Court Opinion

ID: 9478617
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:53:21.158958+00
Date Added: 2024-06-11T17:46:31.391180
License: Public Domain

BALDOCK, Circuit Judge,
dissenting.
The majority ventures beyond the letter of credit involved in this case and concludes that the grant of authority which allows the FDIC-corporation to purchase assets from a failed bank, 12 U.S.C. § 1823(c)(2)(A), also allows the FDIC-corporation to purchase and acquire assets of a failed bank free of express transfer restrictions created by state law or by agreement. The majority does not merely rest its holding on its reading of the statute, however. Instead, the majority enacts a new rule of federal common law allowing the FDIC-corporation to purchase and acquire any asset of a failed bank free of express transfer restrictions.
What is striking about much of the majority opinion is its resemblance to a legislative committee report, but without supporting congressional testimony. The short record in this case contains no evidence to support the majority’s prescriptive discussion about the mechanics of asset disposition at a failed bank and, in particular, about the necessity and advantages of allowing the FDIC-corporation to take any asset free of express transfer restrictions. These matters, which involve legislative and executive policy determinations, were not addressed below.
I respectfully dissent for several reasons. First, in creating new law, the majority overlooks the unique nature of the asset involved in this case, a letter of credit (documentary credit). A letter of credit is a widely used commercial instrument that traditionally has not been assignable in the absence of an express provision allowing assignment. Second, the majority’s holding is far too broad. Each type of bank asset should turn on its own facts and circumstances; we simply have no way of foreseeing whether every asset is properly transferable despite transfer restrictions to the contrary. Third, the majority ventures outside the record for its rationale. There is no evidence concerning the FDIC-corporation’s customary procedure in a purchase and assumption transaction. There is insufficient evidence about how the FDIC evaluated the letter of credit before and after Dominion Bank failed. This is not a situation where the facts may be assumed with confidence; indeed, the parties do not agree as to all relevant facts. Fourth, I view the majority’s approach as too great an incursion into international trading convention, state law and private contractual arrangements. Whether a letter of credit is transferable to the FDIC-receiver by operation of law is a matter well-suited for state court resolution given the express limitation on federal jurisdiction contained in 12 U.S.C. § 1819 (Fourth). I would affirm the district court.
There are two common types of docu-l mentary credits, commercial and standby letters of credit. A commercial letter of credit is used in connection with the purchase of goods. A standby letter of credit is used to insure payment of a money obligation in the event of a default. Federal Deposit Ins. Corp. v. Philadelphia Gear Corp., 476 U.S. 426, 428, 106 S.Ct. 1931, 1933, 90 L.Ed.2d 428 (1986). In a traditional letter of credit transaction, the customer (applicant, account party or buyer) enters into an agreement with the issuer (bank) whereby the issuer promises to pay the beneficiary (seller) upon proper presentation of documents and full compliance with the terms and conditions of the letter of credit. Arbest Constr. Co. v. First Nat’l Bank & Trust Co. of Oklahoma City, 777 F.2d 581, 583 (10th Cir.1985). Three separate relationships are involved: 1) one between the customer and the beneficiary based on an underlying agreement (e.g., sale of goods by beneficiary to customer or extension of credit by beneficiary to customer) which imposes a financial obligation on the customer; 2) one between the customer and the issuer in which the issuer agrees to issue the letter of credit in favor of the beneficiary and the customer agrees to repay the issuer; and 3) one between the issuer and the beneficiary in which the beneficiary may draw on the letter of credit *1143upon presentation of proper documents and compliance with the terms of the letter. Id. The letter of credit allows the beneficiary to rely on the issuer’s credit, rather than on the customer’s, for satisfaction of the underlying financial obligation of the customer to the beneficiary. Leney v. Plum Grove Bank, 670 F.2d 878, 881 (10th Cir.1982).
Several important features of the letter of credit make it commercially attractive. The relationship between the issuer and the beneficiary is independent of the underlying transaction between the customer and the beneficiary. 1974 UCP, General provisions and definitions c.; Colorado Nat’l Bank of Denver v. Board of County Comm’rs of Routt County, 634 P.2d 32, 37 (Colo.1981). Thus, all parties concerned deal in documents, not in goods or the subject matter of the underlying transaction between the customer and the beneficiary. 1974 UCP art. 8b. If the documents presented for payment or to draw on the letter of credit comply, on their face, with the terms and conditions of the letter of credit, the issuer will honor the letter of credit and the customer is required to reimburse the issuer. 1974 UCP art. 3a, 8b.
The documentary credit in this case is a standby letter of credit. A customer of the Bank of Boulder, Mr. Reed, obtained the letter of credit from the issuer, the Bank of Boulder, in favor of the beneficiary, Dominion Bank. Dominion Bank was entitled to draw on the credit by a sight draft accompanied by a certification by Dominion Bank that the amount drawn represented amounts due on a promissory note in which Mr. Reed was the maker and Dominion Bank was the payee. The FDIC, in its capacity as liquidator of Dominion Bank, attempted to draw on the credit after furnishing a letter certifying that the amount of the drawing represented unpaid principal and interest due and owing on Mr. Reed’s note.
Article 5 of the Uniform Commercial Code (UCC) concerns letters of credit and would apply to this letter of credit in the absence of a provision indicating otherwise. See Colo.Rev.Stat. §§ 4-5-101 to 4-5-117 (art. 5 of the UCC as codified in Colorado), 4-5-102(3) (scope of art. 5) (1973). There is another widely used source of rules pertaining to letters of credit, however. The International Chamber of Commerce has developed the Uniform Customs and Practice for Documentary Credits, “a code of practice which is recognized by banking communities in 156 countries.” Int’l Chamber of Commerce (ICC), Pub. No. 305 Guide to Documentary Credit Operations 1 (1978). Documentary credits are used widely in international trade and involve “thousands of transactions and billions of dollars every day in every part of the world.” Id. It is essential that there be a standard and consistent application of the rules concerning documentary credits.
The letter of credit in this case expressly states that it is subject to the Uniform Customs and Practice for Documentary Credits (1974 Revision) (1974 UCP). See Int’l Chamber of Commerce, Pub. No. 290 Documentary Credits (1975).1 Thus, the 1974 UCP governs the rights of the parties. The UCP provides that: “A credit can be transferred only if it is expressly designated as ‘transferable’ by the issuing bank.” 1974 UCP art. 46(b). “It should be noted that a credit would only be issued as a transferable one on the specific instructions of the applicant. This would mean that both the credit application form and the credit itself must clearly show that the credit is to be transferable.” Int’l Chamber of Commerce, Pub. No. 305 Guide to Documentary Credit Operations 31 (1978). If a credit is not transferable, the benefi-1 ciary still has the right to assign the proceeds in conformity with applicable law. 1974 UCP art. 47.2 These provisions of the *1144UCP are similar to those found in art. 5 of the Uniform Commercial Code. Section 4-5-116(1) provides that “[t]he right to draw under a credit can be transferred or assigned only when the credit is expressly designated as transferable or assignable.” Colo.Rev.Stat. § 4-5-116(1). The beneficiary, however, may assign his right to proceeds. Id. § 4-5-116(2) (1973 & 1987 Supp.).
The difference between assignment of a letter of credit and assignment of its proceeds is that assignment of the letter allows the assignee to execute and sign drafts which the issuer must honor. Shaffer v. Brooklyn Park Garden Apts., 311 Minn. 452, 250 N.W.2d 172, 177 (1977). If a letter of credit is not expressly assignable, the assignee only has the right to proceeds, that is “the right to receive drafts properly drawn by the beneficiary.” Id.
The rule concerning assignability of letters of credit involves two competing policies. J. Dolan, The Law of Letters of Credit 1110.02 (1984). As a general proposition, the law does not favor restraints on alienation of property. But the law also does not favor the delegation of contract rights and liabilities which are inherently personal. Documentary credit law seeks to accommodate both policies by allowing assignment when there is an express designation; in the absence of an express designation, the beneficiary may still assign the right to proceeds. Assignability is an important attribute that may be bargained for — a beneficiary is free to insist that a letter of credit contain language making it assignable or transferable by operation of law. See Hyland Hills Metropolitan Park and Recreational Dist. v. McCoy Enterprises, 38 Colo.App. 23, 554 P.2d 708 at 710 (1976) (if the beneficiary is not satisfied with the terms of the credit, it could require the customer to supply another letter containing other terms). On the other hand, a customer may be apprehensive concerning “presentation of sensitive documents by a person whom he may not trust.” J. Dolan, The Law of Letters of Credit 1110.02 (1984).
An express designation of assignability protects that customer. Satisfactory performance of the terms of the credit depends upon proper presentation of documents by the beneficiary. In the absence of express consent, the customer’s protection should not be diminished by a change in the beneficiary presenting the documents. See Pastor v. Nat’l Republic Bank of Chicago, 76 Ill.2d 139, 28 Ill.Dec. 535, 538, 390 N.E.2d 894, 897 (1979). In other words, requiring assignment in the absence of an express provision may alter the risk among the parties. See Official Comment 1 to Colo.Rev.Stat. § 4-5-116 (recognizing that the customer “may be deprived of real and intended security” if the beneficiary may delegate performance by assignment). There are a number of reasons why a customer may view assigna-bility with disfavor, such as the potential for forgery of documents or the possibility that an unknown assignee may present documents which comply, yet not perform the underlying agreement satisfactorily.
Another reason for requiring an express designation of assignability lies in the doctrine of independence. In deciding whether to honor a draft, the issuer should look only at whether the documents and draft presented conform to the letter of credit. *1145The relationship between the customer and the beneficiary is independent of the relationship between the issuer and beneficiary. Without an express designation of assignability, however, the issuer must look behind the documents in deciding whether to honor a draft. This involves reference to the underlying transaction between the customer and the beneficiary to determine whether performance has occurred, thereby defeating the purpose of a letter of credit. Colorado repeatedly has recognized the importance of the independence doctrine. Colorado Nat’l Bank of Denver v. Board of County Comm’rs of Routt County, 634 P.2d at 40; East Bank of Colorado Springs v. Dovenmuehle, Inc., 196 Colo. 422, 589 P.2d 1361, 1365 (1978), aff'g, 38 Colo.App. 507, 563 P.2d 24, 28 (1977); Hyland Hills Metropolitan Park and Recreational Dist. v. McCoy Enterprises, 38 Colo.App. 23, 554 P.2d 708, 710 (1976).
Colorado also has recognized the importance of the strict compliance doctrine. Colo.Rev.Stat. § 4-5-114; Colorado Nat’l Bank of Denver v. Board of County Comm’rs of Routt County, 634 P.2d at 40 (“To maintain the commercial vitality of the letter of credit device, strict compliance with the terms of the letter of credit is required.”). We have noted that the issuer’s duty to the beneficiary is a limited one — if the documents and draft conform, the issuer must honor the draft, if the documents and draft do not conform, the issuer must not honor the draft. Arbest Contr. Co. v. First Nat’l Bank & Trust Co., 777 F.2d at 584-85.
Several cases have considered whether a letter of credit not designated as assignable may nevertheless be transferred to a successor entity. In American Bell Int’l, Inc. v. Islamic Republic of Iran, 474 F.Supp. 420, 423-24 (S.D.N.Y.1979), the customer sought to enjoin the issuer from honoring a demand for payment under a letter of credit because a successor government had taken power after the letter of credit was executed. In rejecting this argument, the district court relied on the international law principle that a successor government succeeds to the contract rights of the predecessor government. Id. at 423; accord American Bell Int’l v. Manufacturers Hanover Trust Co., N.Y.L.J., Mar. 29, 1979, at 6, col. 7 (N.Y.Sup.Ct.1979), aff'd mem., 70 A.D.2d 830, 418 N.Y.S.2d 551 (N.Y.App.Div.1979). The district court determined that a demand by the successor government would sufficiently comply with the terms of a letter of credit. The district court was concerned that an opposite holding would elevate form over substance and would subject international financial commitments to the “vicissitudes of political power.” 474 F.Supp. at 424.
In Temple-Eastex Inc. v. Addison Bank, 672 S.W.2d 793 (Tex.1984), rev’g, 665 S.W.2d 550 (Tex.App.1984), a parent corporation sought to enforce a standby letter of credit which had been distributed to it upon dissolution of a wholly-owned subsidiary. The letter of credit was silent as to transferability. The Texas Supreme Court held that the parent had succeeded to the rights of the subsidiary in the letter of credit based upon a state statute which provided that shareholders succeeded to the rights and claims existing prior to dissolution. Id. at 796. The court also held that the issuer bank should have been on inquiry notice concerning the rights of the parent based upon the circumstances including an explanation by the parent. Id. Finally, the court determined that a demand letter would suffice for a sight draft required by the letter of credit. Id. at 796-97. The case demonstrates little regard for the strict compliance doctrine. The decision by the court of appeals is more in accord with traditional letter of credit principles.
In In re Swift Aire Lines, Inc., 20 B.R. 286, 288-89 (Bankr.C.D.Cal.1982), rev’d, 30 B.R. 490 (9th Cir.1983), the trustee in bankruptcy sought to enforce a nonassignable letter of credit in which the debtor was the beneficiary. The issuer declined to recognize the trustee as a beneficiary because the documents presented by the trustee did not strictly comply with the terms of the letter of credit. The debtor beneficiary had not signed the draft and other necessary documents, as the trustee of the bankruptcy estate had succeeded the debtor. The *1146bankruptcy court rejected this argument, reasoning that the federal law of bankruptcy would override the state principle of strict compliance and that form would be elevated over substance if the trustee were not allowed to enforce the letter of credit. Id. at 288.
The Ninth Circuit reversed the bankruptcy court, holding that state law did not conflict with federal bankruptcy law and that the latter “did not give the trustee the power to automatically enforce payment thereunder if state law requiring strict compliance of tender documents would dictate otherwise.” In re Swift Aire Lines, Inc., 30 B.R. at 495. In so deciding, the court emphasized the need for certainty in commercial transactions using letters of credit:
Rules relating to the treatment of documents, such as letters of credit, providing for payments of funds in a complex commercial transaction have developed from a long history of pragmatic experience. This experience has shown the need for specificity in the conditions for payment and a corresponding need for absolute compliance with these specific conditions. In this manner, the customer, issuer, and beneficiary will have no doubts where they stand.
Id. at 496. The strict compliance doctrine enables the issuer to avoid liability based on wrongful honor and wrongful dishonor; when documents of questionable authority are presented the issuer is justified in not honoring the letter of credit. Id. at 496-497. The court distinguished the result of American Bell as controlled by international law principles; in domestic transactions the beneficiary’s rights in a letter of credit vest solely in the named beneficiary absent proper assignment. Id. at 495.
In Pastor v. National Republic Bank of Chicago, 76 Ill.2d 139, 28 Ill.Dec. 535, 390 N.E.2d 894 (1979), aff'g, 56 Ill.App.3d 421, 14 Ill.Dec. 74, 371 N.E.2d 1127 (Ill.App.1977), the customer sought to prevent the liquidator of an insurance company beneficiary from drawing upon a letter of credit in favor of the insolvent company. The customer contended that the letter of credit could not be transferred. The Illinois Supreme Court determined that the UCC’s restriction on assignment did not apply because a voluntary transfer was not involved, rather the beneficiary’s right to draft on the letter of credit was transferred to the liquidator by operation of law under a specific statute and by court order. Id. 28 Ill.Dec. at 539-40, 390 N.E.2d at 898-99. The court emphasized that its holding was one of “narrow scope” confined to a situation when the beneficiary had performed the underlying obligation to the customer and all that remained was for the beneficiary to recover on the credit. Id.
The approach taken in Pastor has been criticized as destroying the independence of the letter of credit because the issuer must be concerned with the original beneficiary’s performance. J. Dolan, The Law of Letters of Credit ¶ 10.03[3] (1984). Erosion of the principles of independence and strict compliance reduce the certainty associated with letters of credit.
The issuer of a credit reasonably expects to receive a draft drawn by the beneficiary. These cases force the issuer to decide whether concerns of international law, insurance liquidation law and bankruptcy law excuse strict compliance with terms of the credit. The burden of that inquiry is far greater than the burden the strict-compliance rule imposes on the issuer. Under the rule of these cases, issuers must invoke legal concepts and may have to litigate; under the strict compliance rule, the issuer need only determine whether the documents comply on their face with the terms of the credit.
Id. In the case before the court, the majority has determined that policy concerns outweigh deference to established law regarding the transferability of letters of credit. While it is possible that Colorado might recognize the initial transfer of the letter of credit (to the FDIC-receiver) on the authority of Pastor, recognizing a subsequent transfer (to FDIC-corporation) would further impair the strict compliance principle.
In deciding that 12 U.S.C. § 1823(c)(2)(A) allows FDIC-corporation to purchase or ac*1147quire assets free of transferability restrictions, the majority relies upon cases involving the assignability of tort actions to the FDIC against those who may have contributed to the bank’s insolvency. See FDIC v. Hudson, 643 F.Supp. 496 (D.Kan.1986) (tort action against bank’s officers, directors and employees); FDIC v. Main Hurdman, 655 F.Supp. 259 (E.D.Cal.1987) (tort action against accounting firm which prepared allegedly false financial statements for borrower); FSLIC v. Fielding, 309 F.Supp. 1146 (D.Nev.1969) (suit against officers, directors and others associated with savings and loan association); FDIC v. Rectenwall, 97 F.Supp. 273 (N.D.Ind.1951) (tort action against cashier who allegedly paid drafts when drawer’s accounts were insufficient to cover the drafts). The only case cited by the majority which did not involve a tort or quasi-tort action, Chatham Ventures, Inc. v. FDIC, 651 F.2d 355 (5th Cir.1981), cert. denied, 456 U.S. 972, 102 S.Ct. 2234, 72 L.Ed.2d 845 (1982), also did not involve a state law prohibition on assignment of the note in question. The court in that case specifically noted that it “need not decide what result would obtain if state law made the FDIC’s rights worthless.” Id. at 358 n. 4.
The statement in FDIC v. Rectenwall, 97 F.Supp. at 274, that the language of § 1823(c)(2)(A) “contemplates the unrestricted transferability of every asset of an insured bank, at least where necessary to accomplish the assumption of its deposit liabilities by another insured bank,” simply is too broad. For example, it is unlikely that a personal service contract would be assignable. While tort actions for the malfeasance of bank officers and directors may be assignable as a matter of federal law, there is no requirement that federal law must supply a rule of decision at odds with uniform state law. See United States v. Kimbell Foods, Inc., 440 U.S. 715, 728, 99 S.Ct. 1448, 1458, 59 L.Ed.2d 711 (1979) (holding that a national rule is not needed to determine the priority of liens arising from federal lending programs). When there is a uniform rule of state and international law governing commercial transactions, only the most compelling reasons, not present in this case, ought to overturn that rule.
Whether to follow state law or create federal common law depends upon several factors including: 1) the need for national uniformity; 2) whether application of state law would interfere with federal program objectives; and 3) whether application of a federal rule would disrupt commercial relationships based on state law. Id. The majority concludes that federal common law is needed not only in this case, but also in all cases involving the FDIC and transfer restrictions on bank assets. Because the above criteria must be applied to specific facts, I only address the contentions of| the majority opinion insofar as they concern letters of credit. Applying these criteria to this case, I do not agree with the majority’s conclusion.
The majority’s conclusion that there is a need for a nationally uniform rule concerning the transferability of letters of credit is seriously undercut by the presence of a uniform rule prohibiting assignment, absent an express provision, in both the UCC and UCP. The UCC’s provision concerning assignment, § 5-116, has been adopted in all 50 states, 2A Uniform Laws Ann. § 5-116 (Master ed. 1977 & 1988 Pamp.), and the UCP is used throughout the world. There is little mystery concerning letters of credit and the need for an express designation of assignment. See, e.g., 12 C.F.R. § 208.8(d) (regulation of letters of credit for State banks which are members of the Federal Reserve System); American Law Institute (ALI), Uniform Commercial Code Official Draft § 5-115 & Comment 1, 531-32 (1952) (adopting current rule); 6 W. Hawkland & T. Holland, UCC Series §§ 5-116:01, 5-116:02 (1984); 2 A. Squillante & J. Fonesca, The Law of Modern Commercial Practices § 7:32 (rev. ed. 1981); J. White & R. Summers, Uniform Commercial Code § 18-9 (2d ed. 1980). Thus, the majority is simply wrong when it speculates about the difficulty of determining whether this letter of credit was transferable.3 See *1148Majority Opinion at 1138-1140. The process described by the majority to evaluate transferability restrictions is without application to this case,4 yet that error forms the premise for the majority’s conclusion that the FDIC cannot be expected to examine bank assets quickly for transferability restrictions. By deciding this issue as a matter of law, the majority conveniently dispenses with a need for factual inquiry in this or any other case. See Majority Opinion at 1139 n. 5 (no need to decide whether the FDIC knew or should have known that the letter of credit was not assignable).
If any inference can be made, it is that the transfer restrictions concerning this asset were known prior to its being designated an “unacceptable” asset. After all, this asset is a standby letter of credit issued by a solvent bank. The FDIC is not without familiarity concerning standby letters of credit. See, e.g., 12 C.F.R. § 337.2 (standby letters of credit and unsafe banking practices). Moreover, the majority’s analysis completely fails to address the FDIC’s power to examine bank assets regularly and prior to bank failure.5 See 12 U.S.C. § 1819 (Eighth). I cannot agree that changing the rule concerning assignability of letters of credit would 1) “eliminate the need for detailed examination of the failed bank’s assets and of varying laws,” or 2) enable the FDIC to prepare quicker and more accurate cost estimates concerning a failed bank, or 3) allow the FDIC to implement a purchase and assumption of a failed bank rather than liquidation. See Majority Opinion at 1139, 1141. There simply is no support in the record for these claimed advantages because there is no trial evidence concerning the importance of transfer restrictions on this or any other asset acquired by FDIC-corporation. Existing law concerning letters of credit is sufficiently uniform so as to obviate the need for an independent federal rule.
Nor can the existing law be said to interfere with the objectives of the federal deposit insurance program in any significant way. The record is devoid of any “potentially enormous cost to the banking system,” id. at 1140, if the FDIC-corporation is not allowed a special exception to the general rule that a letter of credit is not assignable unless it says so. It is apparent that the majority seeks to reach a result that will allow recovery by the FDIC without giving due consideration to the unsettling influence such a precedent will have on state law.
This is not the type of problem that is so vital to the federal deposit insurance program that it requires “a high degree of inventiveness from the courts.” Int’l Union, United Automobile, Aerospace & Agricultural Implement Workers of America AFL-CIO v. Hoosier Cardinal Corp., 383 U.S. 696, 701, 86 S.Ct. 1107, 1111, 16 L.Ed.2d 192 (1966). In this case, assuming Colorado would allow transfer by operation of law, the FDIC-receiver could assign the proceeds of the letter of credit to the FDIC-corporation.6
*1149Allowing a letter of credit to be assigned in the absence of an express provision would disrupt commercial relationships predicated on state law. The issuer is forced to look beyond the letter of credit and review documents with no objective standard for determining whether a valid assignment has occurred. The majority is quite willing to impose this unanticipated burden on a commercial issuer, yet is most concerned with the possibility that the FDIC-corporation might have to review a bank asset for transferability restrictions (if it has not already done so). Given the potential liability for wrongful honor of a letter of credit, the majority has imposed a significant burden on an issuer and has interfered with the commercial expectations of the customer.
The majority’s final reason for enforcing this letter of credit in the hands of FDIC-corporation is not convincing. The majority concludes that the Bank of Boulder will get an unjustified windfall if the letter of credit is not assignable. On this record, we simply have no way of knowing whether the Bank of Boulder has been or will be paid by its customer if the letter of credit is honored. Moreover, we cannot say with certainty that the FDIC-corporation could not collect on the underlying note if the letter of credit is not honored.
I would affirm the district court’s decision that this matter was suitable for state court resolution. In that way, the courts of Colorado could have decided whether the letter of credit was transferable by operation of law to the FDIC-receiver. If so, the FDIC-receiver could have assigned the proceeds to FDIC-corporation. If the letter of credit was not transferable, the FDIC-corporation could then sue on the underlying note. Because these options are available, I simply do not see the need to expand federal law into a commercial transaction involving a letter of credit. Moreover, I expect that the broad holding of the majority will have unanticipated application far beyond the facts of this case; I do not share the majority’s confidence in our ability to decide cases in the absence of record facts.
ORDER
This matter comes on for consideration of appellee’s petition for rehearing and suggestion for rehearing en banc.
Upon consideration whereof, the petition for rehearing is denied by the panel that rendered the decision sought to be reheard.
Further, a vote having been taken on the suggestion for rehearing en banc, see Fed. R.App.P. 35(b), rehearing en banc is granted. Circuit Judges William J. Holloway, Jr., Monroe G. McKay and James K. Logan voted to deny rehearing en banc. Circuit Judge Robert H. McWilliams, who as a member of the hearing panel voted to deny the petition for rehearing, did not participate in consideration of the suggestion for rehearing en banc. Circuit Judge David M. Ebel did not participate in consideration of the suggestion for rehearing en banc.
The appellant shall file a supplemental brief on rehearing on or before January 14, 1989. Within 30 days after service of appellant’s brief, appellee shall file a supplemental brief on rehearing. Within 14 days after service of appellee’s supplemental brief, appellant may file a reply brief. All supplemental briefs shall be subject to the page limitations set forth in 10th Cir.R. 28.3. Counsel will be notified when oral argument on rehearing is set.

. A 1983 revision of the UCP is available. The provision of the 1974 UCP concerning transferability of a letter of credit that applies in this case, art. 46(d), is now found in art. 54(b) of the 1983 UCP, but the substance remains the same. Int'l Chamber of Commerce (ICC), Pub. No. 411 Documentary Credits — UCP 1974/1983 Revisions Compared and Explained 82-84 (1984).

. The UCC contains the "applicable law” concerning the assignment of proceeds. Colo.Rev. Stat. § 4-5-116(2) (1973 & 1987 Supp.) provides:
*1144Even though a credit specifically states that it is nontransferable or nonassignable, the beneficiary may before performance of the conditions of the credit assign his rights to proceeds. Such an assignment is an assignment of an account under article 9 of this title on secured transactions and is governed by that article, except that:
(a)The assignment is ineffective until the letter of credit or advice of credit is delivered to the assignee, which delivery constitutes perfection of the security interest under article 9 of this title; and
(b) The issuer may honor drafts or demands for payment drawn under the credit until it receives a notification of the assignment signed by the beneficiary which reasonably identifies the credit involved in the assignment and contains a request to pay the assignee; and
(c) After what reasonably appears to be such a notification has been received, the issuer may without dishonor refuse to accept or pay even to a person otherwise entitled to honor until the letter of credit or advice of credit is exhibited to the issuer.

. The letter of credit at issue is four short paragraphs and only references the UCP.

. The majority states:
Instead, FDIC/Corporation would be forced to examine in detail the terms of every asset to determine which state law applies, whether the asset itself restricts transferability, and whether the asset refers to other laws that may impact the asset’s transferability. FDIC/Corporation would then have to locate, review, and interpret varying state laws and all laws referenced in the asset to find every possible transfer restriction. To require FDIC/Corporation to do all this under the time constraints of a P & A is asking the impossible.
Majority Opinion at 1139. This description finds no support in the record.

. It is this factor which makes me seriously question the majority’s conclusion that the FDIC operates under time constraints which would make it impossible to evaluate the transferability of assets. Bank examinations are performed at least annually, and more frequently if circumstances require. The FDIC acquires some | familiarity with a bank's assets during this process, particularly if a bank has been classified as a problem bank and is subject to more frequent examinations. After a decision has been made to close a bank, the bank and its assets will be reviewed prior to any meeting of proposed bidders. In short, the FDIC will have some familiarity with most of the bank’s assets prior to a purchase and assumption transaction.

.Thus, the FDIC-Receiver would not be required to "retain and liquidate" the letter of credit as assumed by the majority at 1140 n. 6. Footnote 6 of the majority opinion, listing the purported disadvantages of such a procedure, *1149appears to assume that funds from this letter of credit would be used to complete this purchase and assumption transaction. This seems unlikely as the FDIC was appointed receiver for the bank on September 30, 1983, and the FDIC-Corporation did not attempt to draft on the letter of credit until October 5, 1984, based upon a default which occurred August 5, 1984.