The learned referee has found, and the evidence contained in the record fully justifies the finding, that the bills and accounts which were assigned to secure the two notes in question were for goods sold and delivered by the manufacturing company to various customers, and that the same were in fact paid to the bank from time to time, the'greater portion of those embraced in each list being paid before the respective notes matured; that the bank received the amounts thus paid both before and after the Maturity of the notes, applying so much thereof as was necessary to extinguish the notes, and crediting the surplus upon the general indebtedness of its assignor. It is now contended that, inasmuch as such surplus was realized from collections instead of from a public sale of the *288assigned accounts, the defendant has no right within the express terms of the contract to retain the same for any purpose'; and it necessarily follows that in ordér to determine what force, if' any, there is to this contention, construction must he given to the language of the assignment and the real intention of the contracting parties in that manner ascertained.
The rules which govern in cases of this character have become familiar by reason of their repeated enunciation by the. courts, but for the purpose of this review we shall reiterate and adopt those formulated by the court of last resort in the latest decision of • that tribunal which has been brought to our notice.' It is there declared that: “ In the construction of written contracts it is the duty of the court, as near as may he, to place itself in the situation of the partieSj and from a consideration of the surrounding circumstances, the occasion and apparent object of the parties, to determine the meaning and intent of the language employed. * ■ * * ‘ Contracts are not to be interpreted by giving a strict and rigid meaning to general words or expressions without regard to the surrounding circumstances, or the apparent purpose which the parties sought to accomplish.’ * * * If the language of a promise may be understood in more senses than one, it is to be interpreted in the sense in which the promispr had reason to believe it was understood.” (Gillet v. Bank of America, 160 N. Y. 549, 555.)
With these rules, therefore, for our guide, let us place ourselves “ in the situation of the parties, and from a consideration of the surrounding circumstances, the occasion and apparent object of the parties,” endeavor to determine the meaning and intent of the language employed in the particular instruments now under consideration.
At the time of their execution the company which this plaintiff represents was "heavily indebted to the defendant. It was obviously embarrassed .by reason of lack of necessary funds with winch to condxict its business and meet its financial engagements. In these circumstances it applied to the defendant for additional loans, which apparently the bank was unwilling to advance, unless ample security was furnished, and to meet this, requirement assignments of, a large number of hills and accounts were executed, the aggregate amount of which was considerably in excess of the desired loans. This *289being the case, it requires no stretch of the imagination to reach the conclusion that the bank availed itself of the opportunity which the situation afforded to insist that such excess should be applied to a reduction of the company’s general indebtedness, and this phase of the transaction was covered by the last paragraph of the contract of which the note forms a part.
It is not.to be denied that a literal construction of the language of this paragraph would limit the appropriation of any surplus to the reduction of the assignor’s general indebtedness to such only as might arise from a “ sale ” of the collateral assigned ; but would such a construction represent the obvious intent of the parties in view of the existing situation ?' In our attempt to answer this inquiry, we at once encounter another, and an equally pertinent one, viz.: Why should the application of any funds to the payment of a debt not represented by either of the notes in question be dependent upon the contingency of a surplus arising after a sale of such accounts, either public or private, instead of upon their regular collection by the assignee \ If any answer to this inquiry can be furnished which will accord with the manifest intention of the parties, as expressed in their'written contract, it has yet to be suggested. On the contrary, it is apparent that the construction contended for might, and probably would, operate to defeat one of the main objects the parties had in view when entering into this new agreement, by permitting the debtor to procure the payment of the outstanding accounts a day or two before the.notes matured.
Had the collateral assigned consisted of marketable securities such as stocks, bonds, etc., their collection by “ sale ” upon “ non-performance ” of the obligation assumed by the plaintiff^ company, would have been the proper and usual method of procedure; but as the bills and accounts assigned were maturing at different periods of time, it can hardly be said that the assignee thereof was bound to retain them until the maturity of the obligation to secure which they had been assigned, and then go through the form of a sale thereof in order to secure to itself whatever surplus might arise therefrom for application to the company’s general indebtedness, which, as we have already indicated, was the obvious design of the p>arties.
*290.No rule of construction is more definitely settled .than the one which declares that a particular portion of a written instrument, instead of being separated from its context and construed' by itself, shall be considered in connection with and in the light of all which precedes and follows it; and that where two or more instruments relating to the same subject are executed at the same time they shall be taken and construed in connection with each other. (Hamilton v. Taylor, 18 N. Y. 358 ; Clark v. Devoe, 124 id. 120; Fox v. International Hotel Co., 41 App. Div. 140.)
When the present case is subjected to the test of this rule, and recourse is had to the memorandum which accompanied and was annexed tó a statement .of the accounts assigned, it will be seen that such accounts were assigned to the defendant with full authority to collect the same m any manner it saw fit. ' -
This language is obviously inconsistent with the restrictive clause in the assignment proper, and tends, we think, to essentially modify the literal interpretation of that instrument. In short, the different instruments, when taken together and in connection with all the circumstances under which they were executed, express- to our mind an unmistakable intention upon the part of the defendant to exact, and upon the part of the plaintiff’s company to concede, as a condition of its obtaining the additional loans represented by the notes, that any surplus obtained from the sale or -collection of the securities collateral thereto should be applied in the manner in which the defendant has applied it.
It is asserted, however, that if this construction is placed upon .- the instruments in question it must be held that the officer of the corporation- who executed them exceeded his authority; but this contention is hardly tenable in view of the fact that his action, was subsequently ratified by a formal resolution of the board of directors, called together for- that express purpose.
We think the case was properly decided by the learned referee and that the judgment appealed from should, therefore, be affirmed.
All concurred.
Judgment affirmed, with costs.