                                               No.    82-94

                  I N THE SUPREBE COURT OF THE STATE O F M N A A
                                                          OTN

                                                      i982




INSURANCE SPECIALISTS, I N C . ,

                                P l a i n t i f f and Respondent,

                  VS   .
DALE LONGFELLOW,

                                Defendant and A p p e l l a n t .




Appeal from:           District Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
                       I n a n d f o r t h e County o f Y e l l o w s t o n e
                       H o n o r a b l e Diane G. B a r z , J u d g e p r e s i d i n g .

C o u n s e l o f Record :

     For P l a i n t i f f :

           Law O f f i c e s o f R u s s e l l K.      F i l l n e r ; R u s s e l l R.    Fillner,
           B i i l i n g s , Montana

     For Defendant:

           Towe, B a l l , E n r i g h t & Mackey; N e i l D.              Enright, Billings,
           Montana




                                               Submitted on b r i e f s :           J u l y 29, 1982

                                                                   Decided :         OCT    7 1982



Filed:    d !Jp[ d 7 '!%i!
L o n g f e l l o w s t i l l owes $ 1 , 7 0 9 . 6 3          on the note.            L o n g f e l l o w coun-

t e r c l a i m e d t h a t 762 s e r v i c e c o n t r a c t s s h o u l d h a v e b e e n c r e d i t e d

to h i s account.               According to Longfellow,                      n o t o n l y is t h e p r o -

m i s s o r y n o t e f u l l y p a i d , b u t I S 1 owes him $ 1 , 8 1 0 i n c o m m i s s i o n s .
The     District            Court      found           that    the    evidence        did      not      support

Long f e l l o w ' s c o u n t e r c l a i m .
       Longfellow            raises        two         seemingly       contradictory               issues      on
appeal.         F i r s t , he claims t h e D i s t r i c t C o u r t e r r e d b y a p p a r e n t l y

n o t c o n s t r u i n g t h e p r o m i s s o r y n o t e and t h e u n d e r l y i n g a g r e e m e n t

( l e t t e r ) as one instrument.                     T h e n , i n t h e s e c o n d i s s u e , h e claims
the      District           Court      erred           by     misinterpreting            the     underlying

agreement.
       T h e r e is n o t h i n g i n t h e r e c o r d           to s u p p o r t a p p e l l a n t ' s f i r s t
c o n t e n t i o n t h a t the District Court f a i l e d                    to c o n s t r u e     t h e pro-

m i s s o r y n o t e and t h e u n d e r l y i n g a g r e e m e n t t o g e t h e r .         Nearly a l l

of     the     evidence          at      trial          went    to     the     construction             of    the
u n d e r l y i n g c o n t r a c t , and d e t e r m i n i n g who had r e f e r r e d w h i c h c a r

dealers to ISI.                W e need n o t c o n s i d e r t h i s i s s u e s i n c e i t is n o t

based on t h e r e c o r d .
       In his         second        issue,        Longfellow b a s i c a l l y         claims        that     the

District Court m i s i n t e r p r e t e d               t h e word     "referred"          as it is used
in     the     underlying             agreement.               Long f e l l o w   contends           that     his
uncontroverted              t e s t i m o n y showed he r e f e r r e d c e r t a i n c a r d e a l e r s

to ISI,         and     therefore          he      should       be    credited       with      the      service
c o n t r a c t s s o l d by t h o s e d e a l e r s .          A c c o r d i n g to Long f e l l o w , e v i -

d e n c e t h a t a n o t h e r a g e n t f o r I S 1 a l s o r e f e r r e d c a r d e a l e r s to I S 1
is     irrelevant            because             the     contract       does       not       require         that
Longfellow             be       the        sole             person     making          the       referrals.
       Longfellow's            c o n t e n t i o n must f a i l        simply because              it   is n o t

s u p p o r t e d by t h e r e c o r d .
       It    i s e l e m e n t a r y t h a t e a c h p a r t y m u s t p r o v e h i s own a f f i r -
mative allegations.                   S e c t i o n 26-1-401,         MCA,    and sect i o n 26-1-402,

MCA.         The      claim o f         satisfaction             on    a promissory            note      is    an
a f f i r m a t i v e a l l e g a t i o n and m u s t be p r o v e d by a p r e p o n d e r a n c e of
the evidence.                B a k e r N a t i o n a l Bank v .            Lestar         ( 1 9 6 9 ) , 1 5 3 Mont.

4 5 , 4 5 3 P.2d 7 7 4 ; E . H .          Coltharp           &   C o . v . T a y l o r ( 1 9 7 4 ) , 3 0 Utah2d

448,     5 1 9 P.2d          885.       Here,       a p p e l l a n t Longfellow simply d i d not
meet t h i s b u r d e n .
       A t trial,          appellant's           case c o n s i s t e d o f h i s own v a g u e t e s t i -
mony      and          the      noncommittal              testimony             of        one     car      dealer.
       L o n g f e l l o w t e s t i f i e d t h a t p r i o r t o May 1 9 7 8 h e had worked f o r

Gamut        Insurance          Company          and     most        of     the      car     dealers       in    the
Billings           area      were      his       customers.                 Specifically,            Long f e l l o w

t e s t i f i e d t h a t p r i o r t o May 1 9 7 8 h e r e f e r r e d A r n l u n d A u t o P l a z a ,

Ryan O l d s m o b i l e , M i d l a n d Dodge, D - J                  V o l k s w a g e n , Town and C o u n t r y
GMC,    and C a p i t a l F o r d i n H e l e n a ,              to Gamut I n s u r a n c e .           A f t e r May
1978,        when         Longfellow          made           the       loan       agreement          with       ISI,

L o n g f e l l o w b e g a n t o make r e f e r r a l s f o r I S 1 t h r o u g h t h e l o c a l c a r
dealers.             He    testified         that       he       had      nearly daily            contact       with
e v e r y car d e a l e r i n B i l l i n g s and had r e p e a t e d l y r e f e r r e d them t o

ISI.         He     g a v e no s p e c i f i c s       c o n c e r n i n g when       the referrals             took

place        and       introduced          no      evidence              showing          how    many      service
contracts resulted                  from t h e s e        referrals.               Long f e l l o w j u s t made

t h e broad          s t a t e m e n t t h a t he r e f e r r e d         a l l of    h i s p r e v i o u s Gamut

c u s t o m e r s t o I S 1 , i n c l u d i n g A r n l u n d A u t o P l a z a , Ryan O l d s m o b i l e            ,
Bob S m i t h A u t o s and M i d l a n d Dodge.

       The        only     other      evidence           submitted            by     Longfellow           was    the

testimony of              David P i e r c e , m a n a g e r of              A r n l u n d Auto P l a z a .       The
following              testimony            by         Mr.         pierce            is       very       telling:

                  "Q. Did            Mr.       Longfellow             refer         Plaintiff,
                  I n s u r a n c e S p e c i a l i s t s I n c o r p o r a t e d , and AWC t o
                  you?        A.     C l i f f Tophem -- W e had b e e n d e a l i n g
                  b a c k and f o r t h w i t h Dale and C l i f f , and a t t h e
                  t i m e I would s a y were c o m p e t i t o r s .                    And i n
                  d e a l i n g w i t h Dale, w e had s i g n e d w i t h some o f
                  h i s c o m p a n i e s . And h e had t h e Ming C e n t e r and
                  Dale worked w i t h cars t h e r e .                         And i t was a
                  convenient l o c a t i o n f o r us.                      And w e d i d d o
                  b u s i n e s s w i t h him a t t h e Ming C e n t e r , a l s o .
                  C l i f f c a l l e d o n u s numerous t i m e s . H e w a s w i t h
                  o n e and t h e n s w i t c h e d t o a n o t h e r .               And Dale
                  w a s w o r k i n g a t t h e Ming C e n t e r .                  And I d i d
                  t a l k t o him.          I c a l l e d him and a s k e d him a b o u t
                  C l i f f , b e c a u s e w e were t h i n k i n g o f d r o p p i n g
                  t h e o t h e r t w o companies e n t i r e l y .                 And he d i d
                  s a y t h a t C l i f f would s e r v i c e t h e a c c o u n t and
                  d o a good j o b f o r u s . And I k i n d o f f e l t t h a t
Mr.    J u s t i c e Gene B. D a l y d e l i v e r e d t h e O p i n i o n of t h e C o u r t .


       Dale     Longfellow,             t h e maker o f         a $2,000 promissory n o t e             in
f a v o r of     Insurance         Specialists,           Inc.,      appeals        from a    judgment
i s s u e d by t h e D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
Yellowstone County.                  The D i s t r i c t C o u r t f o u n d t h a t Long f e l l o w ' s
c o u n t e r c l a i m o f s a t i s f a c t i o n on t h e n o t e was n o t s u p p o r t e d by t h e

e v i d e n c e and g r a n t e d judgment           f o r Insurance Specialists,                Inc.   in

t h e amount o f $ 2 , 2 6 2 . 8 4 .
       Appellant        Longfellow           is    an    insurance           agent.     One     type    of
i n s u r a n c e c o n t r a c t h e h e l p s t o s e l l is t h e e x t e n d e d w a r r a n t y ser-
vice         contract       issued        by      Insurance          Specialists,        Inc.       (ISI)
through automobile d e a l e r s .                  Insurance S p e c i a l i s t s issues these

c o n t r a c t s u n d e r t h e name, A u t o m o b i l e W a r r a n t y C o r p o r a t i o n (AWC)   .
Longfellow           participates           in    the    selling        of     these    contracts       by
"referring"          the     car d e a l e r      to t h e      i n s u r a n c e company h e     repre-

s e n t s , i n t h i s case, I S I .
       On May 1, 1 9 7 8 ,          IS1 lent L o n g f e l l o w $ 2 , 0 0 0 f o r a p r o m i s s o r y

n o t e d u e on May 1, 1 9 8 0 .              Both p a r t i e s admit t h a t a l e t t e r s e n t
to    Longfellow .by              the     president        of     IS1    is     part    of    the    loan

agreement.            The    letter contains              the      following        relevant     provi-
si o n s :
               "1. I t i s a g r e e d t h a t w e w i l l c r e d i t y o u r
               promissory note                    a t t h e rate of       $5 p e r
               Automobile             Warranty           Corporation       service
               contract          issued            and   paid     to   Automobile
               W a r r a n t y C o r p o r a t i o n from y o u r Montana d e a l e r s
               t h a t are r e f e r r e d to u s by y o u r s e l f d u r i n g t h e
               p e r i o d of 5/1/78 t h r o u g h 5/1/80.
               "2.       I f t h e t o t a l s e r v i c e c o n t r a c t s a r e 400 o r
               rnore,        t h e n t h e n o t e is p a i d o f f i n f u l l .
               A n y t h i n g less t h a n 400 w i l l l e a v e a b a l a n c e
               d u e and p a y a b l e as of 5/1/80.                     I f the total
               number of s e r v i c e c o n t r a c t s e x c e e d s 4 0 0 , y o u r
               p r o m i s s o r y n o t e w i l l be p a i d o f f and you w i l l
               r e c e i v e a n a d d i t i o n a l $5 f o r e v e r y c o n t r a c t
               o v e r t h a t amount d u r i n g t h e p e r i o d o f t i m e
               indicated "    .
      The c o n t r o v e r s y h e r e c e n t e r s upon how many s e r v i c e w a r r a n t y

c o n t r a c t s should have been c r e d i t e d              to t h e d e b t L o n g f e l l o w owed
on    the     promissory          note.          IS1 c l a i m s ,    and     the     District      Court

found,         that         after        deducting           all        possible        commissions,
               C l i f f would.           H e would h a v e b e e n v e r y p e r -
               s i s t e n t i n t r y i n g to o b t a i n o u r b u s i n e s s upon
               t h a t r e c o m m e n d a t i o n and t a l k i n g w i t h B u r t w e
               d i d go w i t h AWC."

       On r e b u t t a l , I S 1 p r e s e n t e d t h e k e y t e s t i m o n y of C l i f f Tophem.
Tophem t e s t i f i e d t h a t h e t o o b e g a n w o r k i n g f o r I S 1 i n May or J u n e
1978,       af t e r    having       represented            a    different         insurance        company.

Tophem c o u n t e r e d         Longfellow's             claims       by    stating        that    he,       not
L o n g f e l l o w , had s o l i c i t e d t h e c a r d e a l e r s i n B i l l i n g s .        Tophem's
t e s t i m o n y was b u t t r e s s e d by t h e i n t r o d u c t i o n i n t o e v i d e n c e of s i x

" D e a l e r Agreement" c o n t r a c t s .
       In    these       dealer          agreements,        a car dealer             is a u t h o r i z e d    to
i s s u e I S 1 ( a / k / a AWC) s e r v i c e c o n t r a c t s and r e c e i v e a c o m m i s s i o n .

Tophem       stated          that    he     had     negotiated           the      agreements,           writing
i n the      s p e c i f i c terms.            F o u r of       t h e a g r e e m e n t s were s i g n e d     by

Tophem as a n a p p r o v e d s p e c i a l r e p r e s e n t a t i v e            for ISI.             In a l l ,

Tophem had n e g o t i a t e d d e a l e r a g r e e m e n t s w i t h Arnlund A u t o P l a z a ,
Ryan O l d s m o b i l e ,      Town and C o u n t r y GMC,              C a r M a r k e t , Giv-Way        Auto
S a l e s , and Bob S m i t h L i n c o l n Mercury.

      Tophem's s p e c i f i c t e s t i m o n y ,          Dave P i e r c e ' s t e s t i m o n y and t h e
documentation                introduced a t trial                support         the District           Court's
finding t h a t Longfellowqs counterclaim                                is w i t h o u t m e r i t .       This

e v i d e n c e a l s o s u p p o r t s t h e c o n c l u s i o n t h a t t h e c a r d e a l e r s used
I S 1 c o n t r a c t s m a i n l y b e c a u s e of T o p h e m q s e f f o r t s .         Lastly,        this
evidence         implicitly              supports       the       conclusion         that     Tophem          and
Long f e l l o w were          competing          for     the      commissions         on    the        service
contracts,             and    that       the   commissions            properly        went     to Tophem.
      I n c o n t r a s t , L o n g f e l l o w ' s c a s e was s u p p o r t e d o n l y by h i s own
vague       testimony.              No    e v i d e n c e was      introduced        a t trial          showing
when Long f e l l o w made h i s r e f e r r a l s and which                        service contracts
r e s u l t e d from t h e s e r e f e r r a l s .
      The     District          Court       had    no     evidence          at    trial     to d e t e r m i n e
s p e c i f i c a l l y how much Long f e l l o w s h o u l d r e c e i v e i n c o m m i s s i o n s .

No     specific              documentation           in         the     trial       records        supports

a p p e l l a n t ' s c o u n t e r c l a i m t h a t 7 6 2 s e r v i c e c o n t r a c t s m u s t be cre-

d i t e d a g a i n s t the promissory note.
        A s s t a t e d previously,          t h e burden w a s on L o n g f e l l o w t o p r o v e

h i s c o u n t e r c l a i m by a p r e p o n d e r a n c e o f t h e e v i d e n c e , a n d h e h a s

n o t done s o .        Therefore, t h e District Court properly denied h i s

c o u n t e r c l a i m and p r o p e r l y g r a n t e d judgment t o I S I .

        I S 1 a d m i t s t h a t t h e D i s t r i c t C o u r t imposed a n i m p r o p e r a n n u a l

i n t e r e s t r a t e o f 10 p e r c e n t , s i n c e t h e p r o m i s s o r y n o t e r e q u i r e s

a n 8 p e r c e n t p e r annum i n t e r e s t r a t e .

        The D i s t r i c t C o u r t i s d i r e c t e d t o amend i t s judgment t o con-

form t o t h i s O p i n i o n .




W e concur:


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