                             No. 14715
               IN THE SUPREME COURT OF THE STATE OF MONTANA
                                1979


BUDGET INSURANCE AND FINANCE,
                  Plaintiff and Appellant,
       VS.

CHARLES 0 LEIGHTY and ARLENE LEIGHTY,
         .
husband and wife,
                  Defendants and Respondents.


Appeal from:   District Court of the Eleventh Judicial District,
               Honorable James M. Salansky, Judge presiding.
Counsel of Record:
   For Appellant:
        Hash, Jellison, O'Brien and Bartlett, Kalispell, Montana
        James Bartlett argued, Kalispell, Montana
    For Respondents:
       Astle and Astle, Kalispell, Montana
       Dave Astle argued, Kalispell, Montana


                                 Submitted: December 14, 1979
Mr. Justice John C. Sheehy delivered the Opinion of the Court.

     Budget Insurance and Finance appeals from a judgment
against it in the Eleventh Judicial District, Flathead
County, entered after a nonjury trial, determining that
Charles 0.    eighty is not obligated under the terms of a
retail installment contract and promissory note to Budget.
     On April 2, 1973, Leighty (Leighty means Charles 0.

Leighty unless otherwise stated) entered into a retail install-
ment contract with Western Motors, Inc. of Kalispell, Montana,
to cover the repairs on a 1959 autocar diesel.   Under the
retail installment contract, he agreed to pay $1,496.64 over
a period of 24 months to Western Motors, Inc.    The contract
was assigned to Budget Insurance and Finance (Budget) by
Western Motors, Inc., and Budget at all times thereafter was
the owner of any payee's rights under the contract.
     On July 6, 1973, Leighty also executed a promissory note
to Budget, by which he agreed to pay $3,431.01 over 37 equal
monthly installments.
     In each transaction, Leighty purchased credit life and
disability insurance.   The insurance was written by Budget,
as an agent for North Central Life Insurance Company (North

Central).    Budget, named as a beneficiary on the insurance
policies, did not require a physical examination of    eighty
although its personnel were fully cognizant of his preexisting
arthritis.
     Subsequent to the execution of these instruments, and

after the issuance of insurance policies, Leighty's

neck began to hurt one day while sitting at a table and
following that, he became disabled.   He submitted a claim for
disability coverage under the insurance policies to the

manager of Budget who in turn filed the claims with ~ o r t h
Central.     The insurance company denied coverage on the
basis of Leighty's preexisting arthritic condition and
refunded the premiums paid by Leighty.
        The manager of Budget took issue with the insurance
company's denial and drafted a letter to North Central requesting
reconsideration of the claim.     North Central again denied cover-
age.
        Meanwhile, the payments due on the retail installments
and on the note became delinquent and Budget filed suit against
the Leightys thereon on November 21, 1975.    At the time
of trial, the unpaid amount was $4,852.66.
       Arlene Leighty, the wife of Charles 0. Leighty was named
as a defendant in the suits because she cosigned the promissory
note.     The District Court, sitting without a jury, entered
findings of fact and conclusions of law against Budget and
in favor of Leighty.     It found that Leighty had become
totally disabled, that Budget had acted as an agent for the
credit life insurance company, that Budget had received a
commission of approximately 50% of the premium charged by
the insurance company, that Budget was the beneficiary under
the policies of insurance and that the manager of Budget had
testified that the defendant was deserving of benefits under
the policy.     The District Court held, in its conclusions of
law, that Leighty was not obligated under the terms of the
retail installment contracts and promissory note and that
the defendant was properly covered by disability insurance
issued by the "plaintiff insurance company".     It appears
from that conclusion that the District Court considered that
Budget and the issuing credit insurance company as       one and
the same.
        Judgment in favor of the Leightys and against Budget
was entered in the District Court.     Budget appeals.   We find
we must reverse.
                                 -3-
     Budget frames these issues for review:
     1.   Is a finance and insurance agency company, which
sells disability insurance as an agent for an insurance
company precluded from recovering money lent to a customer
on the ground that the insurance company denies coverage to
the customer and the agent is a beneficiary?
     2.   316.   the District Court have jurisdiction to find or
did it err in finding that Leighty was disabled and was
properly covered by disability insurance without the insurance
company being a party to the action?
    We have been presented with problems growing out of
credit life and disability insurance policies in different
aspects in the last several months.         In First Sec. Bank of
Bozeman v. Goddard (1979),          Mont.         , 593 P.2d 1040,
36 St.Rep. 854, we determined that a credit disability
insurance policy became effective on the date the obligation
was incurred by the insured-debtor.         In Cameron v. First
National Bank of Bozeman, et al. (No. 11751, Decided Karch 7,
1980), we found that a credit disability insurer and its
agents had the duty to give promptly to the insured, a notice
of denial of coverage and to return any premium collected
under section 33-21-206(3), MCA. In Cameron, we held in
effect that the insurance company was responsible for the
acts of its agent in failing promptly to notify the insured
that he was ineligible for disability insurance, and in
failing to return promptly his premium.
     None of those issues appear here.         Instead the District
Court equated the agent, Budget Insurance and Finance with
the insurance company itself, and forbade the collection of
the debt owing the agent by Leighty.
                                  -4-
     The insurance policy or policies issued by North Central
are not of record here, but Leighty testified that he had
received an insurance policy, though he was unclear as to
when he had received it.
     The occasions when an agent becomes responsible to
third persons as a principal are set out in section 28-10-
702, MCA.   That section states:
     "One who assumes to act as an agent is
     responsible to third persons as a principal
     for his acts in the course of his agency in
     any of the following cases and in no other:
     "(1) when, with his consent, credit is given
     to him personally in a transaction;
     "(2) when he enters into a written contract in
     the name of his principal without believing in
     good faith that he has authority to do so; or
     " (3) when his acts are wrongful in their nature."
    At all times, Budget's position as an agent of the
insurance company was known to and acted upon by Leighty.
The effect of the court's decision is to hold Budget liable
as a principal, and to wipe out the debt owed to Budget by
Leighty because Budget was such a principal.   This runs
against the general rule that an agent is not personally
liable on a contract entered into by him on behalf of a
principal if it appears that the agent disclosed the identity
of his principal and made the engagement for him.    See dicta
in Farr v. Stein (1918), 54 Mont. 529, 172 P. 135.   We find
nothing in the Montana statutes relating to insurance agents
(section 33-17-101, et seq., MCA) to take insurance agents
out of this general rule.
    We hold therefore that Budget is not precluded from
recovering the indebtedness due to it on the note and retail
installment contract even though it is the agent of the
insurance company which denied the disability claim and
further even though Budget disputes the correctness of the
insurance company's denial.
        We turn now to the second issue, whether the District
Court had jurisdiction to determine disability insurance
coverage without the insurance company having been joined in
the action.
        The record is bare as to any reason for Leighty not
joining the insurance company.        It was suggested on oral
argument that perhaps the joinder was not sustainable because
of the statute of limitations.        However that may be, a binding
determination of insurance coverage under a policy issued in
this case by North Central cannot be made against North Central
unless that company were made a party to the action.       Since
we have demonstrated Budget is not itself responsible as a
principal in this case to Leighty, the issue whether he was
properly denied coverage by North Central was not before the
District Court because a proper party for that determination
was not present in the action.
        We hold therefore, that the judgment of the District
Court in favor of Leighty must be reversed, and the cause
remanded to the District Court for further proceedings in
connection with the claimed indebtedness on the retail
installment contract and the note, and the issues framed by
the pleadings, consonant with this opinion.
    -




We Concur:


           Chief Justice


n




    .............................
               Justices
                                    -6-
