EDWARD P. MURPHY, District Judge.
Defendant obtained a loan from the Bank of America, National Trust and Savings Association, fifty per cent of which was guaranteed by the Veterans Administration pursuant to Title III of the Servicemen's Readjustment Act of 1944, 58 Stat. 291, as amended, 38 U.S. C.A. § 694 (1952). Defendant defaulted in payment of the loan, and the Veterans Administration thereupon paid the guaranteed portion of the outstanding loan.
Defendant has moved for summary judgment on two grounds: (1) that settlement of the principal creditor's claim in the state court operated to extinguish the claim of the United States for the amount it had paid as guarantor of the loan; and (2) equitable estoppel. A third ground, res judicata, has been withdrawn by defendant.
The case of United States v Henderson, D.C.S.D.Iowa 1953, 121 F.Supp. 343 is indistinguishable from the instant case and I heartily endorse the reasoning in the Henderson case. Accordingly, I hold that the principal creditor's settlement of the state court action did not extinguish defendant's debt to the United States which was created when the United States made payment to the principal creditor pursuant to its guarantee.
Defendant's claim of equitable estoppel is based on a letter from the Veterans Administration reading as follows:
This letter makes it abundantly clear that there are two independent debts — one owing to the principal creditor and the other owing to the United States. There is no estoppel here.
Defendant's motion for summary judgment is denied.