Court Opinion

ID: 5180309
Source: CourtListenerOpinion
Date Created: 2022-01-06 04:41:11.555448+00
Date Added: 2024-06-11T08:26:32.950409
License: Public Domain

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 *492ered 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.
*493Madden’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.