#### Harder, Appellant, vs. Reinhardt, Respondent.

*February 23*

March *14, 1916.*

*Bills and notes: Delivery for special purpose: Evidence: Contemporaneous oral agreement: Recitals: Burden of proof.*

1. Under sec. 1675 — 16, Stats., in an action by the payee upon a promissory note, the maker was properly permitted to show a contemporaneous oral agreement pursuant to which the note was delivered conditionally and for a special purpose only and was not to be paid unless the amount thereof was collected by the maker in a certain suit to foreclose a mechanic’s lien. Such evidence did not tend to vary or contradict the written contract.

2. The words “being money loaned me October 21, 1912,” contained in such note, constituted a recital or statement of the consideration and placed upon the maker the burden of proving the real nature of the transaction.

Appeal from a judgment of the circuit court for Milwaukee county: Chester A. Fowler, Judge.

*Affirmed.*

This action was brought by the plaintiff, *Harder,*against the defendant, *Reinhardt,*upon a promissory note, of which the following is a copy:

“$800. Milwaukee, Wis., April 14, 1913.

“For value received six (6) months after date I promise to pay to *Frank J. Harder,*or order, at Milwaukee, Wisconsin, eight hundred dollars ($800), with interest at the rate of-per cent, per annum until paid, being money loaned me October 21, 1912.

“Witness: Oscar Bing. O. H. ReiNiiardt.”

The answer admitted the making of the note, but alleged *559facts tending to show that it was delivered for a special purpose only and not to be paid by tbe defendant except under the conditions hereinafter set out. The facts -were these: One Pettigrew, a son-in-law of Daniel W. Eloor, entered into-a contract with the defendant for the construction of a building. The property, when the building was completed and its cost ascertained, was to be deeded by Pettigrew to Eloor. The pjaintiff was a real-estate man, had transacted business for Bloor, and acted for Pettigrew and Bloor in making payments as the same became due under the contract, the payments to be made out of funds to be furnished by Bloor. One payment of $700 had been made by plaintiff pursuant to the arrangement, and the defendant had demanded a second payment from plaintiff as the agent of Bloor. Plaintiff, having no funds in his hands belonging to Bloor, gave to the defendant his personal check on October 21, 1912, for $800, writing across the lower left-hand corner thereof the words “Petti-grew account,” and charged the same to ' Bloor’s account in his ledger. Shortly after the giving of the check and before any funds belonging to Bloor had come into plaintiff’s hañds,- and on the 8th day of November, 1912, Bloor died. Thereafter plaintiff and defendant sought to collect the several amounts due them. It was proposed that the plaintiff and defendant should file claims against the estate of the deceased Bloor in county court. But after some discussion and counsel with attorneys, it is claimed by the defendant that it was agreed he should file a claim for a mechanic’s lien against the property and include therein the $800 advanced to him by the plaintiff, and that the note in question was given.upon the understanding that it-was not to be paid unless the $800 was collected in the lien suit. The plaintiff claimed the advancement was in fact a loan and that it was so agreed between the parties at the time it was made. . The jury found against the plaintiff’s contention. The plaintiff does not attack the verdict as unsupported by the evidence and the verdict stands as a verity in the case.

*560Tbe jury by its verdict found (1) that it was understood between tbe parties at tbe time plaintiff gave tbe $800 check to defendant that plaintiff was advancing tbe money on tbe Bloor contract and that plaintiff was to look to Bloor and not to defendant for reimbursement; (2) tbat it was. agreed between tbe parties tbat tbe defendant, for tbe benefit of tbe plaintiff, should include tbe $800 claim of plaintiff against BlooBs estate in bis mechanic’s lien foreclosure suit brought to enforce against tbe premises bis claim for money due for constructing tbe building for Bloor; (3) tbat tbe note in suit was given for tbe purpose of using it to further recovery of tbe $800, together with defendant’s claim of $1,201, in tbe mechanic’s lien foreclosure suit, and with tbe understanding between tbe parties tbat tbe note would not be used against tbe defendant nor tbe amount thereof demanded from him unless tbe plaintiff should recover tbe full $2,001 in tbe foreclosure suit. Upon tbe verdict judgment was rendered for tbe defendant, and plaintiff appeals.

Tbe cause was submitted for tbe appellant on tbe brief of *Adolph*Kanneberg, and for tbe respondent on tbat of *Hanna-ford & Brown.*

RoseNbeeRt, J.

Plaintiff objected to any evidence of tbe facts found by tbe special verdict, on tbe ground tbat it was incompetent, irrelevant, and immaterial and in conflict with tbe contract; tbat it was not in writing; and tbat it tended to contradict tbe written contract of tbe parties. Tbe objection made at tbe beginning of tbe trial was renewed throughout its course and tbe question preserved by appropriate motions and exceptions, and tbe sole question to be determined, on this appeal is whether or not tbe evidence of tbe oral agreement made between tbe parties at tbe time of tbe making and delivery of tbe note was properly received by tbe trial court.

Sec. 1675 — 16, Stats., reads as follows:'

> “Every contract on a negotiable instrument is incomplete and revocable until delivery of tbe instrument for tbe pur*561pose of giving effect thereto. As between immediate parties, and as' regards a remote party other than a holder in due course, the delivery, in order .to be effectual, must be-made either by or under the authority of the party making, drawing, accepting or indorsing, as the case may be; *and in such case the delivery may he shown to have been conditional, or for a special purpose only, and not for the purpose of transferring the property in the instrument.*But where the instrument is in the hands of a holder in due course, a valid delivery thereof hy all parties prior to him so as to make them liable to him is conclusively presumed. And where the instrument is no longer in the possession of a party whose signature appears thereon, a valid and intentional delivery hy him is presumed until the contrary is proved.”

In the case of *Paulson v.*Boyd, 137 Wis. 241, 118 N. W. 841, approving *Hodge v. Smith,*130 Wis. 326, 110 N. W. 192, the facts in the *Paulson Case*being in many respects similar to those in the instant case, this court stated the law in the following language:

> “It is familiar law, notwithstanding some conflict in the authorities, that a person may manually deliver an instrument, though it be in the form of commercial paper, to another, on its face containing a binding obligation *in prcespnti*of such person to such other, with a contemporaneous verbal agreement that it shall not take effect until the happening of some specified event, and that the paper, as between the parties, will have no validity as a binding contract till the condition shall have been satisfied; and that proof of such condition does not violate the rule that a written instrument cannot be varied by a contemporaneous parol agreement; that such evidence only goes to show that the instrument never had vitality as a contract.”

The trial court was clearly right in admitting the evidence concerning the making of the contemporaneous' oral contract and within the rule above set forth. The evidence admitted by the trial court did not tend to vary or contradict the written contract, but tended to establish the fact that the note was delivered conditionally and for a special purpose only.

The words “being money loaned me October 21, 1912,” *562contained in tbe note, constituted a recital or statement of tbe consideration for wbicb tbe note purported to be given -and placed tbe burden upon tbe defendant of proving tbe true nature of tbe transaction, wbicb burden tbe defendant assumed and met with satisfactory competent evidence.

For a case distinguishing between recitals and contractual elements see *Conant v. Estate of*Kimball, 95 Wis. 550, 70 N. W. 74; that a recital is not a part of a deed, *Clark v. Post,*113 N. Y. *17,*25, 20 N. E. 573; tbat a statement of tbe consideration for a contract may be explained or contradicted, see *Crowe v. Colbeth,*63 Wis. 643, 24 N. W. 478; *Halvorsen v. Halvorsen,*120 Wis. 52, 97 N. W. 494; *Mueller*v. *Cook,*126 Wis. 504, 105 N. W. 1054; *Kipp v. Laun,*146 Wis. 591, 131 N. W. 418; 4 Wigmore, Evidence, § 2433. Tbe evidence was properly received and tbe judgment should be affirmed.

*By the Oourt.*— Judgment affirmed.