(dissenting).

As to the claimants other than Dave C. Yegen I adhere to the opinion heretofore rendered herein. 35 F.(2d) 933 . I am satisfied that the claimants have had their day in court in the Martin Case and in the Frantz Case. In both these eases the judgment of the trial court was adverse to the rights of the claimants upon the merits. In the Martin Case upon appeal this judgment, on the merits, was affirmed. It is true that the Supreme Court of Montana in affirming the judgment based its conclusion largely upon the proposition that there was no express' promise made on behalf of the claimants on the bond, but judgment being on the merits is conclusive as to any other right the claimants had, and whether right or wrong is binding upon the parties. The decisions of the court upon which the opinion of Judge Dietrich is based are all to the effect that the materialmen and laborers have an action upon the bond. The only cases which I have found in which the suit is brought by a municipal corporation or a publie corporation are two eases in Missouri where the bond expressly provided that the suit could be brought by the public corporation on behalf of the materialmen and laborers. City of St. Louis v. Ton Phul, 133 Mo. 561 , 34 S. W. 843 , 54 Am. St. Rep. 695 ; St. Louis Public Schools v. Woods, 77 Mo. 197 . In State v. Royal Indemnity Co., 99 W. Va. 277 , 128 S. E. 439 , 43 A. L. R. 552, it is held that under the West Virginia Code the laborers and materialmen could not sue directly on the bond at law unless the bond was for their sole benefit and that otherwise their remedy upon the bond was in equity. The Supreme Court of Montana in Gary Hay & Grain Co. v. Carlson, 79 Mont. 111 , 255 P. 722, 725 , in part overruled the decision in the Martin Case. That court there held that the materialmen and laborers had a right of action upon the bond and contract where there was an express agreement in the contract on the part of the contractor to pay laborers and materialmen. So far as it did not overrule the Martin Case it was sustained upon the theory that the laborers and materialmen had a right to recover on the bond only where there was an express promise in the "contract that there was no such express promise in the contract now sued upon in the ease at bar. The court there said:

The court then proceeded to analyze the cases holding that materialmen and laborers would have a direct action upon the bond, stating:

It is clear from the consideration of this later opinion of the Supreme Court of Montana (Gary Hay & Grain Co. v. Carlson, supra) that if the court were of the opinion that the claims of the materialmen and laborers were covered by the contract and bond in question, it would have held in, the Martin Case, as they did subsequently hold in the Gary Hay & Grain Company Case, that such materialmen and laborers could recover in an aetion brought by them upon the bond. I cannot see that there is anything in the distinction between sections 7472 and 9067 of the Revised Code of Montana which justifies the conclusion that the action brought by “a person with whom or in whose name a contract is made for the benefit of another” must proseeute the aetion on behalf of the beneficiaries of the “express trust.” We are not without authority on this point. The Code of Montana is adopted from the Code of California. The provisions of section 9067 of the Revised Code of Montana are found in sections 367 and 369 of the Code of Civil Procedure of California, which read as follows:

It was held by the Supreme Court of California that section 369 was merely permissive and that the action might be brought in the name of either the beneficiary or the trustee in Anglo-Califomian Bank v. Cerf, 147 Cal. 384 , 81 P. 1077, 1079 . That action is brought by the beneficiary of the express trust. It was contended that the action should have been brought by the trustee, Steinhart, who was the grantee in the deed which was intended as a. mortgage. The court there said:

See, also, to the same effect, Horseshoe Pier Amusement Co. v. Sibley, 157 Cal. 442 , 108 P. 308 ; Allen v. Chatfield, 34 Cal. App. 785, 787 , 168 P. 1149 ; Ellis v. Harrison, 104 Mo. 270 , 16 S. W. 198 .

If this rule is applied to the ease at bar,' it- would follow that under section 9067 of the Revised Code of Montana the action upon the bond in question could be brought either by the plaintiff herein or by the materialmen and laborers as beneficiaries under the promise contained in the contract and bond. It should be observed also that section 7472 of the Revised Code of Montana, which is identical with section 1559 of the Civil Code of California, is merely a codification of the common law. In 6 Cal. Jur. it is said:

If the materialmen and laborers as beneficiaries under the bond could litigate their rights either by an action brought in their own name as plaintiffs or in an action brought by the Cove irrigation district as trustee for them, the judgment in either case would be conclusive upon their rights. If there was no “intent clearly manifested” to pay these third persons, they could not recover upon the bond regardless of whether the action was brought by them or on their behalf. 6 Cal. Jur. 280, supra. As I understand it, what the Supreme Court of Montana determined in the Martin Case was that there was no right of recovery upon the bond because there was nothing in the contract or bond “to indicate that it was intended expressly, or otherwise, for the protection of third parties.” Martin v. American Surety Co., 74 Mont. 43 , 238 P. 877, 878 . That court subsequently overruled the Martin Case so far as its interpretation of j;he bond was concerned, but it still required such a promise in the contract as a consideration for the otherwise sufficient promise in the bond. Gary Hay & Grain Co. v. Carlson, supra. It follows that under the law of Montana, the place of contract, as stated by its courts, there can be no- recovery by the claimant upon the bond in question either directly or through the intervention of the Cove irrigation district as “trustee of an express trust”

*965 With reference to the claim of Dave C. Yegen, the Circuit Court of Appeals in the Eighth Circuit, in Federal Surety Co. v. Minneapolis Steel & Mach. Co., 17 F.(2d) 242 ; Id., 34 F.(2d) 270 , had under consideration the rights of materialmen and laborers against a surety upon a bond in the exact form of bond involved in the ease at bar. It is held in these decisions that the material-men had no right of action upon the bond under the law of Montana for the reason that the contract contained no direct promise on the part of the contractor! to pay the persons furnishing the labor and material for the work. In so far as this determination is based on the statutory law of Montana, the decisions of the Supreme Court of that state are binding upon the federal courts. It is held by the Circuit Court of Appeals of the Eighth Circuit in the first appeal [ 17 F.(2d) 242 ] and in the second appeal [ 34 F.(2d) 270 ] that the materialmen and laborers could not recover on the bond for the reason that under the law of Montana, as established by the decisions of the Supreme Court of that state construing its legislation, the promise in the bond was without consideration because there is no direct promise in the contract. That court cited the decision of this court in McNaught v. Hoffman, 274 F. 918, 920 , holding that the decisions of the Montana Supreme Court as to the proper construction of section 7472, Rev. Codes, was binding on this court. It was said by this court in McNaught v. Hoffman, supra, that: “It may be conceded that the rule so established in Montana as to the rights of third persons for whose benefit contracts have been made is opposed to the weight of modern authority. 6 R. C. L. 884; 13 C. J. 705. But it rests upon the construction of a state statute, and it is binding upon this court.”

It follows from these decisions that the materialmen and laborers cannot sue upon a contract in question because there was no direct promise made therein for their benefit, and they cannot sue upon the promise in the bond for the reason that such bond is without consideration. It has thus been determined by the Supreme Court of the State of Montana that the promise in the bond in the case at bar so far as it is a direct promise to pay the laborers and materialmen on the job is without consideration for the reason that in the contract there is no direct promise made by the contractor to the Cove irrigation district to pay for such labor, and material.