letter of credit from T & M Mortgage Solutions (Non-Bank Issuer) for US$187,000 in favor of the Town of Poland (Beneficiary). Under the development agreement between Developer and Beneficiary, Developer was to complete the construction of a road within one year. When Developer failed to meet the deadline, Beneficiary demanded payment from Non-Bank Issuer but was not paid. Beneficiary then sued Non-Bank Issuer for wrongful dishonor and moved ex parte for attachment of Non-Bank Issuer's bank account and attachment on trustee process. The Superior Court of Maine, Androscoggin County, Delahanty, J., granted Beneficiary's motion against Non-Bank Issuer in the form of $187,000 and a summons to trustee freezing Non-Bank Issuer's $20,462.09 in assets at TD Bank (Bank).

Non-Bank Issuer subsequently moved to modify the attachment by substituting four undeveloped lots, valued at approximately $20,000 each, for the liquid assets. The Superior Court granted the motion. On appeal, the Supreme Judicial Court of Maine, Saufley, Alexander, Levy, Silver, Mead, and Jabar, JJ., in an opinion by Saufley, C.J., vacated the lower court's judgment and reversed the modification of the order.

The appellate court ruled that the trial court erred as a matter of law by allowing Non-Bank Issuer to substitute real property for attached funds in an attachment on trustee process. It ruled that an attachment on trustee process could only be substituted by "goods or credits" or "cash or bond".

[JEB/kmw]

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