Martha Maytag Dannerbeck v. Oscar C. Palmer, Sr., Al A. Marth, Trustee in Bankruptcyof Pete Horner Excavating, Inc.

Al A. Marth, Trustee in Bankruptcy of Pete Horner Excavating, Inc. (Hor-ner Excavating) appeals from a declaratory judgment in this diversity action in favor of Martha Maytag Dannerbeck and Oscar C. and Corinne E. Palmer, husband and wife. We affirm.

Initially, two actions for declaratory relief were filed, one by United States Fidelity and Guaranty Company (USF&G) and the other by National Union Fire Insurance Company of Pittsburgh, Pennsylvania (National Union). These plaintiffs, as sureties for Horner Excavating, a bankrupt contractor which had defaulted on city street contracts, sought a declaratory judgment that plaintiffs were entitled to receive the proceeds of six city improvement district contracts to the extent they had paid to complete the contracts under performance bonds and had paid claims of laborers and materialmen under payment bonds.

The plaintiff surety companies named, as defendants, Oscar Palmer and Mrs. Palmer, the Arizona municipalities of Phoenix and Prescott, and Marth, the contractor’s Trustee in Bankruptcy. Palmer had advanced monies to the contractor and claimed the contract proceeds by virtue of assignments. The named municipalities had…