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Note: Garnishee/buyers, Tandy Corporation and A&A International, Inc., caused LCs to be issued by First Union National Bank and others in favor of the sellers, six foreign corporations that were judgment debtors, in order to pay for the goods purchased. By using an LC, buyer/applicants "avoided having any open or revolving accounts with the foreign businesses, and did not owe money directly to the companies." Phonetel Communications, the judgment creditor, served a writ of garnishment on the buyer, seeking to garnish monies due to the judgment debtor. The applicant/garnishees responded that they were not indebted to the judgment debtor but indicated that the banks had issued the LCs at their request payable to the judgment debtor. The U.S. District Court for the Northern District of Texas, Fort Worth Division, Mahon, J., on its own motion, awarded summary judgment and attorney's fees to garnishees. The judgment creditor argued that it was entitled to garnish payments made to the judgment debtors outside the U.S. via LC. The court rejected this argument where the garnishees "have submitted undisputed evidence that all of their outstanding payment obligations to the foreign companies are satisfied solely through the use of letters of credit." The court noted that "Garnishees are not parties to these letters of credit, which are independent contracts between the issuing bank - and the beneficiaries - and thus the Court does not see how [the judgment creditor] may garnish payments to be made pursuant to the letters of credit by serving a writ of garnishment on the applicants/garnishees.".

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