The cause of action, in issue and on trial, was the mortgage notes, given by the defendant to E. W. Farrington, and by him transferred to the plaintiff. E. W. Farrington has now deceased. The defendant pleaded the general issue. This compelled the plaintiff to produce in evidence, and rely upon, his notes. This gave him the right to open and close the argument to the jury. The execution of these notes was not contested. The contention was in regard to whether certain sums claimed by the defendant to have been paid by him to E. W. Farrington, to be applied upon the notes in suit, had been so paid, and not endorsed by E. W. Farrington. The case does not disclose any item claimed by the defendant which would entitle him to recover under his plea in set-off. The items which the defendant claimed to have allowed him, were, on his evidence, payments on these notes. If made as payments, it was immaterial whether they had been endorsed as such. When the defendant established that he delivered any of the claimed items as payments on the notes, the law applied them, at once, in extinguishment of the notes pro tanto; and there was no burden on the plaintiff to show what had been done with the money. There was but a single issue tried — that was the amount due on the notes. The fact that the defends ant succeeded in reducing the amount due to a less sum than claimed by the plaintiff, did not entitle the defendant to an apportionment of the costs. The defendant did not recover upon any issue in the case. R. L. 1002 provides :
“Where one of the original parties to the contract, or *573cause of action, in issue and on trial, is dead, or is shown to the court to be insane, the other party shall not be admitted to testify in his own favor except to meet or explain the testimony of living witnesses produced against him as to facts or circumstances taking place after the death or insanity of the other party.”
This in terms supports the rulings of the county court in excluding the defendant from testifying as to all such matters and conversations in regard to 1he notes in suit, and in regard to payments thereon made in the life of E. W. Farrington, and while he owned the notes, although made or had with the plaintiff, and to which the plaintiff was a competent witness. As bearing collaterally upon some of the payments claimed by the defendant, and which the jury did not allow to him, as we understand the exceptions, the plaintiff was allowed to introduce another mortgage note, to show its execution, and conversations had by him with defendant about it. The only ground on which any of this evidence could be, or was, admitted, was that it had a tendency to explain and refute the defendant’s testimony tending to establish his claimed payments. It is apparent it might have such a tendency, and therefore was properly admitted, although against the exception of the defendant. The court, against his exception, excluded the defendant from testifying in regard to a conversation which the plaintiff had been permitted to testify to, had with the defendant about this outlawed note. We think this was error. The outlawed note was not any part of the contract or cause, of action on trial. It was claimed to bear, collaterally, upon that contract, or cause of action, as it tended to defeat one or more of the defendant’s claimed payments thereon. • R. L., 1002, is an exception to R. L., 1001, which removes the disqualification formerly existing to witnesses, arising from interest. The exception should not be given effect beyond the fair scope of its language. This confines the retained disqualification to testimony bearing directly upon the con*574tract, or cause of action, in issue and on trial. It does not extend to matters collateral to such contracts or cause of action. Such is the construction which this court has placed upon this provision of the statute. Morse v. Shaw, 44 Vt. 561; Downs v. Belden, 46 Vt. 674; Taylor v. Finley, 48 Vt. 78; Banister v. Ovitt, 64 Vt. 580. Under these decisions it was error to exclude the defendant from testifying in regard to his conversation with the plaintiff about the outlawed note.
Judgment reversed and catt.se remanded.