Joining in the one suit the three surety companies, appellant here, plaintiff below, brought this suit to recover on six bonds, four of them performance, and two of them fidelity, bonds.

The four performance bonds, executed by Cecil Gardner as principal and Maryland Casualty Company as surety, insured the performance by Gardner of two contracts, one to supply gas to the Sylacauga, Alabama Housing Authority the other to supply it to the Childersburg, Alabama Authority.

Of the two fidelity bonds, one issued by the Associated Indemnity Company, insured the fidelity of described but not named employees of the Sylacauga Housing Authority, the other, issued by the U. S. Fidelity & Guaranty Company, insured the fidelity of described but not named employees of the Childersburg Housing Authority.

The claim of the suit upon the performance bonds was that the condition of the bonds was breached by the principal therein in this, that he submitted to one James A. Bushnell, as manager of the two housing projects, claims for gas which was not in fact delivered, and received payments in excess of the true amounts due him for gas actually delivered to the projects.

The claim as to the fidelity bonds was that James A. Bushnell, as manager of the two projects, had obtained the payment of various fictitious and fraudulent claims by said Gardner for gas which was pretended to have been, but was not in fact furnished to the project.

All the defendants filed motions to dismiss for failure of the complaint to state a claim, and, these motions denied, they filed full answers denying liability.

Upon the issues thus joined, the case was tried to the district judge without a jury on the evidence offered by plaintiff as shown by the colloquy between the court and plaintiff's counsel, Mr. Hogue, as set out in the note below.1

On the record thus made, the district judge filed findings of fact and conclusions of law.2 One of these conclusions being that the judgments against Gardner and Bushnell were not under Alabama law admissible against, or in any way binding upon, the sureties, either as conclusive or prima facie proof of liability. Another was that if they were admissible in evidence, upon this record they were insufficient to support a judgment against the sureties. Based on these findings and conclusions, judgment was entered for defendants.

Appealing from the judgment, plaintiff filed a motion in the District Court under Fed.Rules Civ.Proc. rule 75(h), 28 U.S.C. A., for correction of the record on appeal to require the Clerk of the District Court to send up as part of the record the transcript of the testimony and exhibits offered in evidence in case No. 5830, and an order was entered granting the motion and requiring the transcript to be sent up.

After the record as thus constituted had reached this court, appellees, on the basis of the record showing that this evidence, had not been offered in the trial, assailed as improvidently and wrongly entered the order sending up the transcript of evidence as part of the record in this case, and moved the district court to rescind its former order.

The District Court sustained this motion and ordered these matters stricken from the record, and now it is appellant which assails the order of the District Court as improvident and wrong, and insists that we must disregard it, as entered without authority, or vacate and set it aside and determine the dispute for ourselves in favor of considering the transcript of the evidence in cause No. 5830 as a part of the record.

We cannot agree with this view. We are, on the contrary, convinced that the first order of the District Court was improvidently entered. The record of the trial in this case, including particularly the colloquy set out in Note 1, supra, makes it plain that the transcript of the evidence in the earlier case, No. 5830, was not offered in evidence in this case and that it is not, and cannot be, considered as a part of the record on this appeal.

With this preliminary matter disposed of, there remains for our determination only whether, upon the record actually made below and actually considered by the District Judge in making his findings and conclusions and entering his judgment, his judgment was rightly entered for the reasons which he gave or other good and sufficient reasons.

A careful consideration of the record and of the law of Alabama convinces us that the judgment appealed from was correctly entered for the reasons stated below, (1) that under the settled law of Alabama the judgments were not admissible in evidence; and (2) that if they were admissible, they were, without more, insufficient to furnish a basis for a judgment against the sureties.

In so holding, we have not failed to give full consideration to appellant's claim that Rule 43(a) and our cases of Lake County, for Use of Baxley v. Massachusetts Bonding & Insurance Co., 5 Cir., 75 F.2d 6; Id., 5 Cir., 84 F.2d 115; and Scholtz, for Use of Barnett Nat. Bank v. Hartford Accident & Indemnity Co., 5 Cir., 88 F.2d 184, are controlling here, both as to the admissibility and the effects of the judgments.

In the light of the Alabama law as the decisions3 of the Supreme Court of that state declare it, however, we think it clear that what appellant contends for here as to the judgments is not really a matter of procedure. It is a matter of substance. It is not whether the judgments are admissible in evidence, but what is their effect when admitted. This being so, the question as to their admissibility and effect is a matter of substantive law and is controlled by the law as decided in Alabama.

This is made even more clear by a consideration of the language used in Firemen's Insurance Co. v. McMillan, 29 Ala. 147, at pages 167-168 in comparison with that used by us in the Lake County case, supra. In the Firemen's Insurance case, after discussing and declining to follow decisions in other jurisdictions, the court went on to say:

"The true rule is, that a recovery against the principal cannot be used as evidence to charge the surety, except in cases where the contract of the surety can be construed into an undertaking to be bound by the result of legal proceedings against the principal; and we apprehend, when the judgment is binding on the surety at all, it is conclusive, and not merely prima facie evidence. There is, in our opinion, no middle ground. [McClure v. Colclough] 5 Ala. [65] 69, per Goldthwaite, J. The surety is either a party, or privy, and bound by the judgment; or a stranger, and not bound. In the case before us, he falls within the second category, and the judgment is no evidence to charge him."

In the Lake County case, we held not that the judgments bound the sureties as parties or privies, but that they were admissible as prima facie evidence, a position, which, as shown by the language quoted above, the Alabama courts completely reject.

This being the state of the Alabama law, it is quite plain that the District Judge was right in holding that the judgments were without effect against the sureties.

Finally, however, it is equally plain from the record that if they had been admitted they were not sufficient in the state of the evidence to support the judgment sought, and the District Judge was right in saying that the case failed for want of the necessary proof that the condition of the bonds sued on had been breached and the extent and consequences thereof.

Since these considerations are sufficient to affirm the judgment, we pass without discussion the contention of Maryland Casualty Company that, since its bonds were performance bonds, the frauds charged against Gardner were not within their coverage, other than to say that, considered either as a part of the whole defense to plaintiff's claim or as an independent defense in itself, it certainly cannot be brushed aside as wholly wanting in merit. Indeed, it tends strongly to support the other reasons given above for affirmance.

Affirmed.