Jackson, J.,
(after stating the facts as above.) It is conceded by plaintiff’s counsel that, under the foregoing state of facts, the defendant has a valid equitable lien upon the 50 barrels of whisky in question, to the extent of the claim which the Newcomb-Buchanan Company held against him, growing out of the advances or payments made by them for liis benefit, consisting of the two sums of $500.40, with interest thereon from January 29, 1884, and $1,100, tendered the bank, November 12, 1884. The controverted question between the parties is whether defendant can hold the whisky, as against the plaintiff, for the full amount of its demands against the Newcomb-Buchanan Company for the security of which the warehouse receipts were pledged by the latter. If this question rested upon the general rules of law relating to the right of an agent or factor to pledge the property of his principal for his own debt, it would be easily resolved against the defendant. But its correct determination in this case depends upon the proper construction of two acts of the legislature of Kentucky in connection with certain provisions of the general revenue laws of the United States. The first of said Kentucky acts is that “relating to warehousemen and warehouse receipts,” approved March 6, 1869, the sections of which material to this case are the following:
“(1) That hereafter in this state all and every person or persons, firms, companies, or corporations, who shall receive cotton, tobacco, pork, grain, corn, wheat, rye, oats, hemp, whisky, coal, or any kind of produce, wares, merchandise, commodity, or any other kind or description of personal property, or thing whatever, in store, or undertake to receive or take care of the same, with or without compensation or reward therefor, shall be deemed and held to be warehousemen. (2) That every warehouseman receiving anything enumerated in section one of this act shall, on demand of the owner thereof, or the person from whom he receives the same, give a receipt therefor, setting forth the quality, quantity, kind, and description thereof, and which shall be designated by some mark, and which receipt shall be evidenco in any action against said warehouseman. (3) All receipts issued by any warehouseman, as provided by this act, shall be negotiable and transferable by indorsement in blank, or by special indorsement, and with like liability as bills of exchange now are, and with like remedy thereon.” “(5) That no warehouseman or other person shall issue any receipt or voucher upon or for any goods, wares, merchandise, produce, commodity, property, or other thing, of any description or character whatever, to any person, persons, company, companies, corporation, or corporations, as security for any money loaned or other indebtedness, unless such goods, wares, merchandise, produce, commodity, property, or other thing so receipted for shall be at the time of issuing such receipt or voucher the property, without incumbrance, of said warehouseman; and, if incumbered by prior lien, then the character and extent of that lien shall be fully sot forth and explained in the receipt, and shall bo actually and in fact in store and under the control of said warehouseman at the time of giving such receipt or voucher.” “(7) That no warehouseman or other person shall sell or incumber, ship, transfer, or in any manner remove beyond his immediate control, any goods, wares, merchandise, produce, commodity, property, or chattel, for which a receipt or voucher shall have boon given, without the written consent of the person or persons holding such receipt, and the production of the receipt.”
[262]*262The second of said acts is entitled “An act to declare and amend the law relating to principals and factors or agents, ” approved May 5, 1880, which contains the following provisions applicable to the present controversy, viz.:
“(1) Be it enacted by the general assembly of the commonwealth of Kentucky: Every factor or other agent intrusted with the possession of a document of title to merchandise, or with the possession of merchandise, shall be deemed to be the true owner thereof, so far as to give validity to any contract made by such factor or other agent with any other person for the sale or disposition of the whole or any part of such merchandise for any money paid or advanced, or negotiable instrument given, or existing security surrendered, by such other person. (21 Where any person shall take any such merchandise or document therefor from any such agent, as a security for any antecedent debt or demand, he shall not thereby acquire any right or interest therein other than was possessed or might have been enforced by such agent at the time of such transfer, or than the value of any security surrendered at the time of such transfer, whichever may be greatest. (3) The sale or disposition provided for in the first section of this act shall not be valid in favor of any person who at the time he. shall advance or pay said money, or give said negotiable instrument, or surrender such security, shall have notice that such factor or agent is acting in violation of his authority. (4) ÜSTothing contained in this act shall be taken to authorize a common carrier or warehouseman, who is not a factor or dealer in merchandise, to whom merchandise may be intrusted for transportation or storage only, to sell or hypothecate the same; and nothing contained in this act shall be taken to authorize any person to sell or hypothecate any merchandise in his possession upon which he has issued a warehouse receipt.” “(6) Any custom-house permit, warehouse receipt, or other document, used in the ordinary course of business as proof of the possession of merchandise, or authorizing, or purporting to authorize, either by indorsement or delivery, the possessor of such document to transfer or receive the merchandise thereby represented, shall be deemed a document of title, in the meaning of this act; and a factor or other agent shall be deemed intrusted with such document, whether the same is derived by him from such owner, or obtained by him by reason of having had the possession of said goods, or some other document of title.”
In connection with these provisions of the Kentucky law should be noticed certain provisions of the internal revenue laws of the United States, in order to clearly understand the situation of the property about which the controversy arises. By section 3271, Rev. St, every distiller is required, at his own expense, to provide a warehousé, to he situated on and to constitute a part of his distillery premises, to be used only for the storage of distilled spirits of his own manufacture, until the tax thereon shall have been paid; and such warehouse, when approved by the commissioner of internal revenue on report of the collector, is “declared to be a bonded warehouse of the United States, to be known as a distillery warehouse, and shall be under the direction and control of the collector of the district, and in charge of an internal revenue store-keeper, assigned thereto by the commissioner.” By sections 3273 and 3274, such store-keeper has charge of the warehouse to which he is assigned, said warehouse being in the joint custody of the store-keeper and the proprietor thereof; and no articles shall be received in or delivered from [263]*263such warehouse, except on an order or permit addressed to the storekeeper, and signed by the collector having control of the warehouse. By section 3288, it is provided that no distilled spirits on which the tax has been paid shall be stored or allowed to remain on any distillery premises, under the penalty of a forfeiture of all spirits so found.
It is shown by the statement of facts that the 50 barrels of whisky in controversy were, in June, 1880, stored in the distillery bonded warehouse of the Anderson Distillery Company, by whom it was manufactured. That said company issued to L. J. Haskins its receipt therefor, attested by J. S. Osborne, the United States store-keeper in charge of said warehouse and spirits, specifying that the whisky was deliverable only on the return of said receipts, and the payment of the government tax and storage on the same. This government tax was due and payable in August, 1883. Prior to that time the plaintiff had become the owner of said receipts so issued to Haskins, and entitled to the whisky represented thereby, under some arrangement or agreement with the NeweombBuchanan Company that the latter should aid or assist him in raising the money, when required to pay the government tax. Spirits so deposited in a bonded warehouse of the United States are frequently sold by the distiller or other owner subject to tax, but while they remain in such warehouse of the United States, under the control of officers and agents of the government, they are subject to all the provisions of the internal revenue laws, and regulations made in pursuance thereof. The whisky in question, while thus stored, was liable, not merely for the specific government tax thereon, but for all lawful assessments made against the distiller or distillers in connection with the business. Hartman v. Bean, 99 U. S. 393-397.
Under the provisions of the law, it could not be delivered from this bonded warehouse of the United States, except on payment of the government tax, and “on an order or permit addressed to the store-keeper thereof, and signed by the collector having control of the warehouse.” Nor could the whisky remain in such warehouse on storage, after the tax was paid, without incurring the penalty of forfeiture. In respect to this whisky, the Anderson Distillery Company did not', and could not, under the law, occupy the position of a free or private warehouseman. While the tax was unpaid and the whisky remained in this warehouse, it was subject to regulations prescribed by the act of congress, and its place of storage was an agency of the general government, and subject to the authority and control of officers and agents of the United States. The premises in which the whisky was stored, being a bonded warehouse of the United States, and an agency of the government, where unbonded or free whisky could not be received or allowed to remain on storage without liability to forfeiture, do not come within the provisions of the Kentucky statutes above referred to, relating to warehousemen and warehouse receipts, and the law relative to principals and factors or agents. It cannot be assumed that the legislature of Kentucky undertook to regulate the duties and obligations of a bonded warehouse of the United States, created and established for the protection and security of their own rev[264]*264cnues, and in which free whisky could not remain without incurring the penalty of. forfeiture.
The Kentucky acts manifestly refer to warehousemen and warehouse receipts, and to principals and factors, over whom the state of Kentucky possessed authority, and could exercise lawful jurisdiction. Instrumentalities and agencies of the United States, suelvas the bonded -warehouses established and employed by them for the due and proper enforcement of their internal revenue laws, and subject to their exclusive regulation, do not come legitimately within the scope of the above-quoted acts of the Kentuckjr legislature. The Kentucky laws apply to ordinary warehouse-men and warehouse receipts, and the relations between principals and factors, over whom, and whose duties and obligations to each other and to the public, the state may properly exercise her authority. In respect to the 50 barrels of whisky in question, and while the government tax thereon remained unpaid, the Anderson Distillery Company was not a Kentucky warehouseman, who could lawfully receive and issue receipts for free whiskies, but was a governmental agency, for the custody of specific property, on which the United States had a lien for taxes, and the right of possession till such taxes were paid, when its removal from such place of storage was required by the law of congress. Receipts issued by such an agency of the United States are not warehouse receipts, under the Kentucky act of March 6, 1869; nor is the relation between such a custodian and that of the beneficial owner of the whisky that of principal and agent, within the meaning of the Kentucky act of May 5,1880. When, therefore, the Anderson Distillery Company issued receipts for the whisky thus stored in a bonded warehouse of the United States, and subject to their control and custody, such a receipt, whatever may be said of the authority of this government agency to issue the same, did not constitute warehouse receipts or documents of title, in the sense in which those terms are employed in the Kentucky act. The company, in respect to such whisky, was not a warehouseman, under or subject to the laws of Kentucky, and the evidences as to ownership of such whisky which it might issue, subjéct to the rights of the government, were not such receipts as are contemplated- or covered by the warehouse or factors’ acts of Kentucky. The plaintiff, in forwarding these original receipts to the Newcomb-Buchanan Company to enable them to .arrange for the payment of the government tax, and free the whisky from the claim and possession of the government, did not intrust his said agents with such possession of the property, or of such a document of title thereto, as will bring the case within the operation of the Kentucky statutes above cited.
This view of the subject is of no special importance in respect to the controversy over the 85 barrels of whisky. The original receipts, to the extent of said 35 barrels, were surrendered by the Newcomb-Buchanan Company in June, 1883, when the government tax thereon was. paid, and the new free warehouse receipts of the Newcomb-Buchanan Company'were issued to George for said 35 barrels, which receipts, after being indorsed in blank by him, were forwarded to the Newcomb-Buchanan [265]*265Company as Ms agents, to be pledged as collateral to the. defendant for the loan of $1,233 on the joint note of plaintiff, and his said agents, the Newcomb-Buchanan Company. These new receipts, so issued to George after the 35 barrels were released from bond, clearly came within the operation of said Kentucky acts; and if, after they wore indorsed by him, and returned to his said agents, the Newcomb-Buchanan Company, even for a special purpose, the latter had misapplied them, and pledged or hypothecated them to innocent parties, to secure loans or advances to themselves, the plaintiff’s rights would no doubt have been affected by the provisions of the Kentucky factors’ act. But the Newcomb-Buchanan Company, as plaintiff’s agent, did not make any wrongful or improper use of said receipts in the first instance. They properly executed the trust of their agency, by delivering those new free warehouse receipts to the defendant, in pursuance of tho agreement and understanding of the parties, as collateral security for the joint note of plaintiff and themselves. Their relation to the note, as between themselves, being that of surety for the plaintiff, when those receipts wer-e placed in the possession of the bank as collateral for the loan, the agency of the NewcombBuchanan Company in respect to said documents of title, and the whisky represented thereby, so stored with them, ceased. The purpose for which the receipts had been intrusted to the Newcomb-Buchanan Company were accomplished, and their agency for plaintiff in respect to the same then terminated. When the Newcomb-Buchanan Company, on the 30th June, 1884, paid the bank the balance of $1,066 then due on the renewed note, and took up said receipts, without the request, knowledge, or consent of George, did their voluntary act in making such payment, and thereby regaining possession of the receipts, have the effect and operation of restoring or re-establishing their former agency relation towards the plaintiff in- respect to said receipts? This is the contention of the defendant’s counsel, but the position cannot be maintained without disregarding well-settled legal principles, and extending the provisions of the Kentucky factors’ act far beyond what the legislature contemplated in its passage.
Assuming that the Newcomb-Buchanan Company, in virtue of their connection with the note, and relation of surety thereon for George, and in disregard of his wishes, had the right to pay off the note, and receive possession of the collateral from the hank, in what character or capacity did they thereafter hold such collateral? Certainly not as the agents of George. The hank, from whom the Newcomb-Buchanan Company received the receipts, held them in no agency relation such as the factors’ act contemplates. The holder of a collateral, as security for the payment of a debt, is hardly to be held and treated as an agent or factor of the debtor, within the true meaning of the act of May 5, 1880, even though such collateral should be in the shape of a warehouse receipt. In paying off the note and taking up the receipts, the Newcomb-Buchanan Company were simply substituted or subrogated to the rights of the bank. They thereafter held the note and the collaterals as creditors of George, for whose benefit, as their principal, the payment had been [266]*266made. This payment merely created between themselves and George the new relation, by operation of law, of creditor and debtor, and conferred upon them, at most, only the right to hold such receipts as creditors until the amount so advanced for George should be refunded. In no just sense can it be said that the possession of warehouse receipts issued by themselves, thus acquired by the Newcomb-Buchanan Company, would operate to constitute them the factors or agents of George. How can it bo said, with any show of reason or propriety, that these documents of title, obtained under such circumstances, were intrusted to them as the factors or agents of George? . What was the agency upon which the Newcomb-Buchanan Company held George’s documents of title, whose possession was procured without his knowledge and consent? As creditors, they had the right to hold them until their advances were returned; but no relation of factor or agent was either created or revived when they by their own act repossessed themselves of plaintiff’s receipts. While holding plaintiff’s receipts, not as agents, but merely as self-constituted creditors, they wrongfully, and in fraud of his rights, cancel the same, store the whisky in the warehouse of Daniel E. Doherty, and take receipts therefor in their own name, which they pledge to defendant for a debt of their own.
It is not pretended' that these Doherty receipts, which the bank now holds, and under which it claims the 35 barrels of whisky for the security of its loan to the Newcomb-Buchanan Company, were ever intrusted by plaintiff to the Newcomb-Buchanan Company, as his factors or agents. But it is said that the Newcomb-Buchanan Company was enabled to obtain these warehouse, receipts of Doherty, because they were intrusted by plaintiff with the receipts issued by themselves; but, as we have already shown, this position is not correct, and the case comes down simply to this: that a warehouseman who has issued his receipts for goods placed in his possession on storage, while such receipts are still outstanding, wrongfully, fraudulently removes the goods from his own to another warehouse, where they are stored in his own name, and the receipts taken therefor are pledged for his own debts. There is nothing in the sixth section of the factors’ act of May 5, 1880, to give validity to rights acquired under such conduct, or divest the rights of the true owner. This action of the Newcomb-Buchanan Company, under the facts of this case, not only finds no support in the provisions of section 6 of said act, but comes within the express inhibition of the last clause of section 4 of said act, which provides that “nothing contained in this act shall be taken to authorize'any person to sell or hypothecate any merchandise in his possession upon which he has issued a warehouse receipt.” Neither the fact that the defendant was innocent, and. knew nothing of the fraudulent acts of the Newcomb-Buchanan Company, nor the fact that such-receipts as were issued by Daniel E. Doherty, for the 35 barrels of.whisky are made negotiable instruments by the act of March 6, 1869, can in any way affect the plaintiff’s rights or operate to divest his title to the whisky, or confer upon the bank any right thereto beyond what the Newcomb-Buchanan Company could have lawfully assérted' [267]*267against the same. The defendant’s right in respect to the 35 barrels of whisky, under the facts stated, are only such as the Newcomb-Buchanan Company could have enforced, as against the plaintiff. The negotiability of the receipts taken by defendant, and its innocence in the transaction, in no way enlarge its rights. Insurance Co. v. Kiger, 103 U. S. 352-357.
In respect to the 35 barrels of whisky, the conclusion of the court is that the plaintiff is entitled to the same upon paying to the defendant the sum of $1,100, which was tendered it November 12, 1884.
In respect to the 15 barrels of whisky, as already indicated, the original receipts which plaintiff forwarded to the Newcomb-Buchanan Com-pan jq for the purpose of having them pay the government tax thereon, were not such warehouse receipts as were contemplated by and embraced within the Kentucky acts relied on by defendant. Not coming within the operation of those acts, defendant, under the facts stated, acquired no rights in or to this 15 barrels beyond what the Newcomb-Buchanan Company could have claimed and asserted, which was the repayment of the government tax, amounting to $500.40, withpnterest thereon since January 29, 1884. But aside from the consideration that the original receipts which plaintiff placed in the hands of the Newcomb-Buchanan Company for the special purpose of freeing the whisky from bond do not properly come within the provisions of the Kentucky acts, so as to be governed and controlled by their provisions, how stands the case as to the 15 barrels? The Newcomb-Buchanan Company first fraudulently, and in violation of plaintiff’s rights, asserted ownership of those 15 barrels, and attempted to export the same to Canada. Failing in this scheme of wrongful and fraudulent appropriation of the property, it is returned to Louisville, and in January, 1884, the government tax thereon is paid by the Newcomb-Buchanan Company, and thereupon the whisky is released from the custody and control of the government officials and agency, and passes into the possession of the Newcomb-Buchanan Company without any definite or special instructions from plaintiff as to with whom or how it should be stored. It is going quite far to say that their special agency to pay the tax and free the whisky from bond continued' after their fraudulent removal of the property, and wrongful attempt to export it. But assuming that it did, and that their agency continued or was revived upon the return of the whisky to Louisville, when did such agency terminate? The original receipts issued by the Anderson Distillery Company were no doubt given up when the tax was paid. This payment was not made at the time or in the manner directed by the plaintiff; nor was any place of storage designated by him for the whisky after it should be freed from the bonded warehouse of the United States.
In what capacity, then, did the Newcomb-Buchanan Company hold this whisky, after executing their special agency of paying the government tax thereon? Their agreement with plaintiff to arrange or provide for the payment of this tax had no connection with their character as warehousemen, or as factors or dealers in such merchandise. When [268]*268plaintiff asked or accepted their assistance in arranging or paying the tax, did he thereby make them his factors or agents to deal with and control the property itself, within the meaning of the factors’act? Such a construction would, it seems to me, extend the scope and purpose of the act far beyond what its language and general intent will justify or warrant. The most that can be claimed for the Newcomb-Buchanan Company in connection with this lot of 15 barrels is that upon paying the government tax, by way of an advance for the plaintiff, they became substituted to the lien of the general government on the whisky for the amount so advanced, and that they thereafter held the whisky, not as factors or agents for the plaintiff in the true sense of the Kentucky act, but as creditors who had acquired a lien thereon, and a right to hold possession till such lien was satisfied. Any claim of ownership or right to deal with the property beyond this was fraudulent and wrongful on the part of the Newcomb-Buchanan Company, and could neither confer nor divest rights.- If the pledge of the Doherty receipts for the 15 barrels wrongfully stored in the name of the Newcomb-Buchanan Com-pan}^ could be sustained to the extent claimed for the defendant, it would follow that any person in possession of personal property by way of security for debt, or by fraud or theft, could store the same in a warehouse in his own name, take receipts from the warehouseman therefor, then pledge such receipts to an innocent party for value, and thus divest the title, right, and interest of the true owner in and to the property so wrongfully converted.
The act relied on to sustain such a claim never was intended to cover such a transaction. It cannot affect the question, or prejudice the right of the plaintiff, that such receipts as Doherty gave to the Newcomb-Buchanan Company are made negotiable; for Doherty’s negotiable paper, based upon property stored with him by a person having no right to pledge .the prope^ itself, cannot defeat or impair the rights of the true and lawful owner. The statute of Louisiana made such receipts negotiable instruments, but the supreme court, in the case of Insurance Co. v. Kiger, 108 U. S. 352-357, held that the owner’s rights were not defeated by the wrongful act of an agent in pledging such receipts for his own debts, although the pledgee was an innocent holder for value. The cases cited by counsel for defendant do not support their contention, as applied to the facts of the present case, which is clearly distinguishable from Steam-Boat Co. v. Scudder, 2 Black, 373, and other like decisions relied on by defendant. There is nothing in the Kentucky acts which would or could, under the facts of this case, properly defeat the plaintiff’s right to recover these identical 15 barrels of whisky from the warehouseman Doherty. In the judgment of the court, it is clear that the plaintiff is entitled to said 15 barrels of whisky upon paying to the defendant the sum of $500.40, with interest thereon from January 29, 1884; said sum and interest being the only valid claim which the defendant, as between itself and plaintiff, has or can assert against said whisky: Judgment will accordingly be rendered in favor of plaintiff for the two lots of whisky, subject to the claim of the defendant for the two [269]*269amounts hereinbefore indicated. The costs of the said suit will be divided.