I can understand why a deposit is non-refundable only if they make available to you, your first choice. I hope there is something written in the language of your deposit that speaks to notification, by both parties, as well as what is being offered.
If both bitches whelp on the same day, and both produce the puppy you want, then I can see how you might lose one deposit. However, if you give notification to either breeder prior to the other litter being born, you should be able to receive a full refund.
Both Tracy and I are just concerned that you are protected. Who knows, perhaps you'll end up with two pups!
During all the time I was searching for a Cavalier puppy, here in southern Ontario, at no time was I requested to give money to be put on a waiting list. That was generally first come, first served, unless it is a repeat purchaser or connected in some other way, like another breeder with whom they plan to breed.
When are the pups due? Having a new puppy is very exciting and I think you are wise to have a back up plan