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Petitioners offered to secure the note with their home.
Voier rejected it because she did not want to have to foreclose
on their home if they defaulted. Petitioner asked Roy Throndson
(Throndson), chief executive officer of Evergreen Bank in
Seattle, whether the bank would approve a letter of credit to
secure the note. Sometime before December 19, 1986, Throndson
said the bank could approve a letter of credit for petitioners.
Voier accepted a letter of credit as security for the note.
2. 1987 Letter of Credit
To secure the $262,000 balance owed under the promissory
note, petitioners gave Voier a letter of credit for $250,000,
dated January 16, 1987, issued by Evergreen Bank. The letter of
credit guaranteed that the bank would pay Voier if petitioners
defaulted on their promissory note to her.
The 1987 letter of credit was secured by two deeds of trust
that were dated January 16, 1987. The deeds of trust were filed
on February 17, 1987 (securing $100,000) and February 18, 1987
(securing $150,000). The $100,000 deed of trust was secured by
petitioners’ residence, which was located on 1 acre of land. The
$150,000 deed of trust was secured by 4 acres of land with no
residence which petitioners and Thomas Malone jointly owned. The
deeds of trust provided that the properties were to be reconveyed
to petitioners if they met their obligations under the 1987
letter of credit.
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