TAFT, Circuit Judge
(after stating the facts as above). The complainant objects to the claim of the Railroad Equipment Company on three grounds: First. That it includes interest upon a loan at the rate of more than 8 per cent., which is usurious by the laws of Ohio, [704]*704and that by Ohio law in such a case the excess of interest over 6 per cent, must be credited upon the principal. Rev. St Ohio, § 3188; McClelland v. Sorter, 39 Ohio St. 12; West v. Meddock, 16 Ohio St. 417; Bunn v. Kinney, 15 Ohio St. 40. Second. That the defendant railroad company had no power, under the Ohio law of its creation, to agree to pay more than 7 per cent, interest, wherefore the contract is void, and the Railroad Equipment Company can recover only the reasonable value of the equipment furnished, with 6 per cent, interest. Third. That the Railroad Equipment Company cannot, under the laws of Ohio, seek to take possession of the equipment covered by these contracts for purposes of foreclosure or sale without tendering to the company 50 per cent, of the amount already paid on the contracts.
1. It may admit of question whether the character of this contract, as usurious or otherwise, is to be settled by New York or Ohio law. It is conceded that under the law of New York, by a statute enacted April 6, 1850 (Bank v. Hoge, 35 N. Y. 65), a defense of usury cannot be set up by corporations. But it is not necessary to decide whether the validity of the contracts depends on New York or Ohio statutes, for I think them valid under either. By section 3287 of the Revised Statutes of Ohio, the defendant company was permitted to borrow money at a rate not exceeding 7 per cent., and to issue bonds or notes for the same, and to secure them by a pledge of its property or income. By section 3290 it is provided that the directors may sell or negotiate such bonds or notes at not less than 75 per cent, of par. It has been held by the supreme court, in the case of Junction R. Co. v. Bank of Ashland, 12 Wall. 226, that section 3290 (which was the first section of the act of the legislature of Ohio passed December 15, 1852 [51 Ohio Laws, p. 286]) was tantamount to a repeal of the usury ^ laws as to such companies. It is said that this statement by Mr. Jus-' tice Bradley, in delivering the opinion of the supreme court in that case, was merely obiter dictum, and ignored the effect of section 3287. It is true that the question of usury was eliminated from the case by the holding that the contract was a New York contract, but the particular language was used in discussing the question whether an Indiana corporation, which had been reincorporated in Ohio, had power, under the law of Ohio, to issue bonds drawing 10 per cent, interest. The question was, therefore, directly presented to the court, and had to be decided, whether an Ohio corporation could, under the act of December 15, 1852, issue bonds drawing 10 per cent, interest, and the question was answered in the affirmative. Since that decision, the act of December 15, 1852, has been amended to its present form, as it appears in section 3290, which limits the power to a sale or negotiation of its bonds or notes at not less than 75 per cent, of par. Taking sections 3287 and 3290 together, this would really restrict the borrowing power of railroad companies to loans with annual interest at the rate of $7 on $75, or something more than 9 per cent. It is not claimed that the loans here in controversy exceed such a rate. It is said that the case of Coe v. Railroad Co., 10 Ohio St. 372, overrules the construction put upon section 3290 in Junction R. Co. v. Bank of Ashland. I do not think so. It was held in the Coe Case that the issue of bonds drawing 7 per cent., payable semiannually, [705]*705was not a violation of section 3287, limiting the power of railroad companies to the issue of bonds bearing 7 per cent, or less, and that under section 3290 such bonds might be sold by the company issuing them at a discount. If this implies that bonds drawing more than 7 per cent, may not he issued, it only refers to the form of the obligation, and not to the essence, for it is palpable that the sale by the obligor of the bond drawing 7 per cent, interest at a discount is nothing more than the borrowing money at a greater rate than 7 per cent. In the case at bar the obligations are not, on their face, obligations drawing-more than 7 per cent, interest, and I should hesitate long to declare them void, either as usurious or as ultra vires the defendant railroad company, on a mere objection to their form, when the railroad company really has the power to do that which is, in effect, the borrowing of money at a greater rate of interest than Is stipulated for in such obligations. In so far as sections 3287 and 3290 permit railroad companies to borrow' money at a greater rate than 8 per cent., they do repeal the usury laws as to such companies.
2. What has been said suffices to show that the present contracts were within the power of the defendant railroad company.
3. The contention that the Railroad Equipment Company is not entitled to the relief it prays by way of return of its equipment or a payment of the amount due until it has tendered back to the defendant railroad company at least 50 per cent, of the amount paid as rental upon the contract, is based on section 2 of the act of May 4, 1885 (82 Ohio Laws, p. 238). The act relates, generally, to “cases where any personal property shall be sold to any person to be paid for, in whole or in part, in installments, or shall be leased, rented, hired, or delivered to another,” on condition that title shall remain in the vendor until value of property is paid. By its first section contracts for such sales or hiring are avoided unless evidenced and executed in a certain way, and filed, as chattel mortgages are required to be filed, with the clerk of the township, or, in certain cases, with the county recorder. By the second section 1he vendor or hirer is forbidden to take possession of the property on condition broken without tendering back the sum of money paid thereon by the vendee or lessee, less a sum, not exceeding 5Ó per cent., as compensation for the use. By the third section, violation of section 2 is made punishable as a misdemeanor. I do not think that this act has any application to personal property used in the equipment of railroads, although the terms used are general, and broad enough to include it. I base my conclusion on the act of March 1G, 1882 (79 Ohio Laws, p. 45), passed three years before the act above referred to, and amended since the passage of that act. The legislature of Ohio thereby added three sections to the chapter of the Revised Statutes on “Railroads.” By the first of these, all contracts for the conditional sale “of railroad equipment, rolling stock, or other personal property (to be used in or about the operation of any railroad) were avoided as against creditors or innocent purchasers for value unless recorded in the office of the secretary of state. By the second section it was declared lawful in contracts for renting such property to stipulate that Hie rental might he applied on the purchase money, and that the title should not [706]*706pass until the vendor had been paid, if such contracts were filed as required in the first section. By act of April 12, 1889 (86 Ohio Laws, p. 255), passed four years after the general conditional sale statute, the sections relating to conditional sales of railroad equipment were supplemented by a provision that they should extend and apply to contracts made by others than railroad companies for the purchase or rental of railroad equipment designed for use on railroads in Ohio or other states.
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TAFT, Circuit Judge
(after stating the facts as above). The complainant objects to the claim of the Railroad Equipment Company on three grounds: First. That it includes interest upon a loan at the rate of more than 8 per cent., which is usurious by the laws of Ohio, [704]*704and that by Ohio law in such a case the excess of interest over 6 per cent, must be credited upon the principal. Rev. St Ohio, § 3188; McClelland v. Sorter, 39 Ohio St. 12; West v. Meddock, 16 Ohio St. 417; Bunn v. Kinney, 15 Ohio St. 40. Second. That the defendant railroad company had no power, under the Ohio law of its creation, to agree to pay more than 7 per cent, interest, wherefore the contract is void, and the Railroad Equipment Company can recover only the reasonable value of the equipment furnished, with 6 per cent, interest. Third. That the Railroad Equipment Company cannot, under the laws of Ohio, seek to take possession of the equipment covered by these contracts for purposes of foreclosure or sale without tendering to the company 50 per cent, of the amount already paid on the contracts.
1. It may admit of question whether the character of this contract, as usurious or otherwise, is to be settled by New York or Ohio law. It is conceded that under the law of New York, by a statute enacted April 6, 1850 (Bank v. Hoge, 35 N. Y. 65), a defense of usury cannot be set up by corporations. But it is not necessary to decide whether the validity of the contracts depends on New York or Ohio statutes, for I think them valid under either. By section 3287 of the Revised Statutes of Ohio, the defendant company was permitted to borrow money at a rate not exceeding 7 per cent., and to issue bonds or notes for the same, and to secure them by a pledge of its property or income. By section 3290 it is provided that the directors may sell or negotiate such bonds or notes at not less than 75 per cent, of par. It has been held by the supreme court, in the case of Junction R. Co. v. Bank of Ashland, 12 Wall. 226, that section 3290 (which was the first section of the act of the legislature of Ohio passed December 15, 1852 [51 Ohio Laws, p. 286]) was tantamount to a repeal of the usury ^ laws as to such companies. It is said that this statement by Mr. Jus-' tice Bradley, in delivering the opinion of the supreme court in that case, was merely obiter dictum, and ignored the effect of section 3287. It is true that the question of usury was eliminated from the case by the holding that the contract was a New York contract, but the particular language was used in discussing the question whether an Indiana corporation, which had been reincorporated in Ohio, had power, under the law of Ohio, to issue bonds drawing 10 per cent, interest. The question was, therefore, directly presented to the court, and had to be decided, whether an Ohio corporation could, under the act of December 15, 1852, issue bonds drawing 10 per cent, interest, and the question was answered in the affirmative. Since that decision, the act of December 15, 1852, has been amended to its present form, as it appears in section 3290, which limits the power to a sale or negotiation of its bonds or notes at not less than 75 per cent, of par. Taking sections 3287 and 3290 together, this would really restrict the borrowing power of railroad companies to loans with annual interest at the rate of $7 on $75, or something more than 9 per cent. It is not claimed that the loans here in controversy exceed such a rate. It is said that the case of Coe v. Railroad Co., 10 Ohio St. 372, overrules the construction put upon section 3290 in Junction R. Co. v. Bank of Ashland. I do not think so. It was held in the Coe Case that the issue of bonds drawing 7 per cent., payable semiannually, [705]*705was not a violation of section 3287, limiting the power of railroad companies to the issue of bonds bearing 7 per cent, or less, and that under section 3290 such bonds might be sold by the company issuing them at a discount. If this implies that bonds drawing more than 7 per cent, may not he issued, it only refers to the form of the obligation, and not to the essence, for it is palpable that the sale by the obligor of the bond drawing 7 per cent, interest at a discount is nothing more than the borrowing money at a greater rate than 7 per cent. In the case at bar the obligations are not, on their face, obligations drawing-more than 7 per cent, interest, and I should hesitate long to declare them void, either as usurious or as ultra vires the defendant railroad company, on a mere objection to their form, when the railroad company really has the power to do that which is, in effect, the borrowing of money at a greater rate of interest than Is stipulated for in such obligations. In so far as sections 3287 and 3290 permit railroad companies to borrow' money at a greater rate than 8 per cent., they do repeal the usury laws as to such companies.
2. What has been said suffices to show that the present contracts were within the power of the defendant railroad company.
3. The contention that the Railroad Equipment Company is not entitled to the relief it prays by way of return of its equipment or a payment of the amount due until it has tendered back to the defendant railroad company at least 50 per cent, of the amount paid as rental upon the contract, is based on section 2 of the act of May 4, 1885 (82 Ohio Laws, p. 238). The act relates, generally, to “cases where any personal property shall be sold to any person to be paid for, in whole or in part, in installments, or shall be leased, rented, hired, or delivered to another,” on condition that title shall remain in the vendor until value of property is paid. By its first section contracts for such sales or hiring are avoided unless evidenced and executed in a certain way, and filed, as chattel mortgages are required to be filed, with the clerk of the township, or, in certain cases, with the county recorder. By the second section 1he vendor or hirer is forbidden to take possession of the property on condition broken without tendering back the sum of money paid thereon by the vendee or lessee, less a sum, not exceeding 5Ó per cent., as compensation for the use. By the third section, violation of section 2 is made punishable as a misdemeanor. I do not think that this act has any application to personal property used in the equipment of railroads, although the terms used are general, and broad enough to include it. I base my conclusion on the act of March 1G, 1882 (79 Ohio Laws, p. 45), passed three years before the act above referred to, and amended since the passage of that act. The legislature of Ohio thereby added three sections to the chapter of the Revised Statutes on “Railroads.” By the first of these, all contracts for the conditional sale “of railroad equipment, rolling stock, or other personal property (to be used in or about the operation of any railroad) were avoided as against creditors or innocent purchasers for value unless recorded in the office of the secretary of state. By the second section it was declared lawful in contracts for renting such property to stipulate that Hie rental might he applied on the purchase money, and that the title should not [706]*706pass until the vendor had been paid, if such contracts were filed as required in the first section. By act of April 12, 1889 (86 Ohio Laws, p. 255), passed four years after the general conditional sale statute, the sections relating to conditional sales of railroad equipment were supplemented by a provision that they should extend and apply to contracts made by others than railroad companies for the purchase or rental of railroad equipment designed for use on railroads in Ohio or other states. A consideration of the two statutes satisfies me that the act of 1885 applies generally to sales of all personal property except railroad equipment.- That is provided for in the special legislation of 1882 and 1889. In the opinion of the legislature, certainly, the law of 1885 did not impliedly repeal that of 1882, because it is recognized as being in force by the law of 1889. The subject of conditional sales of personal property on the installment plan to individuals, in the course of which small money lenders had, before the law, been guilty of great oppression to their poor and helpless creditors, is a very different one from the securing of liens on the immensely valuable equipment and rolling stock of railroads. In the former case the debtor is so easily oppressed that he needs the protection of the law. In the latter the contracting is between two great corporations, able to deal at arm’s length. It was entirely natural, therefore, that the legislature should regard the regulation of railroad equipment conditional sales as one not affected by a general law regulating conditional sales of personal property, and should not have introduced a saving clause in the latter act. The railroad equipment act is complete in itself, and the provisions of the general act are in no respect germane or natural amendments to it. The recording in the secretary of state’s office is necessary, because the equipment generally has no situs in any particular township; and yet, if the general act applies, the township recording provisions must in some way be given operation. It would certainly be a strange provision of law subjecting an equipment company to criminal prosecution for attempting to resume possession of its property upon payment for which a railroad company had defaulted. Such paternal protection for defaulting railroad companies would be novel in modem or ancient legislation, And yet, if the act of 1885 is an amendment or supplement to that of 1882, such a result follows. The equities of this case are with the Bail road Equipment Company on this issue, and a decree should be entered permitting it to take back its equipment, or, if complainants and the receiver conclude such equipment is needed to operate the road, then the equipment company must be given a lien on the corpus of the property in preference to the first and second mortgages.