delivered the opinion of the court.
Edward Harper, on the 21st of June, 1887, then living in the State of Ohio, in the city of Cincinnati, made an individual assignment of all of his estate for the benefit of creditors. The assignee appointed by the deed declined to act and resigned, when the present appellant, Harlan P. Lloyd, qualified in his stead, having all the rights and powers of the original trustee.
On the same day the corporation known as the Swift’s Iron and Steel Works made an assignment for the benefit of its creditors to one Adam Wagner, who qualified and took charge of the corporate property. The first assignment (hy Harper) was made in Ohio, and that of the corporation in this State, the corporation doing business in the city of Newport. The assignee of the corporation filed an action in July, 1887, in the circuit court of Campbell county, against the corporation and its eredi*647tors for a settlement of the corporate estate, and obtained .an injunction against the creditors preventing them from suing or further prosecuting actions against the corporation, one John Trapp having already instituted an action against the corporation.
On the 15th of January, in the year 1876, the Swift Iron and Steel Works executed a mortgage on the whole of its property to Sam’l E. Cary and John H. Morton, to secure the payment of certain first mortgage bonds that had been issued by the corporation, numbered from one to twenty, and each bond for five thousand dollars, payable in twenty years, with coupons attached of two hundred dollars each for the semi-annual interest on these bonds. Almira Swift held and owned eighteen of the bonds and L. T. Hubbard two of the bonds. The mortgage, the bonds, and, as is contended, the coupons, amounting to twenty-four thousand dollars, were unpaid at the time the Swift’s Iron and Steel Works made the assignment. There is no question in regard to the validity of the bonds and their non-payment.
Edward Harper, at the date of his individual assignment in Ohio, owned a large portion of the stock of the corporation and was its president. The trustees under the mortgage came into the chancery court on the action of the assignee, and by proper pleadings set up their mortgage lien, asking for a sale of the property to satisfy these bonds and the interest. Lloyd, the assignee of the individual estate of Harper, came into the case and claimed that, from time to time, the latter had advanced out of his own means and purchased of the holders maturing coupons to the extent of twenty-four thousand dollars, or, at least, only asserts a right to that amount in *648this controversy. His claim'was presented to the master upon the general order of reference, and was allowed as-an unpreferred claim, hut upon exceptions to the report by other creditors the entire claim for the coupons was rejected and the report confirmed. Erom that order this appeal is prosecuted. There is some question as to the-character of the pleadings and whether or not a final judgment was rendered from which an appeal could betaken.
It seems that the appellant (Lloyd) attempted to get in the ease by a petition setting up the facts relating to his claim, and the filing of his petition refused; still it appears that the claim was presented to the master, proof heard upon it and the claim allowed, and afterward exceptions-were filed to the report and sustained, rejecting his claim. "We will therefore treat the claim as having been presented to the Master in the ordinary way, its allowance-by him and its rejection by the circuit court, from which this appeal was taken. We think the order made, allowing the appellant by consent to be made a party and his petition taken as his answer, had reference to an inde-, pendent claim for rent that had been offered before the-claim for the coupons was asserted, and therefore -can have no bearing on the question now presented.
These coupons were made payable to bearer, and at the Third National Bank of Cincinnati, Ohio, and when they fell due the money was paid by the teller or the cashier to-the holders of these bonds. The coupons were never canceled but were, no doubt, believed by the holders to have been paid by the corporation. Matthews, its treasurer,, however, says that the money to take up these coupons was furnished him by Harper, and he generally paid in *649currency and not in checks. That the steel works never-furnished the money to him on his individual account to-take up these coupons to my knowledge, not directly. That-he delivered the coupons to Harper when he took them in, and it appears from the testimony that they were found in Harper’s papers, after the assignment, in an envelope marked “ Personal property of E. L. Harper.”
The books of the corporation also conduce to show that the corporation was largely indebted to Harper, and yet there is so much mystery in regard to this case, ox-the claim of Hai'per to these coupons, as must make the-chancellor reluctant to place him in a position where he can swallow up the assets of the corporation by reason of’ claims that every oixe had reason to suppose had been paid. If he took up the coupons he did so without seeking a tx’ansfer or making knowix to the holdex’s that he was advancing the money for the corporation; and while the mere possession of such paper would ox’dinarily authorize the presumption of their having been purchased, yet when found in the possession of one whose duty it .was to see that the corporation paid the coupons, we are not willing to recognize such a doctrine. Besides, it is singular that no one connected with the corporation knew that these advances were being made for its benefit, or that no credit was giveix Harper.,on the books for the expenditure out of his own means; and equally remarkable that these coupons would be paid off in currency, when it is shown that Harper had a large credit to his account in the Cincinnati banks and iix the Fidelity Bank, of which he was the vice-president and chief managing officer, and in which the bank account of the corporation, for some years before the assignment, had been-*650kept. He, in fact, owned the corporate property, and when it comes to be insolvent, he meets the creditors of the corporation with the statement that their liens upon the property of the corporation I have extinguished, not from the means of the corporation but from my own pocket, and, therefore, I hold a prior lien. A payment made without the knowledge of the members of the corporation, and certainly not at their instance or direction, and to the holders of the bonds who believed the paper was thereby extinguished.
In the years 1886 and 1887 the books of the Eidelity National Bank showed a credit balance to the corporation of near one hundred and twenty-five thousand dollars; and yet, it appears from the testimony of the teller that, if the cash memorandums held by the bank against the Swift’s Iron and Steel Works had been charged up to the corporation, the debt of the corporation to the bank would have amounted to two hundred and seventy-four thousand dollars, and that the credit on the bank books given to the corporation consisted of checks on banks and firms, drawn by the corporation, who were in no manner indebted to it.
What was done with all this money, drawn from the bank and evidenced by these memorandums, does not appear, and the presumption is that the process of withdrawal had been going on for some length of time and no charge made’against the corporation for this large sum that must have been made up of many items. The corporation may not have paid the coupons from its own treasury, but the large drafts from the Eidelity Bank and charged by mere memorandums to the Iron and. Steel Works, accounts, doubtless, for the manner in which *651the money was obtained, either to pay the coupons as they became due or to reimburse Harper in the amount already expended by him. The president of the one corporation and the vice-president and chief manager of the other, having both under his control, must be presumed under the circumstances of this case to have paid or ordered this money paid to the holders of the coupons as the corporation’s money, and in full satisfaction of the several demands. There is nothing in this case to imply a sale or to authorize this court to hold that any purchase was ever made by Harper from William Swift, the holder of the bonds; nor can Harper be substituted to the rights of the holder under the doctrine of subrogation. It is said in the text books that this doctrine flows from a principle of natural justice and is a pure equity by which one who pays a debt is substituted to the rights of another. (Sheldon on Subrogation, 2, 3.)
It may be insisted that the payment of these coupons was made by Harper out of his own means to protect his own interest, or that of the corporation, in which he was so vitally interested; and while this may be true when applied to a state of case -where intervening rights are affected, it can not operate as against creditors in favor of one who, as president of a corporation and without the consent of the corporation or the directory, voluntarily places himself in a position where if the corporation remains solvent th.e claims are paid, and if insolvent he comes in with a lien over the creditors who have been confiding in the proper management of a corporation of which Harper was the president and owner of four-fifths of the stock. This case is unlike that of Ketchum v. Duncan, reported in 96 U. S., 659. In that case William *652Duncan, of the firm of Duncan, Sherman & Co., notified the company owning these coupons that they would purchase on their own account sterling coupons, payable in-London. The firm also telegraphed to the Bank of Mobile and to the Union Bank of London to purchase the-coupons thus presented, for them, charging them with the amount and transmitting the coupons uncanceled. This was done. The railway company had no funds to meet the coupons. The banks were repaid by Sherman & Co. the amount advanced for the coupons, and it never, says the court, was intended by the firm of Sherman & Co. that this should be regarded as a payment by the company of its coupons; and yet, in that case, four of the judges dissented from the majority opinion. The doctrine announced in the case of Duncomb v. Railroad Co., 84 N. Y., 190, to which we have been referred, where the president of the railway company received as a collateral' the bonds of the company to secure a debt honestly due him, we regard as sound; but the difference in the facts of that case and the one before us is so manifest that the de-cisión of the one case can in nowise control.the decision in the other.
The vaults of the Fidelity National Bank were open to Harper. In that bank was kept the accounts of the Swift’s Iron and Steel Works and the large amount of currency, evidenced by the receiver’s memoranda, drawn out by the corporation, may have found its way to the Third National Bank, as before stated, in payment of these coupons or to reimburse Harper what sums he had previously advanced for the corporation. Harper must have withdrawn this money without a check or an entry on the books of the Fidelity Bank; and, with a credit on *653the books of the bank of near one hundred and fifty thousand dollai’s in favor of the Kentucky corporation, the chanceller is told that this is merely fictitious, and if he will go to the drawers of the bank he will find the Steel W"orks, as is evidenced by memoranda, is indebted to the bank in a sum exceeding two hundred thousand dollars.
Harper, with the management of that bank under his control, ought not to be heard to say that the credit given the Iron and Steel Works on its books was fictitious, but this court would assume, as the chancellor below did, that this money paid was the money of the corporation and not Harper’s. Besides, Matthews, the treasurer of the corporation, in speaking of the payment by Harper, says, that he knows of no money having been furnished by the corporation directly to pay these coupons; and what he means by the expression is difficult to determine, and we think it evident there is an absence of all such equity in Harper’s claim as would place him in advance of any creditor of the corporation, or that would authorize the chancellor to allow it as against the corporation.
- There is another appeal, on this record in which the creditors are complaining, or the corporation, of the act of the chancellor in ordering a resale of this corporate property to satisfy one of the purchase money notes. The property of the corporation had been sold during the litigation, and the order of resale seems to have been made by consent. We see no reason why the chancellor could not resell the property. It left the securities in the purchase money bonds liable for any deficit, and it is the constant practice of courts of chancery to resell where the purchaser fails to pay.
*654There is a second appeal filed in this case in August,. 1891, from a judgment refusing to allow two lists of coupons, amounting to eight thousand dollars, to the assignee of Harper, the controversy being between, the wife of Harper, the assignee of the Iron Works, and the appellant, Lloyd, as trustee of Harper. The same evidence-applies in this case as in the first appeal. There is no crossiappeal, but it is evident that Lloyd, as trustee, has no lien over the general creditors, and equally plain he is not entitled to recover on the many checks issued by the Iron Works, payable to its own order and found in his, Harper’s, possession.
The judgment appealed from on the -appeals of August 17, 1891, are both affirmed, -as well as the judgments from which the first appeal is taken. . In other words, the judgments from which all the appeals are taken are affirmed.