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scription). Article 950 of the Code of Com

merce.

As stated above, the trial resulted in a directed verdict for the defendants, the court holding (Wells, J.) the defenses of novation and prescription (the statute of limitations) both made out on the bank's own testimony and the documents. The bank brought the case here on a writ of error. We find it necessary to deal with but two questions:

(1) Was there liability of Mrs. Guerra's heirs or succession under the guaranty of November 26, 1917, on the demand notes of $6,000 and $9,000 signed by the Specialty Shop?

(2) Were the notes declared upon, dated in 1919, before Mrs. Guerra's death, outstanding and enforceable when this suit was brought on July 23, 19239 Otherwise stated, was there novation or payment by the new notes, given after Mrs. Guerra's death?

[5] (1) As noted above, it is alleged and proved that these two notes of $6,000 and $9,000, signed by the Specialty Shop only, were renewed by the Specialty Shop from time to time, and interest paid thereon up to January 31, 1921.

We think it plain that, when this suit was filed, there was no liability of the conjugal partnership under this instrument. Construing the instrument as a whole, and in the light of the conduct of the parties and of the pertinent evidence (28 C. J. 93, 934), the agreement is plainly a guaranty by Guerra of a credit extended by the bank to the Specialty Shop. The parties obviously contemplated that the Specialty Shop should be, as it was, managed by Belaval and others than Guerra; Guerra being absent from time to time (and apparently much of the time) in the United States. In their testimony, the bank officials referred to this instrument as a "guaranty."

[6] The bank's contention that its acts, in extending beyond the two-year period, on the Specialty Shop's request, the demand notes taken by it, did not affect Guerra's liability, is grounded on the provision in the second paragraph of the instrument (quoted above), to the effect that signature by the Specialty Shop only should constitute the Specialty Shop and Guerra joint debtors. But, properly analyzed, this is but a provision for business and procedural convenience; it obviated the necessity of getting Guerra's signature on the notes, and undoubtedly authorized suit against him as a joint debtor, on any obligations of the Specialty Shop, given and accepted within the terms of the guaranty. But it did not change the essential

nature of the agreement into a practically unlimited joint contract by Guerra and the Specialty Shop. It left unaffected the vital provision-to the effect that the term of the contemplated notes shall not exceed the period of two years from November 23, 1917, "which date is fixed for the final liquidation of the credit."

No effect whatever would be given to this plain and fundamental provision if we adopted the contention of the bank, that this instrument authorized it to advance the full amount of $15,000 to the Specialty Shop on demand notes, signed by the Specialty Shop only, and then to permit the Specialty Shop to renew such notes from time to time and pay the interest thereon up to January 31, 1921 (more than three years) all without notice to Guerra, and without obtaining any agreement for extension of the guaranty, as expressly provided for in the instrument. [7, 8] It is familiar and elementary law that guaranties cannot be extended beyond the plain import of the terms thereof without the express assent of the guarantor and that such instruments are to be given a fairly strict construction. 28 C. J. p. 9351; Lascelles v. Clark, 204 Mass. 362, 373, 90 Ν. Ε. 875.

In our view, without resorting to the rule of strict construction, we think that there was no liability of the conjugal partnership under this instrument when these suits were brought. Civil Code, § 1752, provides:

"The extension granted to the debtor by the creditor, without the consent of the surety, extinguishes the security." [9] (2) Coming now to the transaction of the $44,500 note of July 20, 1920, it is clear, on the documents and on the bank's own evidence, that this note was given and taken as a payment or novation of the earlier notes sued upon. Some of the old notes covered by this new note were time notes, of which some or all had had one or more extensions; at least one old note carried interest at 9 per cent., while the new note was at 8 per cent.; some of them were notes with collateral; some of them were notes authorizing the holder to appear in any court of Porto Rico and confess judgment, as did the new note of $44,500; one was a joint and several note of Belaval and Torres, running to the bank; another was a like note of the same promisors, running to the Specialty Shop, and indorsed in blank by the Shop; all of them were given up and stamped by the bank as paid. Corresponding entries were made in the bank's books. The new note for $44,500, of course, was a negotiable instrument

1

21 F.(2d) 56

transferable at the will of the holder to any
third party. In fact, it was accompanied
by an oral agreement that it should be paid
at the rate of $1,000 a week, and five pay-
ments were actually made thereon. On the
new note the bank received and credited par-
tial payments; it then brought suit and ob-
tained judgment on the unpaid balance, and
on execution, collected part of that judg-
ment.

We see no escape from the conclusion of
the court below (Wells, J.) that this trans-
action must be held a novation.

The Porto Rican statute law relative to novation is as follows:

"Civil Code, § 1172. In order that an obligation may be extinguished by another which substitutes it, it is necessary that it should be so expressly declared, or that the old and new be incompatible in all points.

"Sec. 1173. Novation, consisting in the substitution of a debtor in the place of the original one, may be made without the knowledge of the latter, but not without the consent of the creditor."

Under these provisions, the knowledge and assent of the original debtor is not required. Compare 29 Cyc. pp. 1130, 1132; Stowell v. Gram, 184 Mass. 562, 563, 69 N. E. 342. The new obligation was entirely incompatible with the old obligations, and was so treated by the parties. Manrique v. Mangual, 28 Porto Rico, 35, 38; 3 Williston, Contracts, §§ 1865-1875; In re Ransford (C. C. A.) 194 F. 658, 662.

The result is the same, whether the extinguishment of the old obligations by the $44,500 note be called a novation, a merger or payment. 3 Williston, Contracts, §§ 1918, 1920 a, et seq. The essence is that the old obligations were thereby ended, and all the rights of the bank were included in the new note, which, in turn, was merged into the judgment against Guerra and the Specialty Shop; on this judgment, execution issued, and was partially satisfied, and proceedings begun to enforce payment of the balance. Yet, on the plaintiff's theory, it may still resort to all the original parties liable. Guerra, Torres, Belaval, Acuna, the Specialty Shop, and the succession or heirs of Mrs. Guerra, obtaining a new judgment against each, in accordance with the original alleged obligation of each. It is difficult to imagine a theory more productive of business chaos and of confusion of legal rights and remedies. We cannot adopt it.

While not necessary to the conclusions we have reached, we note that the evidence of the transactions between the bank and the

various parties in interest is extraordinarily confused and confusing. We are unable to reconcile the notes pleaded as signed or guaranteed by Guerra prior to his wife's death with the evidence offered, much less with the actual notes, copies of most of which appear in one or both records. It appears from the testimony of the bank's vice president that the bank had "a number of different kinds of loans to the Specialty Shop, in addition to having those loans which were guaranteed by Mr. Guerra, or guaranteed by the escritura given by Mr. Guerra." "Escritura" refers to the document of November 26, 1917. "We advanced them money against cars, automobile tires, and as a car was sold they were supposed to give us back the amount we advanced against that particular automobile. The same way with tires. Now, when the question came of paying the money to pay off another obligation, we applied simply any amount of money that we could succeed in getting out of it, which amount of money was applied as suggested by the Specialty Shop."

This course of business furnishes a partial explanation of the confusion and inconsistencies in the pleadings and in the evidence. But, while we do not put our decision on that ground, it is at least doubtful whether the bank proved any such amount of indebtedness accruing prior to Mrs. Guerra's death as it claimed in its pleadings, and as, in No. 1871, was found by the court below.

The final paragraph in the brief in No. 2112 of the bank's able and learned counsel is a further illustration of the conflict and confusion in these records:

"It is submitted that a proper determination of these cases, No. 1871 and No. 2112, would be to affirm the decree in No. 1871, modified, so as to provide that out of the community property now registered in the names of the defendants by title of intestate inheritance the plaintiff be allowed to collect up to the amount of $35,275.64, with interest on $24,700 thereof from October 21, 1920, and with interest on $10,575.64 thereof from January 31, 1921, and that the judgment in No. 2112 be reversed, and a new trial directed in accordance with the principles of law laid down by the decision of this court in No. 1871. The effect of this will be that there will never be a new trial in No. 2112, as it will be rendered unnecessary."

In No. 2112, the judgment of the District Court is affirmed, with costs to the defendants in error.

In No. 1871, the decree of the District Court is reversed, and it is decreed that the

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Rulings on motion to remand, to strike intervening petitions, and to transfer to law side of court being reviewable on proper objections and exceptions by writ of error or appeal, writ of mandamus, an extraordinary remedy, available where ordinary remedies fail, is not available as a substitute remedy.

2. Mandamus 154(1)-Petition for leave to file petition for mandamus should be presented.

The orderly course of presenting a petition for mandamus is to present a petition for leave to file petition for mandamus.

Original petition by Harriett Hosey and others for alternative writ of mandamus to Franklin E. Kennamer. Petition denied.

J. M. Springer, Joe W. Simpson, Joseph A. Gill, E. G. Wilson, and Wm. H. Thompson, all of Tulsa, Okl., for petitioners.

Before WALTER H. SANBORN and BOOTH, Circuit Judges.

WALTER H. SANBORN, Circuit Judge. The petitioners in this case present to this court their petition for an alternative writ of mandamus to Hon. Franklin E. Kennamer, United States District Judge for the Northern District of Oklahoma, to require him to show cause why he should not remand this case to the district court of Creek county, Okl., in which court it was commenced, tried to the court and jury, the verdict set aside, and thereafter the case transferred to the United States District Court for the Northern District of Oklahoma by an order of that state court, upon a petition of the United States and alleged restricted Indians, pursuant to section 3 of the Act of Congress approved April 12, 1926, part 1, 44 Stat. 239, c. 115, amending section 9 of the Act of May 27, 1908, 35 Stat. 312, 315. After that transfer was made, the petitioners, plaintiffs, made a motion in the federal court for the Northern district of Oklahoma, before Judge Kennamer to remand this case to the state court, which was opposed by counsel for oth

er parties in the action. The question was argued by counsel, and deliberately considered by Judge Kennamer, who denied the motion.

In their petition for the writ petitioners now seek (1) to have this court command Judge Kennamer to reverse his decision on the motion to remand and to return the case to the state court; (2) if this court is of the opinion that the federal court below had jurisdiction of the subject-matter of this action, then that it command Judge Kennamer to strike out all the intervening petitions in this case, which on motions and after hearings he refused to strike out; and (3) if this court is of opinion that the interveners are proper and necessary parties, that it order Judge Kennamer to transfer this case from the equity to the law side of the court below, although he has considered the question whether this case should be tried at law or in equity, and has decided and directed that it be tried in equity. Counsel for the petitioners have filed a written argument and cited authorities to sustain their petition. These have been carefully considered.

(1) But the orders and rulings of Judge Kennamer, which petitioners seek to challenge and reverse by means of this petition, are reviewable upon proper objections and exceptions by writ of error or appeal, and the writ of mandamus is an extraordinary remedy available where ordinary remedies fail. Neither the writ nor an application for it is available as a substitute for a writ of error or an appeal. United States, ex rel. Harless v. Judges of U. S. Court of Appeals of Indian Territory (C. C. A.) 85 F. 177, 180; Henderson Tire & Rubber Co. v. Reeves and Otis, Judges (C. C. A.) 14 F. (2d) 903, 906.

Judge Kennamer had the lawful power and jurisdiction and the imperative duty was imposed upon him to hear and decide the issues involved in the rulings and orders of which the petitioners complain. He discharged that duty. When a question has been decided by the officer or person to whose judgment or discretion the law has intrusted its determination, the writ of mandamus may not issue to review or reverse that decision or to compel another. It may issue to command judicial officers to hear and to decide a question within their jurisdiction, but courts have no power by writ of mandamus to direct such officers how they shall decide such a question, or in whose favor they shall render their judgment, because such action would result in the substitution of the judgment and opinion of the commanding court for that of the

21 F.(2d) 65

judicial officer or officers to whose judgment deductible under Revenue Act 1918, § 234a (5), and discretion the law intrusted the decision being Comp. St. § 6336%pp, as a debt ascer

of the issue. For the same reason it cannot be invoked to compel a court or a judicial officer to reverse a decision already rendered, to correct an erroneous conclusion, or to render another decision. Kimberlin v. Commission to Five Civilized Tribes (C. C. A.) 104 F. 653, 655; Henderson Tire & Rubber Co. v. Reeves & Otis, Judges (C. C. A.) 14 F. (2d) 903, 906; Minnesota Moline Plow Co. v. Dowagiac Mfg. Co. (C. C. A.) 126 F. 746, 748; Brictson Mfg. Co. v. Munger, Judge (C. C. A.) 20 F. (2d) 793, opinion filed June 13, 1927.

[2] The orderly course of presenting a peti

tained to be worthless and charged off within

the taxable year of 1920, where it was not charged off and could not be, since the lease remained in force and bound the company to pay a minimum royalty each year, whether it operated or not, against which the notes were a credit.

At Law. Action by the United States and Robert H. Lucas, Collector of Internal Revenue for the District of Kentucky, against the Royal Indemnity Company. Judgment for plaintiffs.

Thos. J. Sparks, U. S. Atty., of Greenville, Ky., A. W. Gregg, Gen. Counsel, Bureau of Internal Revenue, and C. C. McCor

tion for mandamus to this court is to present mick, Atty. Bureau of Internal Revenue,

a petition to the court for leave to file the petition for a mandamus. We have treated the brief of counsel and their authorities as a petition for leave to file this petition for a writ of mandamus. The request to file the latter petition must be and it is denied upon the grounds above stated.

UNITED STATES et al. v. ROYAL IN-
DEMNITY CO.

both of Washington, D. C., for plaintiffs. Beckham, Hamilton & Beckham and Woodward, Warfield & Hobson, all of Louisville, Ky., for defendant.

DAWSON, District Judge. [1] The plaintiffs vigorously press their contention that their motion to strike from the defendant's answer paragraphs 5, 6, 7, 8, 9, and 10, and their demurrer to defendant's answer, should have been sustained; but after fur

District Court, W. D. Kentucky, at Louisville. ther consideration I am content to let the orMay 25, 1927.

1. Internal revenue 7 (19) -Corporation held not entitled to deduct notes receivable from income as loss sustained during year 1920 (Revenue Act 1918, § 234a [4], being Comp. St. § 63361/8pp).

Plaintiff coal company, under the terms of a lease made in 1917, in the next two years paid lessors $20,000 advance royalties, for which lessors gave 'it notes, under agreement that they were payable only out of royalties earned. The lease was abandoned prior to 1920, though not canceled. No royalties were ever earned. Held, that the fact that, as the result of a suit brought by lessors in 1920, the notes were then indorsed as nonnegotiable, did not make them a loss sustained during the taxable year 1920, deductible from income of that year, under Revenue Act 1918, § 234a (4), being Comp. St. § 6336%pp.

2. Internal revenue 7(19)-Corporation could not deduct notes given for lease royalties as worthless debt, where it was required to pay royalty, whether it operated lease or not (Revenue Act 1918, § 234a [5], being Comp. St. § 6336/spp).

der, overruling the motion to strike and the demurrer, heretofore made, stand. Therefore the sole question to be determined in this case is whether the taxpayer, Long Branch Coal Company, was entitled to deduct from its income for the year 1920 the $20,000 which it paid in 1918 and 1919 to Henry and Myrtle Porter, lessors, as advance royalties on a coal lease executed on December 17, 1917, by the Porters to Miller and Arrowood, and by them transferred to the taxpayer, Long Branch Coal Company.

Simultaneously with the execution of the lease an agreement was executed between the parties to the lease, by the terms of which the lessees were to pay to the lessors $20,000, as advance royalties for the property covered by the lease, it being provided: "That said $20,000 shall be repaid to second parties by the first parties out of the royalties of the parties of the first part as the same shall accrue and mature from time to time. The parties of the first part agree to transfer and assign said royalties up to $20,000 to the parties of the second part as soon as the said $20,000 is advanced and pro rata, if any part thereof shall be ad

Plaintiff coal company, under the terms of lease made in 1917, in the next two years paid lessors $20,000 advance royalties, for which lessors gave it notes under agreement that they were payable only out of royalties earned. The lease was abandoned prior to 1920, though not canceled, and no royalties were ever earned. Held, that the fact that, as a result of a suit brought by lessors in 1920, the notes were then The lease provided that the lessees should indorsed as nonnegotiable did not make them have a period of two years and six months

21 F. (2d)-5

vanced."

next ensuing after the date of the lease within which to begin operations on the leased property, and further provided for the payment of a royalty of 9 cents per ton upon 25,000 tons of coal for the first year following the 21/2-year preparation period, a royalty of 9 cents per ton on a minimum of 60,000 tons of coal for the second year, and on a minimum of 100,000 tons for each subsequent year. Thus, under this lease there was a minimum royalty due for the year ending June 19, 1921, of $2,250, of $5,400 for the year ending June 19, 1922, and $9,000 for each subsequent year. The $20,000, agreed to be paid as advance royalties, were paid to the lessors during the years 1918 and 1919.

In February, 1919, to meet some objection of the Blue Sky Department of the state of Minnesota, under the laws of which state the Long Branch Coal Company was organized, it was arranged for the Porters to evidence the advance royalty transaction by four noninterest-bearing promissory notes, the first for $2,250, due June 19, 1921; the second for $5,400, due June 19, 1922; the third for $9,000, due June 19, 1923; and the fourth for $3,350, due June 19, 1924-these notes being secured by a mortgage of even date on the leased premises. It will be observed that these notes fell due on the identical dates upon which the minimum royalties fixed under the lease accrued, and, with the exception of the last note, were for the identical amounts of the minimum royalties for the corresponding years. The mortgage specifically refers to the fact that the lease secures to the Porters an amount in royalties sufficient to pay and discharge each of the notes as they shall become due and payable, and then provides: And the payment of said notes as they shall become due as herein provided by the second party (Long Branch Coal Company), its successors and assigns, shall be a payment of the royalty provided for in said lease, except as to the last note, and its payment shall be a credit on the royalties due and payable for that year."

In November, 1920, the Porters brought a suit in equity in the circuit court of Floyd county, Ky., for the purpose of enjoining the negotiation of these notes, and after a temporary injunction had been granted, and in the same calendar year, the litigation was settled by the Long Branch Coal Company making the notes nonnegotiable, by an indorsement thereon to that effect. The defendant claims that as a result of this suit,

and the settlement thereof in 1920, coupled with the alleged fact that in that year it was certainly ascertained that the lease could never be operated by the Long Branch Coal Company, so that it might recover, through royalties earned, the $20,000, the loss of that amount was sustained in 1920, and should have been deducted from its income in that year for taxation purposes.

Authority for the deduction claimed by the defendant must be found in section 234 of the Revenue Act of 1918. The applicable parts of that section read as follows:

"Sec. 234 (a). That in computing the net income of a corporation subject to the tax imposed by section 230 there shall be allowed as deductions:

"(1) All the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including a reasonable allowance for salaries or other compensation for personal services actually rendered, and including rentals or other payments required to be made as a condition to the continued use or possession of property to which the corporation has not taken or is not taking title, or in which it has no equity.

"(4) Losses sustained during the taxable year and not compensated for by insurance or otherwise.

"(5) Debts ascertained to be worthless and charged off within the taxable year." Comp. St. § 6336/spp.

It is apparent from the record that the deduction cannot be claimed under subdivision (1), as the record conclusively shows that this $20,000 was not an expense paid or incurred in the taxable year 1920. It was incurred as the result of the contract made in December, 1917, and according to the proof was actually paid out in the years 1918 and 1919.

I do not think the deduction can be claimed under subdivision (4), as a loss sustained during the taxable year. As I view the case, the notes and mortgage, the litigation in the Floyd circuit court, and the settlement thereof by destroying the negotiability of the notes, must all be disregarded in determining if the loss of this $20,000 was sustained in the taxable year 1920. It is apparent from the record that there was no intention upon the part of the parties, by the execution of the notes and the mortgage, in reality to change the method of repayment to the lessees of the $20,000 advance royalties. It is clear that it was thoroughly understood that the Porters were

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