#### Regina Company, Appellant, vs. Toynbee, Respondent.

*May 24*

June *13, 1916.*

*Interstate commerce: Conditional sale: Filing of contract: Resale before payment of price: Foreign corporations: "Validity of contracts: Taking security for interstate commerce debt.*

1. A piano brought into Wisconsin under a conditional bill of sale, the title being retained by a foreign corporation, remained an article of interstate commerce while unpaid for in the possession of the original buyer.

2. "Where the conditional bill of sale was duly filed, a sale of the piano by the original buyer to a person having no actual knowledge of the conditional sale, and its removal to another place, did not alter the status of the piano as an article of interstate commerce or affect the rights of the foreign corporation, the original seller.

3. Where, in such case, the foreign corporation, still retaining title to the piano, took a note of the second buyer for the amount remaining unpaid, the transaction being in form a conditional sale reserving title in the corporation until the note was paid, this amounted merely to the taking of additional security and holding the piano as an article of interstate commerce until the debt was paid, — which the corporation might do without having complied with sec. 1770&, Stats.

Siebecker and Yin.te, JJ., dissent.

Appeal from a judgment of tbe circuit court for Price county: G. N. Risjoed, Circuit Judge.

*Beversed.*

*552Tbis action was brought to recover on a promissory note. Tbe defense was that plaintiff was a foreign corporation not licensed to do business in tbis state and that tbe transaction 1 was not interstate commerce, bence there could be no recovery. The court so held and dismissed tbe action, from which this appeal was taken.

No bill of exceptions was settled. Tbe case is here on tbe findings, which are as follows:

That tbe plaintiff is a New Jersey corporation, not licensed to do business in tbis state, not having complied with sec. *1U0b*of tbe Wisconsin Statutes; that on or about July *11,*1912, plaintiff shipped an electric piano from • Chicago, Illinois, to one Procknow, at Marshfield, Wisconsin, under conditional sale, reserving title in itself; that Procknow bad and used, under bis conditional purchase, tbe piano in bis saloon at Marshfield until about November 1, 1912, when be, being still a resident of Marshfield, sold tbe piano to tbe defendant, Toynbee, at Park Ealls, Wisconsin, bis contract of sale with plaintiff being on file with tbe city clerk at Marshfield; that at tbe time of said sale by Procknow there was a balance due plaintiff from him upon tbe purchase price thereof; that tbe piano was delivered to defendant by Procknow pursuant to tbe attempted sale by Procknow at Park Ealls, Wisconsin, and tbe defendant used tbe same in bis saloon at that' place until and after tbe note here sued upon was executed; that defendant purchased tbe piano from Procknow without actual knowledge of tbe conditional sale of tbe piano to Prock-now by plaintiff; that on or about January 23, 1913, Prock-now being in default on payments, an agent of the plaintiff traced tbe piano to tbe possession of defendant at Park Ealls, Wisconsin, and informed tbe defendant of tbe nature of Procknow’s purchase from plaintiff and of Procknow’s delinquency in payments to tbe extent of $180.25 and made demand on tbe défendant for tbe possession of tbe piano or tbe balance due upon tbe purchase price, whereupon tbe defend*553ant agreed to pay $180.25, that being tbe amount due from Procknow to plaintiff, and plaintiff agreed to relinquish to the defendant its title to the piano, and in accordance therewith the note here sued upon for the sum of $180.25 was executed and made payable at Park Falls, and delivered to the plaintiff’s agent there, the transaction being in form a conditional sale under a written instrument signed by the defendant, wherein title to the instrument was still reserved in the plaintiff until the note was paid; that it was also provided in said instrument that it should not take effect and be valid until accepted by plaintiff; that said contract was forwarded to the office of plaintiff in New Jersey and by it accepted; that no part of said note has been paid, the piano remaining in the possession of the defendant; that said Procknow did not consent to the conditional sale by plaintiff of its interest in the piano to defendant-nor did plaintiff release Procknow from liability under his said contract with it.

The court concluded that the transaction transferring by plaintiff to defendant its interest in the piano and the taking of the note in question did not constitute an act of interstate commerce, but was an effort by plaintiff to sell an interest in its property, which had at the time of the sale become part of the mass of property in the state, and was therefore void; that defendant is entitled to judgment dismissing plaintiff’s complaint.

The cause was submitted for the appellant on the brief of *Barry & Barry,*and for the respondent on that of *Holland & Lovett.*

KeewiN, J.

Counsel for appellant insists that,, upon the findings made and the undisputed facts, plaintiff is entitled to reversal on the ground that the transaction between plaintiff and defendant in taking security for the debt in question amounted to interstate commerce.

The piano in question was brought into Wisconsin under a *554conditional bill of sale, tbe title remaining in tbe foreign corporation, and was an article of interstate commerce all tbe time that it remained unpaid for in tbe bands of tbe original purchaser, Procknow. *F. A. Patrick & Co. v. Deschamp,*145 Wis. 224, 129 N. W. 1096; *S. F. Bowser & Co. v. Schwartz,*152 Wis. 408, 140 N. W. 51; *St. Louis C. P. Co. v. Christopher,*152 Wis. 603, 140 N. W. 351.

The conditional bill of sale was filed with tbe city clerk at Marshfield, which was Procknow’s place of business and residence and tbe proper place of filing under sec. 2311, Stats. Tbe transfer of tbe piano by Procknow to tbe defendant and its removal to Park Falls did not prejudice the plaintiff’s rights. *Bailey v. Costello,*94 Wis. *81,*68 N. W. 663. Tbe appellant bad a right to follow its property to Park Falls and collect tbe balance due thereon under tbe conditional sale. Tbe transaction which occurred between plaintiff and defendant merely involved tbe collection of tbe plaintiff’s claim upon the property secured to it by tbe conditional sale. Tbe transaction by which plaintiff assented to tbe transfer and the taking of additional security by way of conditional agreement, whereby tbe title was still to remain in plaintiff,' amounted to a taking of security and holding tbe property as an article of interstate commerce until the debt was paid. *F. A. Patrick & Co. v. Deschamp, supra.*As said in tbe *Patrick & Co. Gase:*“So long as it appears that tbe security is taken for tbe *bona fide*purpose of securing and collecting an interstate commerce debt and is being enforced by ordinary and lawful methods for that purpose alone, tbe statute referred to can have no application.”

In tbe case at bar tbe title to tbe instrument never passed to any one in this state, and tbe piano always retained its status as an article of interstate commerce. Under such circumstances a foreign corporation, without compliance with the statute, may take security in this state for debts due by residents of this state. *Charter Oak L. Ins. Co. v. Sawyer,*44 *555Wis. *387; Chicago T. & T. Co. v.*Bashford, 120 Wis. 281, 97 N. W. 940.

Counsel for respondent relies strongly upon *Duluth M. Co. v.*Clancy, 139 Wis. 189, 120 N. W. 854, and *Sprout, Waldron & Co. v. Amery M. Co.*162 Wis. 279, 156 N. W. 158. We think these cases are clearly distinguishable from the instant case. In the *Duluth M. Co. Case*the goods were shipped by a resident of another state to his commission agent in Wisconsin, not in response to an order from the factory, but to be held as part of his stock of commission goods in Wisconsin, and it was held that the sale and delivery thereof by the commission agent was not a transaction of interstate commerce. A careful examination of the Sprout, *Wal-dron & Co. Case*will also show that it is not controlling in the instant .case.

*By the Court.*— The judgment of the court below is reversed, and the cause remanded for further proceedings according to law.

SiebecKER, J.

(dissenting). When defendant gave plaintiff his note'for $180.25 on January 23, 1913, the piano had been in Wisconsin in the possession of Procknow since July, 1912. Procknow received it from plaintiff at that time under a conditional sale contract whereby plaintiff retained a right to the title in the piano to secure the balance of the purchase price, which was payable in instalments evidenced by notes. In November, 1912, defendant bought and received possession of the piano from Procknow. There can be no dispute but that the piano at this time was in fact in Wisconsin and had become mingled with the mass of property of this state. Under these circumstances it had been completely removed from the channel of interstate commerce when defendant dealt with plaintiff in January, 1913. *Greek-American S. Co. v. Richardson D. Co.*124 Wis. 469, 102 N. W. 888. True, plaintiff still had an interest in the *556piano to secure bis interstate commerce debt and tbe right to enforce such debt. *F. A. Patrick & Co. v. Deschamp,*145 Wis. 224, 129 N. W. 1096. But plaintiff did not do this. The facts of the case show that plaintiff agreed with defendant in January, 1913, to sell defendant its interest in the piano by a conditional sale contract which secured payment of the note in suit of $180.25, the amount unpaid on the sale to Procknow. This sale and transfer by plaintiff of its interest in the piano to defendant, after the piano had become Wisconsin property and had passed out of the channels of interstate commerce, is not in nature and substance the taking of security to insure payment of the original interstate commerce debt of Procknow, but is in fact an independent new obligation of a third person who is not connected with the original interstate commerce transaction. It was in all its essential features a sale of Wisconsin property negotiated in Wisconsin to a Wisconsin citizen. The obligation evidenced by this note is the separate individual obligation of defendant bottomed on the consideration defendant agreed to pay plaintiff for the sale of its interest in the piano in January, 1913. These circumstances and conditions of the transaction make the sale an intrastate contract, which cannot be enforced by the plaintiff for want of compliance by it with sec. 1Y70&, Stats. 1915, and the judgment of the circuit court should be affirmed.

ViNJE, J.

I concur in the foregoing opinion of Mr. Justice SlEBECKER.