#### ROBERT J. POWELL, Receiver of the CUMBERLAND NATIONAL BANK OF FAYETTEVILLE, v. K. A. McDONALD and J. A. BYNUM and Wife, GERTRUDE H. BYNUM.

(Filed 18 September, 1935.)

Banks and Banking O d — Pledge of security for note held to cover only joint obligations of pledgors to hank.

A husband and wife executed a note to a bank, and to secure payment, pledged certain collateral, the pledge stipulating that the bank might hold same as security for any other obligation, primary or secondary, etc., “under which the undersigned shall be in any way bound.” *Held,:*Construing the pledge to ascertain the intention of the parties, the pledge covered only such obligations to the bank upon which the husband and wife were jointly liable, and the bank, or its receiver upon insolvency, is not entitled to hold the pledged security for the individual liability of the husband as endorser on a note of a third person, the bank, which selected the language of the pledge, having failed to stipulate that the security should be pledged to secure the joint or several liabilities of the pledgors.

Appeal from *Grady, J.,*at March Term, 1935, of Cumbeeland.

Reversed.

Tbe undisputed facts presented by tbe present appeal are that on 17 October, 1931, K. A. McDonald executed to tbe Cumberland National Bank of Fayetteville bis promissory note for $275.00, upon wbicb a balance of $208.80 was due at tbe time of tbe institution of tbis action, wbicb note at tbe time of its delivery and negotiation was endorsed by J. A. Bynum. J. A. Bynum and wife, Gertrude H. Bynum, on 9 December, 1931, signed and delivered to tbe Cumberland National Bank *437of Fayetteville tbeir collateral note for $800.00, reading in part as follows:

“60 days after date we promise to pay to tbe order of tbe Cumberland National Bank of Fayetteville, . . . Eight Hundred Dollars, . . . Yalue received . . . and to secure tbe payment of tbis, or any other obligation to said bank, due or to become due .hereby pledge to tbe said Bank, or its assigns, holders of tbe same, tbe collaterals described on back, or herein enclosed, and it is hereby agreed that upon tbe nonpayment of tbis obligation said Bank or tbe bolder thereof, may sell tbe same . . . and after deducting all costs of sale tbe balance of tbe proceeds shall be applied to tbis obligation, and any surplus to any other note, obligation, bill, overdraft or open account under which tbe undersigned shall be in any way bound, primarily or secondarily, absolutely or contingently, due or to become due. Such application to be made in tbe manner and proportions as said Bank or bolder may see fit. Upon tbe discharge of tbis obligation said Bank or bolder may deliver tbe same to tbe undersigned, or order, but shall have tbe right to retain tbe same to secure any other obligation, note, etc., as above described, just as if specifically pledged under an agreement in tbe exact terms of tbis, . . .”

As security for said collateral note, said Bynum and wife transferred, assigned, and delivered to said bank three life -insurance policies in which they were tbe insured and beneficiary, respectively, with tbe right reserved in tbe insured to change tbe beneficiary therein. Said collateral note was subsequently paid in full on 12 March, 1932, without tbe beneficiary in tbe life insurance policies ever having been changed, and upon such payment J. A. Bynum and wife, Gertrude H. Bynum, demanded tbe surrender to them of said life insurance policies, which demand was refused by tbe plaintiff receiver — he contending that as security for a collateral note containing tbe above quoted clause, tbe cash surrender value of said policies should be applied to tbe payment of tbe obligation of tbe defendant J. A. Bynum by virtue of bis endorsement of tbe note of K. A. McDonald.

Tbe plaintiff, as receiver of tbe Cumberland National Bank of Fay-etteville, instituted tbis action on 11 January, 1935, and, at tbe March Term, 1935, of Cumberland County Superior Court, Grady, J., adjudged, on tbe pleadings, that tbe plaintiff have and recover of K. A. McDonald and J. A. Bynum tbe sum of $208.80, with interest, and declared tbe judgment to be a specific lien upon tbe life insurance policies pledged as security for tbe collateral note and empowered tbe receiver to subject them to tbe satisfaction thereof; and from tbis judgment tbe defendants J. A. Bynum and wife, Gertrude H. Bynum, appealed to tbe Supreme Court, assigning error.

*438*Bose & Lyon for plaintiff, appellee.*

*Malcolm, McQueen and Dye & Ciarle for defendants, appellants.*

Schbncic, J.

The single question presented is as to the proper interpretation of the collateral pledge of the life insurance policies as security for the joint note of the insured and beneficiary therein, J. A. Eynuni and wife, Gertrude II. Bynum, respectively.

We are of the opinion that the liability created by the collateral note is a joint liability of the makers thereof. We think the words of the pledge, following the provision for the application of the funds derived from the sale of the securities, “shall be applied to this obligation, and any surplus to any other note, obligation, bill, overdraft, or open account under which *the undersigned*shall be bound” connote that the intention of the parties to the contract or note was to pledge the securities to the payment of only such other notes and obligations as were of the same character as the joint liability under the collateral note. “It is well recognized that the object of all rules of interpretation is to arrive at the intention of the parties as expressed in the contract, and, in written contracts which permit of construction, this intent is to be gathered from the entire instrument, and, ... to ascertain the intention, regard must be had to the nature of the instrument itself, the condition of the parties executing it, and the objects they had in view, and the words employed, if capable of more than one meaning, or to be given that meaning which it is apparent the parties intended them to have.” *Bank v. Furniture Co.,*169 N. C., 180. The natural inference to be drawn from the words “under which *the undersigned*shall be in any way bound” is that the securities were pledged only for the joint liabilities of the makers. The bank, the payee, framed this pledge, and if it desired to have the pledge extend to the individual and several obligations of the makers of the collateral note, it should have had inserted the words “or either of them,” or words of similar import.

Entertaining, as we do, the opinion that the pledge contained in the collateral note extends only to the joint liabilities of the makers to the payee thereof, we hold that the judgment of the Superior Court which extended the pledge to the individual and several obligations of J. A. Bynum was erroneous.

While the facts are not altogether analogous, the reasoning in *Bank v. Furniture Co., supra,*and *Newsome v. Bank,*169 N. C., 534, is apposite to this case. To the same effect is the case of- *Bank v. Scott,*123 N. C., 538, which is also authority for holding that the words “we” and “our” used in a collateral note, as in this case, import joint obligations. See, also, *Heffner v. Bank,*311 Pa., 29, *87*A. L. R., 610, and *Torrance v. Bank*(C. C. A., 3d Cir.) 210 Fed. Reporter, 806.

The judgment below is reversed.

*439Under the stipulation contained in the record, the cases wherein G. C. Barbour and L. C. Jackson, respectively, are codefendants with J. A. Bynum and wife, Gertrude H. Bynum, will be governed by this opinion and judgments therein will be entered accordingly.

Reversed.