
    *The Bank of Ashland v. John D. Jones et al.
    1. A corporation of a state, authorized to raise money by the sale of its bonds, may itself sell the bonds directly, either within or without the state, and such transaction will not be regarded as a loan.
    
      2. Before such sale can be declared invalid, as in contravention of the settled* policy of the state where made, the repugnancy must be plain and substantial. The fact that bonds sold here hear a higher rate of interest than may be prescribed for similar bonds issued under the authority of this state, but which are authorized to be sold at any price, creates no such repugnancy.
    3. The authority given to the directors of the Ohio Life Insurance and Trust Company, by its charter, to invest its funds, otherwise than by loan, in “such real or personal securities as they may deem properis co-extensive-with the securities named, and any such securities as may he legitimately sold, the company may buy. The creation of salable securities, under-statutes passed after the date of the charter, only multiplies the objects-upon which the power may be exercised.
    4. When a transaction would otherwise be a sale by a railroad corporation of its own bonds, the fact that their payment is guaranteed by the directors, in their individual capacities does' not necessarily make the transaction a. loan.
    5. But the giving of the guaranty is to be looked to in determining whether the real transaction is a bona fide sale or a disguised loan. If a sale, the guaranty passes as an incident, and is, in equity, assignable to subsequent purchasers of the bonds.
    Error to the Superior Court of Cincinnati.
    February 15, 1848, the legislature of the State of Indiana passed-“an act to incorporate the Junction Bailroad Company.” The-15th section of this act provides:
    “Said company may negotiate any loan or loans of money, and at any rate of interest deemed expedient, and the principal and-' interest of all debts so contracted shall be a lien, in their order, on, all the property and effects of the company, and the stock of eachcorporator; all of which, or any part thereof, may be sold on-execution or otherwise, as the 'board may direct, for the purpose-of promptly meeting such debts,” etc.
    March 8, 1849, the general assembly of Ohio passed “ an act granting the right of way to the Junction Bailroad Company, and extending its privileges.” 47 Ohio L. 160. The 1st section of the-act provides:
    “ That the right of way is hereby granted to the Junction Bail-road Company, incorporated by the general assembly of the State-of Indiana on the fifteenth day of February, one thousand eight hundred and forty-eight, and said company *are hereby-authorized to construct and extend their road by way of Oxford and Bossville to Hamilton, in the county of Butler, in this state, and for that purpose they shall constitute and be considered, within this state as well as in the State of Indiana, a body corporate and politic, and as such may sue and be sued, plead and be impleaded, ;and do and perform any other act within this state, the same as if the said company had originally been incorporated in this state ; .and so far as relates to the construction and management of that part of said road which may be situated within this state, and the .payment and collection of the stock subscribed therein, said company shall have and possess all the rights, privileges, and powers granted, and be subject to all the restrictions imposed by the-act ■entitled, ‘ an act regulating railroad companies,’ passed February 11, 1848.”
    January 29, 1851, the Indiana legislature passed an act amend•atory of the act of February 15, 1848. The 1st section of the amendatory act provides:
    “ That the said Junction Railroad Company are hereby authorized and empowered to borrow money from time to time on the credit of said company, at any rate of interest per annum to be agreed upon between the parties, for the sole purpose of constructing said road and furnishing the same with locomotives, cars, and other necessary machinery to carry on the operations of said company ; and said company may issue its coxporate bonds or promis? sory notes therefor; and, to secure the repayment thereof, with the interest which accrues, may mortgage the road, income, and other property of said company, and they may, by their president, ■or other'offieex's or agents, sell, dispose of, or negotiate such bonds, .notes,- or stock of said company, at such time and at such places, ■either within or without this state, and at such rates and for such prices as in their opinion will best advance the interests of said ■company* and if such bonds, notes, or stocks are thus sold at a ■discount, such sale shall be valid and binding in every respect as if sold at their par value,” etc.
    June 22,1853, the directors of the Junction Railroad Company—
    “Resolved, That with a view to the enexgetic prosecution *of the work on the road, the president and secretary shall prepare .and execute two hxxndred and fifty ten per cexxt. convertible bonds ■of their company, for one thousand dollars each, payable at the ■office of the Ohio Bife Insux’ance and Trust Company, in New Yox’k, in ten years, with interest coupons attached, payable semi.annually, said bonds to be convertible into the stock of the company within five years, reserving to the company the right to pay said bonds at any time after the expiration of said five years, if not convertible; and the president is hereby authorized to hypothecate or sell said bonds at such rate or price as he may deem expedient.”
    In accordance with this resolution, one hundred and twenty-five bonds of the railroad company were executed at Connersville, in the State of Indiana, for $1,000 each, dated July 1, 1853, payable to Caleb Jones, or bearer, on July 1,1863, with interest thereon, at the rate of ten per cent, per annum, payable on the first days of January and July of each year, on delivery of the annexed interest coupons, for $50 each, payable to Caleb Jones or bearer.
    Indorsed upon each bond are the provisions of the 15th section of the charter of the railroad company copied above.
    The act of the general assembly of Ohio, “ to incorporate the Ohio Life Insurance and Trust Company (32 Ohio L. 68), contains the following:
    “ Seo. 19. The trustees shall have discretionary power of investing the premium and profits received by the company, and the moneys received by them in trust, in government or other public stocks of the United States or of any state, or in the stock of any incorporated city, or in such real or personal securities as they may deem proper, or loan the same to any county, city, incorporated town, or company; but the said company shall not hold stock in any one private incorporated company beyond twenty-five thousand dollars.”
    “Seo. 23. The company shall have power until the year eighteen hundred and forty-three, to issue bills or notes to an amount not exceeding twice the amount of the funds deposited with said company, for a time not less than one year, other than capital, but shall not, at any time, have in circulation an amount greater than one-half the capital actually paid *in and invested in bonds or notes, secured by an unincumbered real estate, agreeable to the seventh section of this act, nor a greater amount than twice the amount of deposits for the time being, and may lend the same on notes or obligations, or such other securities as the said trustees may require, at a rate of interest not exceeding six per cent, per annum. If said company shall suspend payment of its bills or notes, in silver or gold coin, lawful money of the United States, for more than thirty days, or shall demand and receive a greater rata of interest in any case than seven per cent, per annum, its charter shall be thereby forfeited.”
    August 24, 1853, the directors of the Trust Company “ ordered, that the president be authorized to purchase, at par, of the Junction Railroad Company, of Indiana, one hundred and twenty-five bonds of said company, of $1,000 each, payable in 1863, drawing: ten per cent, interest half yearly, provided the guarantee of the directors of the said company be given to this company, with said bonds.”
    In pursuance of negotiations at the office of the Trust Company in Cincinnati, between its board of trustees and the president of the railroad company, before and after August 24,1853, the latter company received from the Trust Company, one hundred and twenty-'five thousand dollars, and delivered to the Trust Company, August 30, 1853, the following guaranty, and with it the bonds therein mentioned, viz:
    “Whereas, the Junction Railroad Company, a body politic, duly organized, propose to sell to the Ohio Life Insurance aud Trust Company, at par, one hundred and twenty-five of their bonds, of one thousand dollars each, payable to Caleb Jones or bearer, at the office of the said the Ohio Life Insurance and Trust Company, in the city of New York, with interest thereon at the rate of ten per centum per annum, payable half-yearly, on the first days of January and July in each year, upon the delivery of the interest coupons thereto annexed, and being bonds No. 1 to No. 125, inclusive:
    “ And whereas, the said Ohio Life Insurance and Trust Company agree to thke the same at the price proposed, in case the prompt payment of the interest and principal of said *bonds, according to the tenor and effect thereof, be secured and guaranteed to them by James Blake of Indianapolis, George Hibbon of Rushville, Samuel W. Parker of Connersville, William M. Smith of Connersville, John W. Ridenouer of College Corner, John Woods of Hamilton, and John D. Jones of Cincinnati.
    “Now, be it known by these presents,.that we, the said James Blake, George Hibbon, Samuel W. Parker, William M. Smith, John W. Ridenouer, John Woods, and John D. Jones, in consideration of the said the Ohio Life Insurance and Trust Company taking said 1 bonds as above proposed, do hereby promise and agree to, and, with the said the Ohio Life Insurance and Trust Company, that the said interest and principal of said bonds, according to the tenor and effect thereof, shall be promptly paid as the same matures, upon the presentation of said interest coupons and said bonds at the place of payment therein named; and in case of any default therein, we, the said James Blake, George Hibbon, Samuel W. Parker, William M. Smith, John W. Ridenouer, John Woods, and John D. Jones, will pay to the said the Ohio Life Insurance and Trust Company, the said interest and principal so in default, according to the tenor ,and effect of said bonds and interest coupons, on demand; and we do hereby waive demand of payment on the exact day, and notice •of non-payment, according to the rules of law applicable to drawers and indorsers of bills of exchange.
    
      “In witness whereof, we have hereunto subscribed our names and affixed our seals, this the 13th day of August, a. d. 1853.
    (Signed,) “ James Blake,
    “ G-eorge Hibbon,
    “S. W. Parker, “Wm. M. Smith,
    “ J. W. Ridenouer, “John Woods,
    Attest: “John D. Jones.”
    “ J. Leach.”
    The amount paid to the railroad company was by the check *of the trust department on the banking department of the Trust Company; and officers of the Trust Company testify that it was an investment for the trust department.
    September 3, 1857, the Trust Company transferred to the Bank of Ashland, by' delivery, in part payment of a previous debt due from the Trust Company to the bank, nine of the railroad bonds with interest coupons attached, with the understanding that the bank should share in the guaranty in proportion to its number of bonds. No written assignment or transfer of the guaranty was made to the plaintiff.
    May 27,1859, the Bank of Ashland filed, in the Superior Court of Cincinnati, a petition against the guarantors of the bonds and interest, upon their guaranty, to recover the amount of overdue coupons. The general trustee and assignee of the Trust Company was made a party.
    In their answer the defendants, guarantors, denied their indebtedness to the plaintiff; denied that the plaintiff was, in. any manner, entitled to the benefit of the guaranty; denied that it passed with the bonds to the plaintiff, so as to give plaintiff any right or •claim in the same, either in law or equity; denied the power of the railroad company to issue the bonds or sell the same as claimed; denied the power of the Trust Company to acquire, by purchase, the bonds with the individual guaranty of the defendants accompanying them; and denied that the company did so acquire them, 'Claiming that the transaction was not a sale of the bonds to the Trust Company, but a shift and device to cover a loan to the rail- , road company by the Trust Company, at a rate of interest not .authorized by its charter.
    The trustee of the Trust Company, in his answer, claimed the transaction to have been a purchase of the bonds by that company, .and that the guarantors were bound by their guaranty; and did not controvert the plaintiff’s right to recover.
    The Superior Court found, on the trial, that the Trust Company •obtained possession of the bonds and the coupons attached to them, by a loan of money to the railroad company, and that, the bonds bearing ten per cent, interest, the transaction was usurious and 'beyond the power of the Trust Company, and that it thereby acquired no title to the bonds *or coupons, and that no title •thereto passed to the plaintiff; and that the guaranty of the payment of the bonds and coupons was void in the hands of the Trust ■Company, and also in the hands of the plaintiff, and consequently that there is nothing due to the plaintiff from the defendants.
    The plaintiff moved for a new trial on the ground that the court •found against the weight of the evidence. The motion was overTuled, the petition dismissed, and judgment entered for the defend, .■ants. The plaintiff excepted. The bill of exceptions embodies all the evidence; and the present petition in error is filed to reverse -the judgment of the Superior Court.
    M. Taft, for plaintiff in error, argued:
    1. Where a railroad company is authorized to sell its own bonds ^payable to bearer, and does so sell one hundred and twenty-five bonds for §1,000 each, and at the same time gives to the purchaser .a written guaranty on a separate paper, signed by individuals, guaranteeing “ that the interest and principal of said bonds, according to the tenor and effect thereof, shall be promptly paid as the same matures, upon the presentation of said interest coupons .and said bonds at the place therein named,” and the purchaser afterward sells nine of said bonds to a third person for value received, and agrees that the purchaser of said nine bonds shall .share in the benefit of the individual guaranty, the said individual guaranty inures to the security of the nine bonds, as well as to that of those not assigned by the first purchaser. Story on Dills, secs. 456-458, and notes; pp. 595-598, 600-604, notes; Parsons on Mercantile Law, 65; Story on Promissory Notes, sec. 464 - Phillips v. Bateman, 16 East, 355; Kitchell v. Burns, 24 Wend. 456; 26 Wend. 425; Walton v. Dodson, 3 C. & P. 163; Leggett v.Raymond, 6 Hill, 640; Story on Contr., sec. 865; Reed v. Garvin, 12 S. & R. 103; Small v. Sloan, 1 Bosw. 352.
    2. The Junction Railroad Company was a corporation created by the legislature of Indiana for the purpose of constructing and operating a railroad upon a route partly in the State of Indiana and partly in the State of Ohio, and was expressly authorized to issue and sell its own bonds bearing ten per cent, interest. The Indiana charter of said company *was ratified and adopted by the act of the legislature of Ohio, passed March 8,1849 (47 Ohio L. 160), so as to make valid in the State of Ohio its bonds issued and sold in accordance with its said charter; and the sale of said bonds in Ohio was subject to the same rules of law, as to usury, as if the same were issued and sold by a railroad corporation organized under an Ohio charter, with express power to issue and sell such bonds. Pickaway County Bank v. Prather, 12 Ohio St. 502; Ohio act of 1848, “ regulating railroad companies,” sec. 13 ; Act of May 1, 1852, sec. 14, S. & C. Stat. 279; Act of December, 1852, S. &. C. Stat. 321.
    3. The Ohio Life Insurance and Trust Company was, by it® charter, expressly authorized to “ invest its trust funds in any personal or real securities,” and had the same authority to purchase railroad bonds as individuals; and neither the fact that the purchase was made directly from the railroad company, nor that it was accompanied with an individual guaranty of prompt payment, by the directors, invalidated the title in the Trust Company, or made-the transaction usurious. White Water Valley Canal Co. v. Vallette et al., 21 How. 414; Coe v. Columbus, Piqua & Indianapolis Railroad Co., 10 Ohio St. 395, 397, 399, 410; Connecticut Mutual Life Insurance Co. v. Cincinnati, Columbus & Cleveland Railroad Co., 41 Barb. 9; Mechanics’ Bank v. New York & New Haven Railroad Co., 13 N. Y. 627; Best v. Givens, 3 B. Mon. 67; 6 B. Mon. 530; Durant v. Banta, 3 Dutcher, 624; Cram v. Hendricks, 7 Wend. 569 ; Anderson v. Rapelye, 4 Hill, 483 ; Dunkle v. Rennick, 6 Ohio St. 535; 3 Parsons on Cont. (5th ed.) 143-150; Ingalls v. Lee, 9 Barb. 647 ; Corcoran v. Powers, 6 Ohio St. 19.
    4. If it were otherwise, and the court are of the opinion that the transaction between the Trust Company and the railroad cornpany was usurious, yet as the Trust Company had a general power to acquire title to such securities, the plaintiff, without notice of the facts that made the transaction usurious, is not to be affected by it, and can hold and enforce the securities. Pickaway County Bank v. Prather, 12 Ohio St. 497; Connecticut Mutual Life Insurance Co. v. Cincinnati, Columbus & Cleveland R. R. Co., 41 Barb. 27; Mercer County v. Hackett, 1 Wallace (U. S.) 92-96; Woods v. Lawrence County, 1 Black, 368; New Albany Plank Road Co. v. Smith, 23 Ind. 353, Gelpeke v. Dubuque, 1 Wallace, 175, 206; *Meyer v. Muscatine, 1 Wallace, 384; Goodman v. Simonds, 20 How. 343, 365 ; Swift v. Tyron, 16 Pet. 1; Murray v. Lardner, 2 Wallace, 110. .
    5. That no such notice to the plaintiff is shown by the evidence-in the case.
    
      JRufus King and 8. T. Thompson, for defendants in error, argued r
    1. The guaranty, which is the ground of action, is a single instrument, intended to indemnify the Trust Company specially, and not divisible, assignable, nor in fact assigned to the plaintiff. A special guaranty of negotiable paper does not pass by the sale or transfer of the paper. Such a guaranty is not assignable. This guaranty was satisfied and discharged whenever the Trust Company sold the bonds without recourse. 11 Ohio, 444; 18 lb. 35;: 2 Penrose & Watts, 27; 1 Ohio, 318; 14 lb. 20; Clinton Bank v.Ayres & Neil, 16 Ib. 282; Walsh v. Baillie, 10 Johns. 180; Chitty on Bills, 250; Fell on Guaranty, chap. 6, secs. 22-38; Ex parte Adney, Cowp. 460; Alsop v. Price, Doug. 130; Story on Notes, sec. 484; True v. Fuller, 21 Pick. 140; Tuttle v. Bartholomew, 12 Met. 452; Springer v. Hutchinson, 19 Maine 359; McDoal v. Yeomans, 8 Watts, 361; Tinker v. McCawley, 3 Mich. 188; Ten Eyck v. Brown, 4 Chand. 151; McClusky v. Cromwell, 1 Kern. 593; Smith. v. Dickinson, 6 Humph. 261.
    2. The Junction Railroad Company had no power to negotiate- and issue, in the State of Ohio, bonds bearing interest at ten percent. per annum. The act of February 11, 1848, 1 S. & C. 273, note, see. 13; the act of May 1, 1852, 1 Ib. 279, sec. 31; and the act of March 11, 1853, 1 Ib. 323, sec. 1; Story’s Conflict of Laws, secs. 7, 8, 18, 20, 22, 23, 26, 259; Corcoran v. Powers, 6 Ohio St. 19; Lockwood v. Mitchell, 7 Ib. 387; De Wolff v. Johnson, 10 Wheat. 367; Andrews v. Pond, 13 Pet. 65, 78; Depau v. Humphreys, 4 La. Cond. 403; Van Reimsdyk v. Kane, 1 Gall. 371.
    3. The transaction between the Junction Eailroad Company and .the Trust Company was not a sale, but a loan, at a rate of interest forbidden to both companies, and therefore usurious, and the guaranty void. The guaranty is notice to the plaintiff, on its face, of every fact constituting this defense. *Even if it were not so, the plaintiff is subject to all the defenses existing between the parties to the guaranty, which is not negotiable, even if considered .-assignable. Corcoran v. Powers, 6 Ohio St. 19, 37; White’s Bank v. Toledo Ins. Co., 12 Ib. 606; Nichols v. Fearon, 7 Pet. 103; Coe v. Col., Piq. & Ind. R. R. Co., 10 Ohio St. 372, 398; 21 How. 414; Churchill v. Sutor, 4 Mass. 162; King v. Drury, 2 Levinz, 7; Payne v. Trezevant, 2 Bay, 23; Yanky v. Lockheart, 4 J. J. Marsh. 276; Freeman v. Brittin, 2 Harrison, 191; Chillicothe Bank v. Swayne, 8 Ohio, 257.
    4. But whether the bargain for these bonds be valid or not, the guaranty is directly within the prohibition of the 23d section of -the Trust Company’s charter, and the proviso of the ten per cent, .-act. It is a direct undertaking to pay the Trust Company the principal of these bonds, with interest at ten per cent, per annum; and whatever may be held as to the power of the Trust Company to “invest ” in railroad bonds, there can be no pretense that the 19th .section of the charter authorizes the purchase of ten per cent, guaranties. No ingenuity can show the, difference between the .giving of a guaranty, such as this, and a promissory note.
   White, J.

If the transaction by which the Ohio Life Insurance .and Trust Company obtained the bonds and guaranty be found valid, the judgment of the court below must be reversed; and it will be unnecessary to inquire whether the plaintiff holds the bonds ;and guaranty exempt from the infirmities to which they might be ■subject in the possession of its assignor.

The first and main question in this case is whether the transaction by which it is claimed the Trust Company acquired the bonds ..and guaranty in question, was legal.

The plaintiff, and the general assignee of the Trust Company, who is made a defendant, and who still holds part of the bonds, maintain the affirmative. They claim the nature of the transaction to have been a purchase of one hundred and twenty-five thousand dollars of the bonds of the Junction Railroad Company, at. par, by the Trust Company, and that the guaranty was given and' accepted as one of the terms of, and to effect the sale.

*The defendants claim the transaction (1) to have been a loan at an illegal rate of interest, and for that reason void; (2) that the Junction Railroad Company had no power to issue and negotiate, in the State of Ohio, bonds bearing interest at the rate of ten percent. per annum.

Independent of special statutory provisions this transaction would clearly be a loan. It would be the case of a party obtaining money-upon his own promises to repay it; and, wherever usury laws exist, when this is the case, the transaction necéssarily imports a loan Whatever form it may be made to assume. For, if this were not so,» laws prescribing the rate of compensation for the use of money could be evaded and nullified at the pleasure of the parties. But in. the absence of any such laws, or, in regard to transactions excepted . from their operation, where they exist, contracts in consideration. of money or its use stand upon the same footing as contracts for • any other species of property/ These laws rest upon considerations of policy applicable to the ordinary business of the country;, and it is the province of the legislature to declare what laws on this-' subject public policy requires, and what classes of enterprise, if any, should be exempted from their operation.

Upon what footing, then, do the statutes place the transaction between the Ohio Life Insurance and Trust Company and the Junction Railroad Company, now in controversy ? "Were the bonds vendible securities while in the possession of the latter company? If not, they could not be sold, and the transaction was necessarily a-loan. But if the law impressed upon them the merchantable quality' of property,-for the purpose of enabling the corporation by which they were made, to go into the market and raise money by their-sale, and sales were accordingly made, we are unable to perceive ■ any satisfactory grounds upon which courts can be required, for - the purpose of invalidating the transaction, to pronounce that to ■ be a loan which the statute has authorized as, and declared to be, a sale.

The parties to any such transaction must undoubtedly have the ■ requisite capacity, and for want of it their supposed purchase would fail. But if the parties are competent, and *the transaction be otherwise unobjectionable, it can not be defeated on the ground-. 'that, ordinarily, and in the absence of the statutory authority, it -would be regarded as a loan.

If the transaction in question might lawfully be either a purchase -of bonds by the Trust Company or a loan of money, it becomes a mere question of fact to determine its real character—what the parties intended it to be, and, in fact, made it.

That a sale of the bonds was intended and supposed to have been made in the present case, by all of the parties, is clear from the evidence.

The resolution of the board of directors of the railroad company ¡authorized the president “ to sell the bonds at such rate or price as he ■..may deem expedient.” The resolution of the board of directors of the Trust Company only authorized their president to purchase 'them; It is recited by the defendants in their guaranty as a sale. This, and the testimony of the witnesses and the books of the Trust ‘Company, leave no doubt of its having been intended as a purchase ■of bonds, and not a loan of money. As a loan, at the rate of interest specified, it would have been clearly illegal; and where a transaction is susceptible of two constructions, one rendering it unlawful and the other lawful, that should be adopted which will uphold it.

The objection that the bonds were transferred to the Trust Company for a loan of money, having been for the present disposed of, the material question remains; whether the sale of the bonds by the .Junction Railroad Company to the Trust Company, was authorized by law? The answer to this question involves the following in•quiries: 1. Had the parties to the supposed sale the capacity to make it, supposing it to be otherwise unobjectionable ? 2. If they -had, was such sale forbidden by the laws or the settled policy of ■this state, the situs of the transaction ?

As to the first question : There can be no doubt of the power of ■the Junction Railroad Company, derived from the legislature of the •State of Indiana, to make and sell these bonds. Section 1 of the ,amendment to the charter, passed January 29,1851, authorized the •company to sell, dispose of, and negotiate its own bonds, bearing any rate of interest, *within or without the state, at such rates and for such prices as it might deem for its interest, and declared that sales at a discount should be as valid in every respect as ■sales made at par.

The law authorizing these bonds, and under which alone they derive any legal validity for any purpose, impresses upon them, in the hands of the maker, the same vendible qualities as are possessed by other personal securities in the hands of lawful holders. The power to make and sell its own bonds is one of the corporate rights of the Junction Railroad Company. That such bonds would be as fully the legitimate subject of sale by the company in Indiana -as they would be by a person who held them as owner, or as any other personal securities, can not be denied. And they would possess the same qualities, and the company would have the same right to sell them elsewhere, if not prohibited by the lex loci acti. 8 Dana, 116; Angell & Ames on Corp., secs. 104, 105, 161.

It is true, the railroad company is a corporation created by the State of Indiana; but it is well settled that, by the law of comity among nations, a corporation created by one sovereignty is permitted to make contracts in another, and that the same law of comity prevails among the states of the Union. The Bank of Augusta v. Earle, 13 Peters, 520; Pickaway County Bank v. Prather et al., 12 Ohio St. 499.

The corporation must show that the law of its creation gives it authority to do the act which it seeks to perform, and that it is not prohibited by the lex loci. In Lathrop v. The Commercial Bank of Scioto, 8 Dana, 116, it is said: “Beyond as well as within the limits of the domestic sovereign, the only difference between a natural and an artificial person, as to the recognition of their personal existence, would be that, whenever the law creating the latter should be recognized, the existence of such a being would be legal only, while that of the other would be actual as well as legal. And this is the reason why, in the absence of all local law or policy to the contrary, the same code of comity will equally apply to each of them in the courts of all liberal and enlightened nations.”

The next question is: Was the Ohio Life Insurance and *Trust Company endowed by its charter with capacity to purchase the bonds? If we are correct in our conclusion as to the merchantable character of these bonds, it is clear that it was so endowed. By the nineteenth section of the charter, the trustees are given discretionary power to invest the premium and profits received by the company, and the moneys received by them in trust, in “ such real or personal securities as they may deem proper,” or loan the same to any county, city, incorporated town or company.”

The scope of the power to purchase is co-extensive with the securities named, and is not limited to such securities as were the?-, subjects of sale at the date of the charter. Whatever real or personal securities might be lawfully- sold, the Trust Company was-authorized to buy; and the exercise of the power is limited neither-as to time nor place. The creation of salable securities, under-statutes passed after the date of the charter of the Trust Company, only multiplied the objects upon which the power conferred by the-charter might be exercised. If the purchase of the bonds had? been made in Indiana, it seems clear that its legality could not. have been impugned. Yet, so far as the transaction is assailed on the ground of the want of capacity in either of the parties, the-objection would have had the same effect, had the purchase been made in Indiana, as it is entitled to have in the present case. We-are of opinion that, if the transaction be otherwise lawful, it will, not fail for want of power in the Trust Company.

We now recur to the second question : Was the sale prohibited, by the laws or settled policy of this state ?

Two grounds are urged by the counsel of the defendants upon.which it is claimed this question should be answered in the affirmative: 1. That the statutes of this state authorizing railroad compa-nies to issue and negotiate their bonds, require that they shall’ bear a rate of interest not exceeding seven per cent, per annum,., while those in question stipulate for ten; 2. The second—which has already been partially considered—is, that, by our laws, the-transaction in question is reduced to a loan.

The policy of the state is found in its laws. The only statutes *relating to railroad companies, material to be noticed, and', which were in force at the date of the negotiation in question, are-section 14 of the act providing for the creation and regulation of incorporated companies, passed Mayl, 1852 (1 S. & C. Stat. 279),. and section 1 of the act relating to the sale of bonds of railroad? companies, passed December 15, 1852 (1 S. & 0. Stat. 321).

The 14th section of the act first named, like section 13 of the-general railroad law of 1848, authorizes railroad companies to borrow money, at a rate of interest not exceeding seven per cent, per' annum, and to execute their bonds or notes therefor.

Owing, doubtless, to the inability of the companies to obtain-money upon the terms authorized, the act secondly above referred. to was passed. The first section provided:

“ That the directors of any railroad company, authorized to borrow money and to execute bonds and notes therefor, shall be, and they are hereby, authorized to sell, negotiate, mortgage, or pledge-such bonds or notes at such times and in such places, either within or without the state, and at such rates and for such prices as, in the-opinion of the directors, will best advance the interest of the company; and if such notes or bonds are thus sold at a discount, such sale shall be as valid in every respect, and such securities as binding for the respective amounts thereof,” as if they were sold at their par value.

This act left the prices at which the bonds might be sold to the discretion of the directors.

It is claimed by the plaintiff’s counsel, that since the passage of this act the rate of interest which the bonds may be made to bear is immaterial. Though it is true the act does not prescribe the-form of the bonds, yet, in a case where the only authority for issuing bonds bearing a higher rate of interest than seven per cent, had to» be derived from these statutes, it might be fairly claimed that it was-only such bonds as the company could -have issued for money borrowed that it was authorized to sell, and that, consequently, the-bonds ought not to bear a higher rate of interest than they could, by law, have borne before the sale was authorized. But, however *this might be, the plaintiff does not rely upon these statutes to support its bonds.

The defendants invoke the aid of the statutes to invalidate the-sale of the bonds, bn account of the rate of interest specified in them. The object of the acts in question is to regulate the exercise of powers by corporations deriving their authority from this state.

Before the policy upon which they are founded can be held, if at all, to invalidate a sale of the bonds of a corporation of a sister-state, the repugnancy must lie plain and substantial. A mere difference in the rate of interest, when the bonds may be sold at any price, creates no such repugnancy.

The second objection, last referred to, has already been in part-considered. It rests upon the idea that this transaction is to be determined upon the rules ordinarily applied to transactions arising under usury laws. This view we regard as erroneous. It deprives the transaction of the aid of the statute under which the bonds were created, and by which their legal qualities were fixed.

The United States, the State of Ohio, and the various corporations of this state, under the authority of statute law, have issued ' ' their bonds for sale, and have sold them not only in the markets of ■our own country but in the markets of Europe. Such sales, at whatever discount made, have not been, nor can they properly be, .regarded as violations of the usury laws in force where the bonds ■have been sold. Most of the bonds issued by railroad companies under the statutory authority of this state, have been sold greatly below their par value, in eastern states and in different countries in Europe, where usury laws prevail. We have not heard of laws being passed in those states or countries exempting such sales from the usury laws; nor do we suppose there have been any. Yet, upon the theory sought to be maintained in this case, all such supposed sales made on behalf of.the corporations making the roads, were in fact not sales but loans, and if so, the transactions were, under the usury laws of the place, either partially or wholly void.

The true ground upon which these transactions are based is this: When the legislature authorizes any corporation to *raise money by the sale of its bonds, such bonds are as salable in the ’hands of such company as in the hands of third persons. It is bona fide business papei’, made so by statute, as soon as made, and entitled to be so treated.

The fact that a guaranty was given is not decisive of the character of the transaction. It is a circumstance to be looked to in ■determining whether its true character was that of a sale or a loan. A guaranty may be given to effect the sale, and be accepted as one •of its terms; and, when such is the case, the' transaction is not thereby converted into a loan. It is a security, it is true, for the payment of the bonds; so is a mortgage; but the mere fact that 'bonds are secured, whether by the personal liability of third persons, or otherwise, renders them not the less subjects of sale. While •■such guaranties may be given as a cover to disguise a loan, they may also be made for the purpose of. effecting a sale ; and, in the the latter case, will pass to the purchaser. Of the last description, in our opinion, is the guaranty now in question.

The learned counsel for the defendants, in speaking of this transaction, remark: “ The whole transaction was between parties on both sides, not only well advised, but every one of them selected .and placed where they were for their intelligence and skill in such •matters.”

We have no doubt this remark is just. We will add, in closing •this branch of the case, the language of the chief justice in Bank of Augusta v. Earle, 13 Pet. 597: “ It is but justice to all the parties concerned to suppose that these contracts were made in good faith, and that no suspicion was entertained by either of them that these engagements could not be enforced. Money was paid on them by one party and received by the other. And when we see men dealing with one another openly in this manner, and making contracts to a large amount, we can hardly doubt what was the generally received opinion at that time in relation to the right of the plaintiffs to make such contracts. And when a court is called on to declare contracts thus made to be void, upon the ground that they conflict with the policy of the state, the line of that policy should be very clear and distinct to justify the court in sustaining the defense.”

* Another ground of defense, claimed on behalf of the defendants, is, that the guaranty was intended to indemnify the Trust Company specially, and was not divisible nor assignable, nor in fact assigned to the plaintiff.

As to the matter of fact alleged, we are all satisfied that there was an agreement, on the part of the Trust Company, that the plaintiff, on taking the bonds, should share in the security of this guaranty in proportion to its number of bonds. And whilst we do not deem it necessary to elaborate the point, suffice it to say, that, whatever might be the case at law, we are unanimous in the cpinion that if the transaction were otherwise valid in equity, the plaintiff would be entitled to share in the benefit of this guaranty with the holders of the other bonds mentioned therein.

Judgment reversed and cause remanded.

Scott and Dat, JJ., concurred.

Welch, J.,

dissenting: I think the transaction was a loan of money and not a sale of bonds; not, because banks may not buy railroad bonds bearing higher rates of interest than their charters authorize them to take, but because the money here was advanced upon a' guaranty of its repayment.

The policy of our law is to limit interest to fixed rates. An exception to this policy is found in statutes enabling railroad companies to borrow money by a so-called sale of their own bonds at higher than the ordinary rates. I suppose the reason of this exception to be, the difficulty or impossibility of borrowing money at the usual rates for the construction of railroads, arising from the fact that the lender must necessarily look to the road alone for its-repayment. As he takes an extraordinary risk—and, in some degree, takes it for the public benefit—he is allowed an extraordinary rate of interest. If the road fails, he loses all. If it succeeds, he gets a large return. He lends his money to the road, and looks to-its success 'as his only security for ultimate payment.

Rut when the repayment of the money is satisfactorily assured by a guaranty for that purpose, the case is not within the reason-of these statutes. The lender refuses to look to *the bonds-alone, and lends his money upon a promise which purports to make-sure the ultimate payment of the money, even should the bonds prove utterly worthless. Such was the character of this transaction. It was, in my judgment, a loan of money at ten per cent, by a bank authorized to take but seven, and was, therefore, unauthorized and void; and for that reason, I hold, the judgment should be-affirmed.

Brinkerhoee, C.J.,

dissented, on the ground that the transaction on which this action was brought, was a loan and not a purchase, in the sense of those words as understood and fixed by law-at the time the Ohio Life Insurance and Trust Company was chartered ; and that said company had not only no power to make, butr by the terms of its charter, was expressly prohibited from making,, such a loan; and subsequent general legislation, having no reference to said company can not properly be so construed as to work an enlargement of its corporate powers.  