matters before the court on an appeal from a grant to rule twelve motion the standard of review is to know with all due respect to the court if you honor before december thirty one of this year ask me to pay you one dollar i will do that did we just enter a contract was there a meeting of the min was there a mutual consent was there consideration and i don't mean to be clear but that's how simple our letter of credit is in this case citizens credit union said to granite ray if before july th you asked me i will pay you three hundred and eighty five thousand dollars that unilateral promise does not constitute a contract under any common law principles under any definition under any case i've read that it was in there a contract between and that says the parties generally prefects but there is a contract between for tax and the bank wasn't there they paid they paint app letter of credit issued you know i assume there was your honor and i can tell you that under north dakota hang on just a  lease and if there is a contract between vortex drilling and the bank they can repeat eate that contract which includes the promise to pay your client they certainly can repudiate that contract that's got nothing to do with the letter of credit that they extended to my client my client did not enter into a contract with that bank but if they repeat the underlying the underlying contract doesn't that repudiate the obligation to pay as well no because doesn't it's a lot of credit really like and i'm just there is a previous case called move and in move it was a personal jurisdiction case but this court described it as the obligation as contractual in nature but i think really what it is is like a rd party beneficiary type of type of situation so if you eliminate the main contract the rd party beneficiary obligation files away this isn't a rd party beneficiary this is a stand alone individual unilateral promise this isn't a rd party beneficiary and if they decided to repudiate that contract that's up to them this court actually kind of foresaw what we're talking credit is not a contract now that was not the issue in that case so it wasn't actually decided in that case but you foretold that this issue was going to be here  contracts well it talks about that what's the effect of this decision if we affirm the effect of it is you cannot reputed a letter of credit at the effect and in in  two separately parsed out the differences sure so what do we what do we have here we have personal liability of the of the board is that what you're well the board passed to pay the letter of credit yes not out of the assets out of out of the assets that it is managing yes but only out of those s s yes talked about there's no there's no personal liability for the answer to that seems to me and it seems to me at least the possibility if if the if the if a standby letter of credit puts a liability on the books of the credit union on the day it's issue couldn't agree more judge but but what do we know that the effect of repudiation is to eliminate that claim well that's what the board's position is and they've fixed gear i mean here they just look they want to talk about that it is want to say firm absolutely and i will testify now what what it what that means and well why can't why can't a different whether or not it was a contractor or not assuming it was a contract why isn't from   troubled assets that the f d i c transferred to its corporate capacity and that could then be sued not successfully in that case the but that is that the situation with the credit unions administration and that answer is no and i so i think i think the f b i see regime is completely despite this different i mean i don't know that i can't i can't read that that case as as authority for for i don't understand what  authority for here's why it's different from our situation in and file a supplemental last night i found this new case and it's from the eastern district in eastern district  damages that were incurred before the filing before the before the receivership was filed in our case judge help hopeful and followed that by saying there's th triggering of vent if you go back and look at the credit union case the triggering event doesn't appear anywhere in the statute the f d i c put it in a letter the judge in new hampshire took that language that there has to be a triggering event and applied it to the cutoff date for damages judge hudson in our case took the triggering event language from the judge in new hampshire and said what the triggering event is the down the the site draft there were no damages than the damages in our case as pled and appendix six paragraph fourteen of our complaint that all of our damages were incurred before the date the cutoff date for damages that's where the confusion is judge government in our case said you don't get any damages this is the f b i see position you don't get damages because you didn't send in that you don't get any payment because you didn't send in your sight draft before the filing inconsistent with credit union and inconsistent with lax on that i just  d those bonding companies had not incurred damages before the filing in our case we had incurred all these damages before filing i want to go back to the contractors there's one other thing that's bothering me  so if you look at willesden and corbin on contracts they they characterize letters of credit and the relationship between between those and in favor the beneficiary and the bank and the way they do it is they say their formal contracts their analogous to placing a seal on a contract which replaces consideration and they seem to say that the weight of authority goes that way what is your best argument against that well it's not just consideration there has to be some mutual consent there has to be a meeting of the minds in a letter of credit situation that the the issuer of the letter of credit never communicates with the bonding company there's no direct communication the binding company goes to the contract contractor and says if you want me to issue bonds you've got to get me a letter of credit in this m o he goes to the bank fake i need you to send a letter of credit to the binding company so we never have any meeting of the minds there's never any mutual consent between us there's not even any documents between us the only thing that happens is i get this letter of credit which get you i will promise to pay me that still gets me back and maybe even answer my question earlier which is why is this not a rd analogous to a rd party beneficiary situation where if you know what you're saying is right i'm taking it as a given everything you just said is right and it seems to me that you're the rd party beneficiary of a contract that was entered into between the drain tile company in the bank there's no i mean we're not a beneficiary were not part of that contract we're not mentioned in that contract there's nothing that ties us to the bank it's an independent just like at the beginning of this argument that's how simple the promises it's not more complicated than that but it's but when it when they the bank  by terminology we're clearly a beneficiary of that letter of credit i will agree with that i'd like to reserve the last minute and a half or so for rebuttal thank you we are talking although nobody's talking in these terms about what congress meant with the word contract in that statute and with that as a as a preamble let me ask you what what is the board's position on the critical day with this decision applied that yes your honor and therefore congress intended to wipe out the purposes of adopting for in the united states respect to damages and what the beneficiary is entitled to is what is the credit union the liability to the beneficiary of that the day before the conservator is appointed counsel that regard how that i can i answer would be a liability of some kind well no your honor and the reason for that is it's important to bear in mind that the mere fact that there is a letter of credit out there in existence does not mean that it will ever be drawn upon a letter of credit could be issued with that of course that's the commercial the whole thing is that the goods and transferred arrive and and the the and the rejected by the buyer and then the then the letter of credit then there's a draw on the letter of credit so that the shell of that so the shipper relied on being paid without being paid in advance of transit is not left with goods overseas and no money so if you if you say that that all of those all of those commercial letters of credit that are issued by your credit unions aren't worth the paper they're written on until it's a draft is in that instance it is entirely possible that that all those events could occur and for whatever reason the beneficiary might never draw on the letter of credit and then the goods  or the beneficiary could choose to go after the customer of the issue are there are a number of reasons why it could be that the issuer never had liability those commercial elsie's are to that's a big thing that's a big deal well and i believe you have to look at this in the context of the greater purpose of syria and the interests involved there which is to protect innocent depositors when a financial institution is this situation getting back to the question that you began with what did congress mean when it identified any contract did it  history well what i would suggest to you i didn't see it in the briefs is absent a specific definition of what is a contract court split to the common law and the common law definition of dictionary definition of a contract it's a promissory agreement between two or more persons that creates modifies or destroys illegal relation there can't be any question here that what we have is a promissory agreement between two or more people certainly we have a clear contract between the issuer and its customer i can certainly say you don't even know how that this credit union accounted for on its books i can say if it if it listed this is a liability on the date the wealthy issue the statutory scheme operates here how often does this i was just going back to a question that just located asked earlier how often i see the potential for bassett disruption but how often does a conservatorship of a credit union happen i mean how often does this agency do that to my knowledge it's rare one percent of credit unions half a percent ten percent i mean you have any idea i mean i'm just wondering i don't know the answer to that but one other liquidation there are separate rules and procedures that apply to liquidation so to the next question and i just want to bear down you know you have a plain language meaning of contract the supreme court has said to us when you have terms that are known at the common law and meaning you look at the common law and now a judge logan is absolutely right that letters of credit are commercial code type of thing it's not a common law deal make your best arguments i've made some of those arguments make your best argument that this is a contract and that it's covered by the statute ok well st of all we have the contract between the issuer and its customer that a letter of credit will be issued the actual so just under the broad meaning of a contract we have a contract and then as is recognized by the official comment to the see this is a contract and there are many cases that talk about how this is unusual is different the reason that article five of the u c c specifically provides that consideration isn't required is to preserve the enforceability of a letter of credit as a contract without having to get into this discussion of what the consideration who has pretty with him so on and so forth a letter of credit may be unusual in its characteristics which is recognized in the restatement of contracts which also provides that it is a formal contract so subject in some respects to special rules that depend on the formal character is this characteristics and different from those governing contracts in general and then specifically provides that letters of credit are a contract they're subject to different rules i'm going to argue against what i was saying earlier on the beneficiary issue my understanding of the letter crowd are pretty sure about this is supposed to drain tyler chems into the bank and says i don't i don't like this anymore i want my money back and i don't want this letter of credit to stand because i don't want this either but i don't want granulated be able to get the money my understanding is even if they give him his money back even if they  and so does that make it different by gas than an ordinary for the type of contract i've been talking about here that would be one of the things that makes it different from an ordinary contract and does not take it outside of the of the i guess any to pay money to the beneficiary upon fulfillment of the requirements of the line of of the letter of credit which in those cases demand counsel i'm going to go down a different trail here assuming the seven hundred and eighty seven d conservatorship there was no liability whatsoever by the credit union to the beneficiary that goes back to a question about how the credit union treats says on its balance sheet seems to me that it's got to be on there some words this is a valuable item of personal property is it not well typically it would be a contingent liability how this particular credit union diane i don't know the government can just wipe that out without compensation well there is a provision for compensation in the statutory scheme and that is designed to limit the liability of the credit union but there is a provision for payment of damages and those damages are what is the credit union liability prior to the appointment of the conservator and in this case there were none there had been no demand made but everyone agrees that had the  presentation been made the day before the conservatorship started they would have paid it and your position is that the day after they don't over anything well it's a gotcha situation well i wouldn't characterize it that way i would say that's exactly what the statute states the question is what is the liability that before the conservator is appointed and in this case there was none no demand had been made that that the statutory scheme has a differen the nature of a deposit is just simply different from a letter of credit there they're not comparable and one other issue here that is worth noting is that by statute this is a decision that's being going to contract does not sovereignty of the credit union to allow them to withdraw their money that's not that's not realistically that is on the size of how this is operated  position basically you're taking the position that the letter of credit has no value it i'm taking the position that in this case the liability of the credit union to the beneficiary prior to the appointment of the conservator with zero there was no liability nothing oh dear period and the statute analyzes it that way right or wrong that is what the statute provide that granite really did not have an automatic entitlement to that money there are conditions that must occur before it it own the money so to speak for example in many it with the commercial letter of credit there are often documentary requirements and there are plenty of cases affirming that strict compliance is required not just substantial compliance there are groups that must be jumped through a way of saving these financial institutions from liquidation and preventing depositors from losing their money two point one if congress had intended to include letters of credit or other duties obligations  that aren't contracts they could have said sale or if they decided to expand the scope of the definition of contract contracts lisa's which as an aside i find this kind of an anomaly and it seems to me to be redundant but if they had chosen to not limit it they could but the language in the statute limits it to contracts that's what we're left with and what would you need to decide is whether or not a letter of credit is a contract and it just doesn't meet all of the required elements for a contract that's one in  that vein take a close look at that raffle case that's the only case that really examines what contract means abbi other cases use the word they say well the contract but they don't look at whether a letter of credit has those elements the nd point was follow that trigger event language through it starts with the letter from the did not have damages before the filing our case does thank you thank you counsel