*5084 *507I. On the trial the defendant offered to prove that the alleged oral agreement was entered into at the time he purchased the goods; that he exposed and offered the goods for sale at the proper season, and that said goods proved to be unsuited for the trade supplied by him. That, after diligent effort to sell the same at a reasonable profit, he offered to return said goods to the plaintiff,and packed and set aside the same, and has since held them subject to the order of the plaintiff. That the price of said goods, as charged to defendant, was $803.75. Defendant also offered *508to prove that at the time he gave the note in suit he expressly reserved his rights under said agreement. To these offers plaintiff objected as seeking to vary by parol the terms of the note, and the objection was sustained. - Hnder a well-established and undisputed rule of law this evidence was not admissible to vary or contradict the terms-of the note, and therefore not admissible in support of the defense plead. The note is payable in money, not in goods; and to entertain this defense as such, and to admit the evidence in support thereof, would clearly vary the-terms of the note by making it payable in goods, instead of ■money. There was no error in excluding this evidence, so far as the alleged defense is concerned, nor of withdrawing the defense from the consideration of the jury.
5 6 *5097 *5108 *508II. We now inquire whether the defendant was entitled to introduce the offered evidence in support of his first, counterclaim. His counterclaim shows a cause of action against the plaintiff for a money recovery, which he-is entitled to have set off against the amount due to-the plaintiff, unless, by giving the note in suit, he has waived said right. Ordinarily, giving a promissory note on-account of a transaction creates the presumption that all matters connected with that transaction have been settled; but this uresumption is not conclusive, but may be overcome. As tending to overcome this presumption, we have the alleged agreement and facts that the-goods were purchased in the fall of 1891, and that the note was given February 9, 1898, before defendant had the opportunity to expose the goods for sale in the proper seasons, namely, in the spring and summer, according to the alleged-agreement. The note was given before the time had expired in which it could be known what goods there would be to return, and before the time had expired in which they might be returned. Defendant had until the fall of 1898 to say what goods offered in proper season were unsalable, yet, the note was due on demand, and we may infer that demandi *509was made as early as April 5, 1898, as a payment of $250 was made on that day. Surely, these facts, taken in connection with the alleged agreement, tend to show that rights under that agreement were not settled nor waived at the time the note was given. If it is true, as defendant offered to prove, that his rights under the agreement were expressly reserved at the time the note was given, then there was neither waiver nor settlement of those rights. It is insisted that this evidence is not admissible, because it varies the terms of the note. Defendant, in this counterclaim, does not question the plaintiffs right to a money judgment for a balance due on the note, but he is in the attitude of saying that, because of the matters alleged in the counterclaim, that they have neither waived nor settled, the plaintiff owes him a sum of money, which he asks to have set off against that confessed to be due to the plaintiff. If these rights were not waived nor settled, then the defendant has a cause of action against the plaintiff, the enforcement of which as a set-off does not vary the terms of the note,though it may operate as any other rightful set-off would, — as a partial or total payment of the amount due to the plaintiff. In Aultman v. Wheeler, 49 Iowa, 641, the action was upon two promissory notes given in renewal of prior notes with additional security. The debt was for a threshing machine purchased under a warranty. Defendants claimed that when they gave the notes they notified plaintiff that they would not waive their right to damages-for a breach of the warranty. This court said: “If, then, then parol agreement sought to be shown in this case would have had the effect to contradict the notes, we think that the ruling of the court that such agreement could not be shown, was correct. But the defendant’s claim for damages, if they had sustained any, was of itself a cause of action. They may be considered, therefore, as admitting that their debt to the-plaintiffs is truly evidenced by the notes, but claiming that the plaintiffs are ndebted to them by reason of their agree*510ment in the warranty which they have not performed.” In Murdy v. Skyles, 101 Iowa, 549, it was held that parol evidence of an agreement to pay a physician for medical services out of the avails of an insurance policy is not admissible on the grounds that it would vary a note given in payment for such services. We conclude, without further citations, that the court erred in excluding this offered evidence in support of the first counterclaim, and in withdrawing that counterclaim from the consideration of the jury.
9 III. As to the second counterclaim, it will be observed that plaintiff admits that the note and chattel mortgage taken as collateral security were to be returned to the defendant when his debt was reduced to $1,200 or $1,500, and that plaintiff has not returned said note and mortgage. The balance now claimed on the note is less than $1,200, therefore, if nothing further appeared, defendant would be entitled to the note and mortgage, or their value, if proper demand has been made. The plaintiff alleges as the reason why the note and mortgage have not been and should not be returned, that it was subsequently agreed that they should be held as security for the entire indebtedness. The defendant rested without offering any evidence with respect to this counterclaim, and the plaintiff offered evidence tending to show the alleged subsequent agreement. Thereupon defendant offered evidence tending to show the financial condition of the makers of said note and mortgage, and the value of the property covered by the mortgage, to which plaintiff’s objection was sustained. Under the admission as to the original contract with respect to this note and mortgage, and upon proving demand and refusal to return, defendant was entitled to a money judgment for their value, and therefore might properly offer evidence as to th value. That his evidence was offered out of order was not made a ground for excluding it. The burden was upon the plaintiff to show that it had been agreed that this security should be *511held for tbe entire debt. We think the defendant should have been permitted to' prove the value of said not and mortgage, and to recover therefor, if demand and refusal were established, unless the plaintiff proved the alleged subsequent agreement. Por the errors pointed out, the judgment is REVERSED.