Nature of a Counterbond in Preliminary Attachment
A counterbond is the security furnished by the adverse party to discharge a writ of preliminary attachment after the writ has been enforced. It does not defeat the plaintiff's cause of action, dismiss the complaint, or adjudicate the validity of the claim; it substitutes a new security for the property seized under the writ.
The practical object of a counterbond is to free attached property from the custody or lien of the attachment while preserving the attaching party's provisional security. Once the attachment is discharged on a counterbond, the bond or cash deposit stands in place of the released property and secures the payment of any judgment that the attaching party may recover in the action.
The counterbond remedy recognizes the balance built into provisional remedies. The plaintiff is protected from a defendant's possible concealment, disposal, or fraudulent transfer of assets; the defendant, in turn, is allowed to recover possession, use, or control of attached property by replacing it with a court-approved security.
When the Remedy Becomes Available
Under Rule 57, the remedy of discharge by counterbond is available after a writ of attachment has been enforced. Enforcement means that the sheriff has levied on property under the writ, so that the attachment has already operated upon specific property or its proceeds.
The party whose property has been attached, or a person appearing on that party's behalf, may move for the discharge of the attachment wholly or partly. The motion is filed in the court where the application for discharge is made, and the counterbond is executed to the attaching party and filed with the clerk of court.
The rule requires due notice and hearing because the court must determine whether the proposed security satisfies the rule, whether the discharge sought is total or partial, and, when only specific property is to be released, what value should be assigned to that property for purposes of the counterbond.
Forms of Substitute Security
The adverse party may furnish the substitute security either by making a cash deposit or by filing a counterbond. Both forms serve the same substantive function: they secure the payment of any judgment that may be recovered by the attaching party in the action.
A cash deposit places money under the control of the court as substitute security. A counterbond places the obligation of the principal and the sureties behind the released property. In both cases, the security is not a voluntary payment of the claim, not an admission of liability, and not a waiver of defenses to the main action.
Notice of the deposit must be served on the attaching party. Notice is essential because the attaching party is entitled to know that the security replacing the attached property has been furnished and to contest the sufficiency or regularity of the substitute security when proper.
Amount of the Counterbond
The amount of the counterbond depends on whether the adverse party seeks a total discharge of the attachment or a discharge limited to particular property.
| Relief Sought | Required Amount | Effect |
|---|---|---|
| Discharge of the attachment wholly | An amount equal to that fixed by the court in the order of attachment, exclusive of costs | The attachment is lifted as a whole, and the substitute security stands in place of the attached property |
| Discharge as to a particular property only | An amount equal to the value of that property as determined by the court | The specified property is released, while the attachment may continue as to other attached property |
For a total discharge, the counterbond is tied to the amount fixed in the attachment order, not necessarily to the market value of all property already levied upon. For a partial discharge, the court values the particular property to be released because the attaching party should receive substitute security equivalent to the property taken out of the attachment.
The phrase "exclusive of costs" means that the counterbond for total discharge corresponds to the amount fixed in the attachment order apart from costs. The security is directed at the judgment that the attaching party may recover, while ordinary costs remain governed by the judgment and the applicable rules on costs.
Procedure for Discharge by Counterbond
The process begins with a motion by the party whose property has been attached or by a person appearing on that party's behalf. The motion should identify the attachment sought to be discharged, state whether the discharge is total or partial, and present the cash deposit or counterbond proposed as substitute security.
The court acts only after notice and hearing. The hearing is not a trial on the merits of the complaint; it is directed at the propriety of substituting security for the attached property and at the sufficiency of the amount and form of the counterbond or deposit.
If the rule's requirements are met, the court orders the discharge of the attachment. Upon discharge, the attached property, or the proceeds of its sale if the property has been sold under the rule, must be delivered to the party making the deposit or giving the counterbond, or to the person appearing on that party's behalf.
The discharge order changes the object of the provisional security. Before discharge, the attachment follows the levied property or its proceeds. After discharge, the attaching party's security is the counterbond or cash deposit, and the released property returns to the control of the party entitled to it.
Legal Effect of Posting a Counterbond
Posting a counterbond dissolves the attachment only to the extent ordered by the court. If the court grants a total discharge, the writ no longer burdens the attached property. If the court grants a partial discharge, only the identified property is released, and the attachment remains effective over the rest.
The counterbond is a replacement security, not a satisfaction of the plaintiff's demand. The defendant remains liable on the cause of action if judgment is eventually rendered against the defendant. If the judgment exceeds the counterbond, the plaintiff may pursue execution against the judgment debtor for the balance, subject to the ordinary rules on execution.
The counterbond also does not convert the attaching party into an owner of the bond proceeds before judgment. The attaching party's right against the counterbond matures only when the conditions of the rule are met, principally when a judgment in the action becomes enforceable against the party whose property was released.
The discharge of the attachment does not terminate the main case. It merely removes or modifies a provisional remedy. The pleadings, defenses, counterclaims, trial, judgment, appeal, and execution proceed under the ordinary rules applicable to the action.
Counterbond, Attachment Bond, and Other Discharge Grounds
The counterbond should be distinguished from the applicant's attachment bond. The attachment bond is filed by the party applying for the writ and answers for costs and damages if the court finally adjudges that the applicant was not entitled to the attachment. The counterbond is filed by the adverse party and secures the payment of any judgment the attaching party may recover.
| Item | Attachment Bond | Counterbond |
|---|---|---|
| Who furnishes it | The applicant for preliminary attachment | The party whose property was attached, or one appearing on that party's behalf |
| When furnished | Before issuance or enforcement of the writ as a condition for attachment | After enforcement of the writ to obtain discharge of the attachment |
| Primary purpose | To answer for damages from wrongful attachment | To secure the judgment that the attaching party may recover |
| Property effect | Allows levy on property under the writ | Releases the property by substituting security |
Discharge by counterbond is also distinct from discharge on grounds such as improper or irregular issuance or enforcement of the writ, insufficiency of the applicant's bond, or excessiveness of the attachment. A counterbond assumes, for purposes of release, that substitute security will answer for the attached property. A motion based on irregularity attacks the legal basis, manner, or extent of the attachment itself.
The remedies may matter differently for later consequences. A discharge based on counterbond preserves substitute security for the attaching party. A discharge based on wrongful or irregular attachment may remove the provisional remedy because the writ should not have issued or should not have been enforced in the manner used.
A party may have reason to seek immediate release through a counterbond when the attached property is essential to business, livelihood, or ordinary use. That practical choice does not, by itself, adjudicate the merits of the attachment or the principal case, although the terms of the discharge order and later motions will control the specific procedural consequences.
Insufficiency of the Counterbond
The sufficiency of the counterbond is not frozen forever. If the counterbond is later found to be insufficient or becomes insufficient, and the party who furnished it fails to file an additional counterbond, the attaching party may apply for a new order of attachment.
Insufficiency may relate to the amount, the solvency or authority of the surety, the validity of the bond, or other circumstances showing that the substitute security no longer affords the protection contemplated by the rule. The court's concern is whether the attaching party retains security equivalent to the protection lost by the release of the attached property.
The remedy of a new order of attachment prevents the adverse party from obtaining release of property through inadequate security and then leaving the attaching party without the provisional protection contemplated by the original writ. The court must still act within the requirements of Rule 57, because a new attachment remains a provisional remedy affecting property before final judgment.
Liability on the Counterbond
The counterbond secures the payment of any judgment the attaching party may recover in the action. When the judgment becomes executory, the surety or sureties on the counterbond become charged on the bond and bound, upon demand, to pay the amount due under the judgment within the limit of the bond.
Recovery against the sureties may be had in the same action after notice and summary hearing. A separate ordinary action against the sureties is not necessary because the bond was filed in the case, the sureties submitted to the bond obligation connected with that case, and the rule provides a direct mechanism for enforcing the security.
The summary hearing is still a due process requirement. The sureties must be notified and heard on matters relevant to liability on the bond, such as the existence and finality of the judgment, the demand, the amount due, the bond limit, payment, release, or defenses arising from the bond itself. The hearing is not a second trial on the plaintiff's cause of action once the judgment in the main case has become final and executory.
The surety's liability is measured by the undertaking. If the judgment is less than the bond, liability follows the amount due under the judgment. If the judgment is greater than the bond, the bond limits the surety's exposure, while the judgment debtor remains answerable for the unsatisfied balance under the rules on execution.
Effect on Attached Property and Proceeds
Once the attachment is discharged by counterbond or deposit, the released property should be returned to the party entitled to possession. If the property had been sold under the rule before discharge, the proceeds take the place of the property and must be delivered in accordance with the discharge order.
The attaching party cannot insist on retaining the released property after adequate substitute security has been approved, because the legal basis for holding that property under the attachment has been dissolved. The attachment's coercive effect shifts from the specific property to the bond or deposit.
If the discharge is partial, the court should identify the property released and the attachment continuing over the remaining property. Clarity in the discharge order prevents confusion during custody, delivery, execution, and later enforcement against the counterbond.
Relationship to Judgment and Execution
Before judgment, the counterbond preserves security but does not determine entitlement to recovery. During the pendency of the case, the attaching party cannot treat the counterbond as adjudged proceeds of the claim. The bond is contingent security tied to the outcome of the action.
After judgment becomes final and executory in favor of the attaching party, the counterbond becomes enforceable under the rule. The attaching party may demand payment from the sureties and, if payment is not made, seek recovery in the same action through notice and summary hearing.
If judgment is rendered for the defendant, or if the plaintiff does not recover a judgment secured by the counterbond, the basis for enforcing the counterbond does not arise. The discharged property remains free from the attachment, and any remaining matters concerning wrongful attachment, damages, or the applicant's bond are governed by the rules applicable to those claims.
Operational Consequences
Posting a counterbond is often used when the attached property is income-producing, perishable, depreciating, operationally necessary, or disproportionate to the plaintiff's need for security. The rule permits release without depriving the attaching party of a fund or obligation that can answer for the eventual judgment.
The court should ensure that the counterbond is real, enforceable, and adequate because the attaching party loses control over the attached property once the discharge is granted. The adverse party, meanwhile, should ensure that the bond amount and scope match the relief sought, because an insufficient or improperly framed counterbond may delay release or expose the property to renewed attachment.
The central doctrine is substitution. The counterbond does not erase the case, pay the debt, validate the writ, or punish either party. It replaces the attached property with security for the judgment, allowing the litigation to continue while reducing the hardship caused by pre-judgment seizure.