dissenting
I dissent.
The majority today in effect holds that the liability of an Indian tribe to a creditor of its subcontractor may be determined in state court. The opinion holds that the result “will not be usurping legitimate exercise” of tribal court jurisdiction and does not “interfere with tribal self-government.” 149 Ariz. at 529, 720 P.2d at 504. The court reaches this remarkable conclusion by engaging in a magic shadow show which misconstrues the ultimate facts and barely mentions the real issue. The case boils down to a single, simple principle: where both a state and a tribe have an interest in adjudicating a civil matter, strong federal policy in favor of tribal self-government requires the tribal court to determine in the first instance whether it has jurisdiction. National Farmers Union Insurance Co. v. Crow Tribe of Indians, — U.S. -, -, 105 S.Ct. 2447, 2454, 85 L.Ed.2d 818 (1985).
THE FACTS
The majority tells us that this is not a case where non-Indians have “interjected themselves into reservation affairs.” 149 Ariz. at 530, 720 P.2d at 505. It is, the majority says, a case of “the Tribe reaching out outside the confines of the reservation to engage in commercial activity— without the concomitant reaching in of non-Indians.” 149 Ariz. at 531, 720 P.2d at 506. The court has incorrectly characterized the ultimate facts. They are, simply, that a tribal authority, as owner, engaged a tribal enterprise to act as prime contractor for the construction of an Indian housing project in Indian country for Indian use.1 Plaintiff knowingly sold plumbing fixtures to a subcontractor obligated to install them in an Indian project in Indian country. Plaintiff chose to participate in an undertaking involving Indians and an Indian tribe. Plaintiffs conduct arguably indicates quite clearly that it knew what this *534court professes not to know—that ultimate security for payment for material supplied consisted of a job payment bond on which the principal obligor was the Enterprise, a tribal agency.
The majority pretends that the sale of the fixtures from plaintiff to the subcontractor was a simple transaction on open account between non-Indians. (149 Ariz. at 530, 720 P.2d at 505.) Not so. Evidencing plaintiffs knowledge that its plumbing fixtures were to be installed in an Indian project in Indian country are the facts that plaintiff signed lien waivers and entered into both a “Joint Check Agreement” and a “Direct Check Agreement” between it, the subcontractor and the Indian General Contractor, White Mountain Apache Development Enterprise, a tribal agency. Also, in its answers to interrogatories it claimed to have a contract with the Enterprise. While most, if not all, of the fixtures not paid for were sold before execution of these documents, certainly the documents provide some evidence that the plaintiff was aware of the circumstances.
Further, it is safe to assume that a firm which describes itself as a vendor of “wholesale plumbing fixtures” in Pinetop-Lakeside, a metropolis of 2,335 people on the edge of the reservation, would have known very well the destination for $300,-000 worth of fixtures. Certainly, the sale of 300 sinks and toilet bowls is an unusual event in such a town. Nevertheless, lacking evidence, the majority prefers to assume that this was a simple transaction between non-Indians, unaware of any connection with Indian affairs. (149 Ariz. at 531, 720 P.2d at 506.) The majority’s statement that “Smith did not conduct business on the reservation” is gross speculation. The record does not indicate where the sale was made or whether delivery was made to the reservation. The record indicates very little, since the case was decided on motion to dismiss. It does show, however, that a majority of plaintiff’s invoices were submitted directly to the tribal agency and paid directly by it.
Plaintiff chose not to sue the non-Indian subcontractor for those invoices not paid, and, instead, brought the action against the Tribe’s surety and indemnitee. Thus, the Tribe did not “reach out”; this is a case of “reaching in”. Cf. R.J. Williams Co. v. Fort Belknap Housing Authority, 719 F.2d 979, 985 (9th Cir.1983) (fact that contract involved housing to be built on the reservation, to be occupied by reservation members and paid for by an agency representing the tribe established the reservation as the locus of the contract dispute), cert. denied, — U.S. -, 105 S.Ct. 3476, 87 L.Ed.2d 612 (1985).
THE ISSUE
In its lengthy opinion, in which various legal principles appear and disappear like the proverbial pea, the majority only touches upon the real issue when it states that “a preemption analysis ... ultimately amounts to whether Indian self-government is implicated.” 149 Ariz. at 529, 720 P.2d at 504. That, in fact, is all that this case is about. If the majority had applied such a preemption analysis it would have reached the correct result.
Although their sovereignty is not absolute, Indian tribes remain a separate people with the power to make and enforce in their own courts substantive law regulating matters which concern the tribe and occur within its geographical territory. See Williams v. Lee, 358 U.S. 217, 223, 79 S.Ct. 269, 272, 3 L.Ed.2d 251 (1959); R.J. Williams Co. v. Fort Belknap Housing Authority, supra. Tribes have sovereign power to exercise civil jurisdiction over non-Indians “who enter [into] consensual relationships with the tribe or its members, through commercial dealing, contracts, leases, or other arrangements.” Montana v. United States, 450 U.S. 544, 565, 101 S.Ct. 1245, 1258, 67 L.Ed.2d 493 (1981). Tribal courts are the “appropriate forums for the exclusive adjudication of disputes affecting important personal and property interests of both Indians and non-Indians.” Santa Clara Pueblo v. Martinez, 436 U.S. *53549, 65, 98 S.Ct. 1670, 1681, 56 L.Ed.2d 106 (1978).
Having failed to assume civil jurisdiction over Indian tribes and their members as permitted under Pub.L. 83-280, § 6, 67 Stat. 590, Arizona has only limited power to determine matters to which a tribe is a party or in which it has an interest. See generally F. COHEN, HANDBOOK OF FEDERAL INDIAN LAW, ch. 6, § C(3)(a) at 362 (1982 ed.); Williams v. Lee, supra. Any state attempt to assert jurisdiction over a tribe or its interests must be closely scrutinized. See United States v. Superior Court, 144 Ariz. 265, 697 P.2d 658 (1985).
The test for determining whether the state may exercise its jurisdiction in Indian matters was articulated by the United States Supreme Court in Williams v. Lee, supra. In that case, a non-Indian operator of a general store on the Navajo Indian Reservation brought suit against Indians in state court to collect for goods sold on credit. The Supreme Court held that
[t]here can be no doubt that to allow the exercise of state jurisdiction here would undermine the authority of the tribal courts over Reservation affairs and hence would infringe on the right of the Indians to govern themselves. It is immaterial that [the general store operator] is not an Indian. He was on the Reservation and the transaction with an Indian took place there. The cases in this Court have consistently guarded the authority of Indian governments over their reser-vations____ If this power is to be taken away from them, it is for Congress to do it.
358 U.S. at 223, 79 S.Ct. at 272 (citations omitted, emphasis supplied). Thus, the Williams test resolves jurisdictional conflicts by providing that a state’s authority stops where tribal self-government would be affected. See Fort Mojave Tribe v. County of San Bernardino, 543 F.2d 1253, 1256 (9th Cir.1976), cert. denied, 430 U.S. 983, 97 S.Ct. 1678, 52 L.Ed.2d 377 (1977).
Courts have consistently applied the Williams v. Lee “infringement” test to resolve conflicts between state court and tribal court jurisdiction. See, e.g., United States v. Superior Court, supra; Santa Clara Pueblo v. Martinez, supra; R.J. Williams Co. v. Fort Belknap Housing Authority, supra; Babbitt Ford v. Navajo Indian Tribe, 710 F.2d 587 (9th Cir.1983). In considering a matter similar to the one before this court, the Ninth Circuit Court of Appeals observed that the question of whether a particular assertion of state jurisdiction will infringe upon tribal self-government generally arises in one of two situations:
First, if a state or federal court resolves a dispute which was within the province of the tribal courts or of other nonjudicial law-applying tribal institutions, that court would impinge upon the tribe’s right to adjudicate controversies arising within it. Second, if the dispute itself calls into question the validity or propriety of an act fairly attributable to the tribe as a governmental body, tribal self-government is drawn directly into the controversy.
R.J. Williams Co. v. Fort Belknap Housing Authority, 719 F.2d at 983 (citations omitted; emphasis supplied); see also Montana v. United States, 450 U.S. at 564-65, 101 S.Ct. at 1257-58. Thus, the question here is whether the dispute between Smith and Aetna is a dispute which involves or determines “an act fairly attributable to the tribe as a governmental body.”
THE TRIBE’S INVOLVEMENT
If Smith obtains a judgment against Aet-na, the surety, the latter has a claim for indemnification and reimbursement against the Enterprise. The right of indemnification presumably comes from an indemnification agreement between the Tribe and Aetna. That agreement is not part of this record, although it is referred to. I do not speculate as to its contents. Even if there were no agreement, hornbook law gives a surety a right of reimbursement against the principal obligor. Restatement of Security § 104 (1941). In other words, judgment against Aetna will provide Aetna with *536a claim for reimbursement from the Enterprise, which is part of the Tribe and supported by the tribal treasury.
In addition, adverse resolution in state court of whatever defenses exist to Smith’s claim will be res judicata against Aetna and will collaterally estop the Enterprise as principal obligor. This is because a principal obligor is ordinarily bound by judgment rendered against the surety, and collaterally estopped from raising defenses which have been asserted by and determined against the surety. See A. STEARNS, THE LAW OF SURETYSHIP § 11.43 at 525-26 (5th ed. 1973); Farmers Insurance Company of Arizona v. Vagnozzi, 138 Ariz. 443, 446, 675 P.2d 703, 706 (1983); United States Fidelity & Guaranty Company v. Alfalfa Seed & Lumber Company, 38 Ariz. 70, 73, 297 P. 868, 869 (1931).
Because the ultimate party responsible for payment of the claims in this case is the Tribe, state court adjudication of the nature and extent of the liability of the Tribe’s surety actually adjudicates the nature and extent of the Tribe’s liability. Thus, by taking jurisdiction of the claim filed by Smith against Aetna, our courts will effectively compel tribal agencies to litigate in state court all issues which determine the nature and amount of the Tribe’s ultimate liability for the materialman’s claim. It is impossible, therefore, to avoid the conclusion that state assumption of jurisdiction infringed upon the Tribe’s right of self-government. Having failed even to discuss this point, the majority ends its sentence too soon when it characterizes this as a case “of a non-Indian materialman suing a non-Indian surety on a performance-payment bond.” 149 Ariz. at 533, 720 P.2d at 508. Actually, this is a case in which a non-Indian materialman is suing a non-Indian surety on a bond to obtain a judgment which the Indian tribe itself must ultimately pay.
PLAINTIFF’S CONSENSUAL INVOLVEMENT WITH THE TRIBE
By providing materials to be used by a subcontractor for installation in a tribal project in Indian country, Smith should have been well aware that he was entering into a commercial relationship on a tribal project so that tribal courts would have power to exercise civil authority over it. See Merrion v. Jicarilla Apache Tribe, 455 U.S. 130, 144-45, 102 S.Ct. 894, 905-06, 71 L.Ed.2d 21 (1982); Hardin v. White Mountain Apache Tribe, 779 F.2d 476, 479 (9th Cir.1985). Nevertheless, Smith could still have avoided jurisdiction in tribal court. It could have sued the subcontractor; certainly, a debt action on open account, brought by a non-Indian materialman against a non-Indian subcontractor, properly belongs in state court. However, Smith instead sued Aetna, the Tribe’s surety, in an action on the payment bond for a tribal project in Indian country. Even if that action was the result of pragmatic necessity, the result is the same. When Smith sued the Tribe’s surety, it directly and ultimately implicated the Tribe as the ultimate source of the payment of the judgment which it sought in state court. A & A Concrete, Inc. v. White Mountain Apache Tribe, 781 F.2d 1411 (9th Cir., 1986), petition for cert. denied, — U.S. -, 106 S.Ct. 2008, 90 L.Ed.2d 659.
Because the action concludes tribal defenses and because the ultimate source of payment of any judgment which Smith may get against Aetna is the Tribe, the latter’s right of self-government is implicated and the action should be brought in tribal court, if it has jurisdiction to hear and adjudicate such an action. Any lack of jurisdiction would not result from state or federal law, since the “Supreme Court has repeatedly recognized that tribal courts have inherent power to adjudicate civil disputes affecting the interests of Indians and non-Indians which are based upon events occurring on the reservation.” Id. at 1415. There might be some lack of jurisdiction because of provisions in the laws of the Tribe, but we have been instructed that the existence and extent of tribal court jurisdiction is “an examination which should be conducted in the first instance in the Tribal Court it*537self.” Id. (quoting National Farmers Union Insurance Co. v. Crow Tribe of Indians, supra). Interpretation of the tribal code is one of the responsibilities of the tribal court, Fort Belknap, 719 F.2d at 983, and any attempt by any other court to determine the jurisdictional question for the Tribe would severely infringe upon the Tribe’s “right to adjudicate controversies” arising on the reservation. See id.; National Farmers Union Insurance Co., supra.
DEFERENCE; SUSPENSION OF STATE PROCEEDINGS
The majority argues that adjudication in state court may not affect the Tribe since it may assert its right of sovereign immunity when and if Aetna attempts to obtain indemnification or reimbursement by action against the Tribe. 149 Ariz. at 533, 720 P.2d at 508. This argument is only partly right. If the Tribe does not assert the claim of sovereign immunity, then it will have been compelled by application of the doctrine of collateral estoppel to submit to the adjudication of the nature and amount of Smith’s claim and all defenses thereto in state court, when it had a right to have those issues determined in tribal court. If it wishes to avoid that, it will be forced to assert the defense of sovereign immunity to the claim of its surety, thus adversely affecting its ability to do business and make such contracts in the future.
Of course, it is always possible that the Tribe may eventually assert its sovereign immunity2 as a defense or that the tribal courts will decline jurisdiction of the case. Neither of these possibilities militates against deferring to the preemptive jurisdiction of the tribal court. Although, as noted ante at 528, 720 P.2d at 503, examination of tribal jurisdiction should occur first in tribal court, there is no need to dismiss the state action. It may simply be held in abeyance until it is determined that the tribal court has jurisdiction and that the Tribe has waived the defense of sovereign immunity. Cf. National Farmers Union Insurance Co., supra. If the Tribe does assert the defense at any time, then the action truly becomes one in which the tribal interests are not involved and may be allowed to proceed in state court.
PROTECTION OF MATERIALMEN
The majority argues that by requiring a surety for the Tribe’s construction obligations, Congress intended to protect mate-rialmen such as Smith. 149 Ariz. at 532, 720 P.2d at 507. This is true but becomes relevant only by the majority’s implicit assumption that non-Indian materialmen will be less protected in tribal court than in state court. This attitude is not supported by law or policy. Congress’ decision to require a payment bond is no more than a conclusion that payment bonds were necessary to protect materialmen against the tribes’ sovereign immunity from suit. It does not create an implicit exception to the longstanding congressional and judicial policy favoring tribal jurisdiction by authorizing materialmen to establish tribal liability in state courts. Although the majority evidently fears that non-Indians may be treated unfairly in tribal court, it articulates no grounds for its apprehension. No doubt, in the distant past some Indians may have been treated unfairly in state court. The majority opinion is a throwback to those times.
GORDON, V.C.J., concurs in Justice Feldman’s dissent.. The Enterprise which entered into the contract with the non-Indian subcontractor, GS & D Plumbing, is not a distinct entity, but is rather part of the governmental organization of the Tribe. Cf. White Mountain Apache Tribe v. Shelley, 107 Ariz. 4, 480 P.2d 654 (1971); S. Unique, Ltd. v. Gila River Pima-Maricopa Indian Community, 138 Ariz. 378, 674 P.2d 1376 (App.1983). Its assets are tribal resources and cannot be reached by suit in state cotut. Shelley, supra; S. Unique, supra; Morgan v. Colorado River Indian Tribe, 103 Ariz. 425, 443 P.2d 421 (1968).
. The majority assumes that the Enterprise did not waive sovereign immunity in the indemnification agreement. I will indulge this assumption.