This action was brought to recover upon two promissory notes drawn on demand, with interest, it appearing upon their face that there had been deposited as collateral security to the notes nine Fifth Avenue Plaza bonds for $1,000 each, with accrued interest on the same from October 1, 1884. Each of the notes bore date April 12, 1886, and was made by Pliyfe & Campbell, and indorsed by William Campbell, the testator of the defendants. All the bonds of the character stated in these notes to have been pledged as collateral were secured by a mortgage upon certain property in the city of New York. On the 14th of April, 1886, after William Campbell had indorsed the notes in question, the mortgage in question was surrendered with the consent of the holders of the bonds, so as to leave the security of the bonds subservient to other loans upon the property mortgaged, which they were not before such cancellation. And this was done without the knowledge of the indorser, William Campbell. We think this proceeding discharged the indorser. The notes upon their face showed that certain securities were pledged as collateral, and the indorser had a right to assume that these securities would follow the notes in the same condition in which they were at the time he made the indorsement; and any trafficking with these securities by which their value was impaired necessarily operated as a release of the indorser. It is clear that, if any person had purchased these notes unaccompanied by the bonds, the indorser would not be held, because upon payment he is entitled to be subrogated to the securities there stated to have been pledged for their payment. So, if these securities are impaired in value by the action of the holder after indorsement of the notes, the same-, rule must necessarily apply. The indorser was indorsing a note secured in a certain way. His liability to final loss by reason of his indorsement of the note might depend very largely upon the value of the securities pledged for its payment, and therefore any diminution of their value was a direct detriment to him. It seems to us, therefore, that the necessary conclusion is that the changing of these securities subsequent to the indorsement of the notes necessarily releases the indorser, as the bonds, which, upon the face of the notes, are represented as accompanying the same, have been severed therefrom. Some point was made, in reference to the protest'of the notes in question, that, the bonds not having been tendered at the time of the demand, the indorser was discharged; but the difficulty with this position is that no such *738point was made during the trial, nor is any such point raised by the pleadings. The ground of the motion to dismiss, based upon the question of the collateral securities, was stated to be that, as the plaintiff had neither tendered the return of the securities, nor made any accounting for the same, he could not recover, which distinctly did not refer to the time of making the protest, but up to the time of trial; and no attention was drawn to the question as to what was done at the time of the protest. The plaintiff was not bound to either tender the securities or account for the same upon the trial. If the indorser desired the securities, he could pay the notes. If anything had been released upon the securities, that was a matter of defense. Upon the whole case we are of opinion that the judgment should be reversed, and a new trial ordered, with costs to appellant to abide event.
Lawrence, J., concurs.