
    Edwin B. Fiske, Appellant, v. Demian D. Williams, Respondent.
    
      Contract — payment enforced from collaterals given to secure an indorsement, although the indorser is not charged—all words to be given significance if possible and construed most strongly against the covenantor.
    
    Where two constructions of the language of an instrument are possible, one of which does not give significance to all the words used and the other of which does, the latter construction is to be preferred; and where the meaning of the words is doubtful they are to be construed most strictly against the covenantor.
    In an action of replevin brought to recover the possession of fifteen shares of the stock of the Standard Electric Signal Company, it appeared that the plaintiff, who was the owner of the stock in question, indorsed a note made by R. M. Madden, which was accompanied by 100 shares of the stock of the Scugog Medicine Company pledged as collateral to the obligation of the maker, in addition to which, collateral the' plaintiff delivered the stock in. question, at the same time executing an" agreement which contained a provision thatthe holder and owner of said note; If the same is not paid on of before maturity, is first to exhaust his remedy-as against R. M. Madden,, the maker, and if the security given by him is not sufficient to pay -and discharge said note, then the certificate of stock hereto annexed is for the payment of such deficiency whatever it may be.”
    The note was not paid and -the liability of the plaintiff as -’indorser wab never fixed by. notice of protest.
    
      Held, that the plaintiff was not entitled to recover;
    That it was the intention of the instrument that the stock in question should be pledged absolutely as security for'any deficiency which might arise after -exhausting the remedies against the maker and after applying the proceeds of the sale of the stock of the Scugog Medicine 'Company to the payment of the noté-, and that, for the purpose of satisfying any deficiency, the stock an question was to remain as a security in the hands of the defendant from which he was entitled to satisfy .that deficiency irrespective of the question as to whether the liability of the plaintiff had been fixed by protest of the note and notice thereof to him;
    That in this view the defendant had not converted the stock and Was still entitled-to its possession.
    Green, J., dissented.
    Appeal ©y the plaintiff, Edwin B. Fiske, from a judgment of: the Supreme Court in favor of -the defendant, entered in the office of the clerk of the county -of Monroe on the 12th day of December, 1895, upon the decision of the court rendered after a trial at the Monroe Circuit before the court without a jury dismissing the plaintiff’s complaint upon the merits.
    This was an action in replevin brought to recover possession of fifteen shares of stock of the Standard Electric Signal Company, alleged to have been delivered to 'the defendant as collateral security for the plaintiff’s -indorsement of a note made by one - Robert M. Madden-, which the- plaintiff, after, indorsing, delivered to the defendant. ' ■ •
    • The court before which the action was tried:, without a jury, found that- the promissory note in question, payable four months after daté to the order of Edwin B. Fiske, the plaintiff, for the 'sum of lj>8?5, was made and deli vered January 9, 1891, and'Was indorsed by the plaintiff and delivered to the defendant for valué before maturity. .
    
      That at the time of the delivery of the note to the defendant the maker delivered therewith 160 shares of the capital stock of The Scugog Medicine Company as collateral security for the payment thereof, and at the same time the plaintiff delivered to the defendant fifteen shares of the capital stock of The Standard Electric Signal Company of Rochester, which latter stock was delivered to said defendant under the following agreement:
    “ Whereas, R. M. Madden has given his promissory note for $875, dated the ninth day of January, 1894, and payable at the Alliance Bank in the city of Rochester four months from the date thereof. He has also given as collateral security 100 shares of the capital stock of the Scugog Medicine Company to secure the payment of said note, and also to secure the indorsers of said note from any harm. How, the fifteen shares of the capital stock of The Standard Electric Signal Company, hereto annexed, is given as collateral security for my indorsement of said note, and it is expressly understood and agreed that the holder and owner of said note, if the same is not paid on or before maturity, is first to exhaust his remedy as against R. M. Madden, and if the security given by him is not sufficient to pay and discharge said note, then the certificate of stock hereto annexed is for the payment of such deficiency, Whatever it may be.
    “Dated Rochester, January 25th, 1894.
    “EDWIH B. FISÉE”
    The court further held that the note Was not paid at its maturity,, and was not protested for non-payment, .and that no notice of protest was given to the plaintiff, but that after the note became due, and before the commencement of this action, the defendant recovered a judgment thereon against the maker, Robert M. Madden, on Which execution Was issued and returned unsatisfied.
    That thereafter the defendant sold the 100 shares of the stock of The Scugog Medicine Company, but that the amount realized therefrom Was not enough to pay the expenses of the sale, and thereafter the defendant caused the fifteen shares of the stock of The Standard Electric Signal Company to be sold, which sale was made upon notice and Was fairly conducted.
    The Court found as conclusions of law that, under the contract, the defendant acquired the right to sell The Standard Electric Signal Company stock for apry déficienp^-tkat might exist after the remedy against the maker of the note and the security given by him was, exhausted, and that the sale of the stock of The Standard Electric Signal Company by the defendant was properly made.
    
      Robson & Robinson, for the appellant.
    
      P. M. French, for the respondent.
   Hardin, P. J.:

When Fiske indorsed the note and delivered it to the defendant he placed his name upon the note which was to run some months to maturity. There were two-fold purposes accomplished by his indorsement: First, it was necessary that his name should be placed upon the note in order to transfer the legal title to the note. Second. He, by placing his name upon the note, made a commercial contract which made him conditionally liable for the debt of the maker in' the event that the note was presented for payment at its maturity, a demand of payment made and notice of protest given. At the same time that he indorsed the note there was accompanying it 100 shares of the Scugog Medicine Company stock that was pledged as collateral to the maker’s obligation to pay the note. Apparently the defendant, who was to advance the' money for the note, was not satisfied with the obligation of Madden, the maker, nor with the Scugog medicine stock, and required further security as a .condition of parting with his money for the note. Thereupon, apparently,1 the plaintiff ^delivered tó the- defendant, fifteen shares, of the Standard Electric Signal Company stock in connection with the delivery of the note and the Scugog Medicine Company stock, and simultaneously with the delivery thereof executed an agreement which is set out in the findings of fact made' by the trial judge. Upon an inspection of that agreement it was found to recite that Fiske, the plaintiff, was to or had indorsed the note in question, and there is a recital in the agreement to the effect that the stock was delivered by the plaintiff, to wit, the fifteen shares of the Standard Electric Signal Company as collateral to the indorsement. If the language of the instrument, closed there, then there might be force in the contention of the plaintiff. But there was further language used, to wit: “ And it is expressly understood and agreed that the holder and owner of said. note,, if. the same is not paid-on or before maturity, is first to exhaust his remedy as against K. M. Hadden, the maker, and if the security given by him is not sufficient to pay and discharge said note, then the certificate of stock hereto annexed is for the payment of such deficiency, whatever it may be.”

It is a well-settled canon for the construction Of instruments executed by parties that full force and significance should be given to. all the language used .by them, and that if two constructions are possible to an instrument, one of which does not give significance to all the words used, and another can be given to the instrument which will give force and effect to all the words, found in the instrument^ the latter construction is to be preferred and adopted. And in case the meaning of the .words is doubtful, they are to be construed the most strictly as against the covenantor whose words they are.

Applying these rules of construction to the instrument executed by the plaintiff, it seems reasonable to place upon it the construction which evinces an intention to pledge his stock as security for any deficiency that might arise after exhausting the remedies againstHadden, the maker of the note, and after conversion and application, of the proceeds of the sale of the Scugog Hedicine Company stock,., and for .the purpose of satisfying the deficiency, which arose after exhausting the prior sources, the stock of the Standard Electric Signal Company was a security in the hands of the defendant, and he was> entitled to it for the purpose of .satisfying,the deficiency ” remaining after the exhaustion of the liability of Hadden and the sale of. the Scugog Hedicine Company stock. Hence, at the time .this; action was commenced the defendant had not wrongfully converted the property of _ the plaintiff, known as the fifteen shares of the. Standard Electric Signal Company stock described in the complaint,; and it was, therefore, proper at the close of the trial to order judg-, ment in favor of the defendant.

The judgment should 'be affirmed.

All concurred, except Creen, J., dissenting.

Green, J. (dissenting):

The indorsement of the note, the execution of the agreement and the pledge of the stock by Fiske were all one and the same transaction.1. The note was payable to his order and was indorsed by him, and deliv-i ered to Williams so indorsed. The note itself is proof of the intention and understanding of all the parties, that Fislce’s liability was that of an indorser only. This is further emphasized by the agreement itself, which contains the recital that the maker of the note — Madden—had given 100 shares of stock “to secure the indorsers of said note from any harm,” as well as to secure the payment of said note. If it had been the intention -of the indorser to secure the payinént of the note it Would have been so provided in the clause of. the contract, wherein was recited the collateral which had actually been given for that purpose. But that was not its purpose. That is expressed in clear and unmistakable terms : “ How the 15 shares of the capital stock of the Standard Electric Signal Company hereto Annexed is given as collateral security for my indorsement of said note.”

The contract, therefore, was a contract óf indorsement^ as shown by the note itself and the agreement. Fiske’s liability as an indorser was limited, and dependent upon the condition that the holder of the note should make demand of payment at maturity, and upon default, give notice of dishonor to the indorser. If tile holder, omitted to perform these essentials then the indorser would stand discharged. These prerequisites were not fulfilled by the holder, and the indorser’s liability as such was never fixed, and he is discharged from all liability upon that note. It is claimed^ however, that-defendant could enforce his deficiency, after exhausting the remedy against Madden, by virtue of the last clause of the agreeiheht made by Fiske.

I do hot so construe that portion of the contract. It is apparent that that clause was inserted by plaintiff as a protection after his liability as indorser had become' fixed by demand for payment, default, and notice given him of same.

It was then provided that Williams should exhaust his remedy against Madden and the security given by him for the payment of the note, before enforcing payment against the indorser. Without this agreement Fiske as indorser could not compel the holder to sue the maker first, or to enforce his claim against the security given by thé maker¡ and in the absence of a conditional and controlling equity, resort to a collateral security. Fiske, therefore, provided by this contract .that the holder should first resort to the maker and his collateral.

Madden’s liability was absolute. Fiske’s was conditional upon the holder fulfilling the obligation imposed upon him by the commercial law, to present the note for payment and give notice of nonpayment in the mode prescribed by the settled rules of that law. He was under obligations to Fiske to fix his liability as indorser before resorting to his security for that pledge given under the implied assurance of law, that he should have notice of presentment, demand and default.

It appears to me that if Fiske and Williams intended an unconditional grant, the contract would not have first provided by its terms for a conditional and then for an unconditional grant.

Certainly Fiske could not have intended to give his stock as cok. lateral security for his indorsement of the note, that is, conditionally,. and then in the same sentence free it from those conditions by giving it as security for the payment of the note.

A reasonable construction of this entire contract leads me to the conclusion that the stock of plaintiff was pledged as security for his indorsement whenever his liability as indorser should become fixed and not for the payment of the note unconditionally.

His liability as indorser was never fixed, and he is exonerated from such liability by the failure Of this defendant to perform the obliga-, tions imposed upon him.

The judgment should be reversed and a new trial granted, with, costs to abide the event.

Judgment affirmed, with costs.  