Cove Irr. Dist. v. American Surety Co. of New York

(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…

On September 28, 1922, the appellant, Cove irrigation district, a Montana public corporation, entered into a contract with Schlueter Brothers, called the contractor, by the terms of which the contractor was to do the work and furnish the materials necessary for certain improvements in the appellant’s irrigation system. The contract provided that, “in consideration of the contractor doing such work and furnishing such materials and paying for the labor performed and the materials furnished and used therefor,” bonds of the district would be delivered to the contractor from time to time in payment for the work as it progressed. Pursuant to a requirement that the contractor furnish a surety bond in the sum of $100,000 “conditioned upon the faithful performance of the contract,” such bond was furnished on October 7, 1922, with the contractor as principal and the appellee herein as surety. In the bond reference was made to the contract and a copy- thereof was attached. The condition of the bond was that if the principal should indemnify the obligee against any loss or damage for its failure faithfully to perform the contrbet and to complete the work within the time specified, and should…