Fibrex & Shipping Co., Inc. (Fibrex) (defendant) obtained a loan for $3.9 million from West One Idaho Bank (West One). As security, West One obtained personal guarantees from the sole shareholders of Fibrex, Akira Saheki and his wife (defendants). West One required a standby letter of credit for $3.9 million. Fibrex obtained the letter of credit through an intermediary, Ochoco Lumber Company (Ochoco) (plaintiff). Fibrex agreed to sell logs to Ochoco, and Ochoco provided the necessary letter of credit, issued by First Interstate Bank. The letter of credit secured both Ochoco’s obligation to purchase the lumber and the loan from West One to Fibrex. Fibrex defaulted on the loan, and the letter of credit was used to pay it off. Ochoco reimbursed First Interstate Bank for the amount paid pursuant to the letter of credit and sought to enforce West One’s rights against Fibrex and the Sahekis under a theory of equitable subrogation. West One refused to recognize the equitable subrogation rights asserted by Ochoco. Ochoco sued, seeking a declaration that Ochoco was subrogated to West One’s rights and enforcement of those rights against Fibrex and the Sahekis. The trial court dismissed Ochoco’s claims, ruling that neither the applicant nor the issuer of a standby letter of credit can be subrogated to the beneficiary’s claims. Ochoco appealed to the Court of Appeals of Oregon.