                                           No. 88-337


                  IN THE SUPREME COURT OF THE STATE OF MONTANA
                                               1989



SIDNEY E. WARD,
                         Plaintiff and Respondent,
        -vs-
VIBRASONIC LABORATORIES, INC.,
a corporation,
                         Defendant and Appellant.




APPEAL FROM:             District Court of the Fifth Judicial District,
                         In and for the County of Jefferson,
                         The Honorable Frank Davis, Judge presiding.
COUNSEL OF RECORD:
        For Appellant:
                         Roger Tippy, Helena, Montana
        For Respondent :

                         Jardine   &   Grauman; John J. Jardine, Whitehall,
                         Montana



                                               Submitted on Briefs:   Dec. 9, 1988
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                                                 ~ ~ ~ i d February 28, 1989
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Mr. Justice John C.    Sheehy delivered the Opinion of the
Court.


     Vibrasonic Labs. Inc., appeals from a judgment of the
District Court for the Fifth Judicial District, Jefferson
County. Trial was held April 6, 1988, without a jury. The
District Court entered judgment for the plaintiff, Ward and
awarded $2,500.00 punitive damages. This Court affirms the
judgment of the District Court but remands the cause for
specific findings with regard to punitive damages pursuant to
§ 27-1-221, MCA.
     There are three issues for review:
     1) whether the District Court erred by allowing the
plaintiff to amend his complaint to conform to the evidence
presented at trial;
     2) whether the District Court erred by           denying
defendant's motion to vacate the trial setting; and,
     3) whether the District Court erred by not presenting
findings pursuant to 5 27-1-221, MCA, regarding punitive
damages.
     The plaintiff, Sidney E. Ward, entered into an
purchase/lease agreement with Vibrasonic Laboratories, Inc.
for the purchase of a hearing aid on July 31, 1986. The cost
of the hearing aid was $499.00 plus $100.00 fitting fee for a
total of $599.00. Ward made a downpayment of $180.00 leaving
a balance of $419.00 to be paid in monthly installments of
$20 over 36 months.     As the District Court noted in its
findings of fact, the agreement failed to comply with several
provisions of the Montana Retail Installment Act.          The
agreement fails to give notice of the buyer's right to payoff
in advance the full amount and obtain a partial refund of the
finance charqe as required by        31-1-231 ( 2 ) , MCA. The
agreement is required to state, if a separate amount for
insurance is paid, the specific types of coverage and
benefits,    31-1-231 (5)(d), MCA.   It fails to state the
amount of the finance charge as required by S 31-1-231(5)(g);
and it fails to state the total amount of the time balance
required by 5 31-1-231(5) (h), MCA.      Finally, Vibrasonic
itself violated S 31-1-233, MCA, by writing an insurance
policy which it was not authorized to do by the state of
Montana.
     Ward purchased this insurance from Vibrasonic's agent.
Vibrasonic called the insurance a "the Ultimate Hearing Aid
Protection Plan."     The plan provided for loss against
physical damage to the hearing aid caused by "external
sources such as theft, fire, accidental hreakage, water, auto
accident," plus loss by mysterious disappearance. This plan
specifically states it is "separate and distinct from the
factory warranty and - - cover repair service normallv
                      does not
covered by the factory warranty."
     The District Court found that "the Ultimate Hearing Aid
Protection Plan" to be "insurance" within the meaning of the
insurance code of the state of Montana because of terms used
in the plan such as "insured's name, policies, coverage, and
premiums." The District Court found that this was an attempt
to write an insurance policy by an unlicensed insurer; that a
premium of $20 was collected and constituted a fraudulent,
deceptive and illegal act on the part of Vihrasonic.
     Ward became dissatisfied with the hearing aid despite
attempts by Vihrasonic to make adjustments. Ward tried to
rescind the contract but Vibrasonic would not return payments
already made under the contract. Nonetheless, Ward returned
the hearing aid in the summer of 1987 and stopped making
payments.   During this time, Ward was diagnosed as having
terminal cancer in the facial area and brain.          Ward ' s
physician, Dr. Sacry, wrote a letter pursuant to paragraph
three of the agreement between Vibrasonic and Ward which
should have allowed Ward to rescind the contract. Paragraph
three reads as follows:
     You may cancel this agreement if in one year after
     the delivery date you consult a licensed physician,
     or a non-competitive certified audiologist, that
     has no connections with a hearing aid dispenser,
     and such person advises you against the purchase or
     use of a hearing aid and specifies in writing the
     medical or audiological reasons for such advice.
Vibrasonic denied Ward's right to rescind under this clause
of the contract.   It was upon this basis that the District
Court found that Vibrasonic breached the contract and ordered
that Ward be refunded $440.00, the amount which he had paid.
     Ward filed a complaint on October 6 , 1987.          The
complaint contained four counts upon which Ward based his
claims for relief. Count I alleged the basis for recission;
Count 11 was an alternative to Count I; Count I11 alleged
usurious interest rates on the contract, this Count was later
dropped; and Count IV alleged fraudulent misrepresentation in
the sale of the insurance policy covering the hearing aid.
Count IV reads as follows:
    That plaintiff was required to purchase "insurance"
    as set forth in said agreement, but plaintiff is
    unaware of the nature or extent of any such
    insurance coverage, nor was he ever furnished with
    a policy or other memorandum of insurance, nor was
    plaintiff advised that he may either accept or
    decline said insurance, and that the additional
    charge of $20.00 for "insurance" is unwarranted and
    unlawful and was obtained by false and fraudulent
    misrepresentations by defendants, and should be
    returned to plaintiff.
     That the actions of the defendants in requiring
     said "insurance" or in charging the plaintiff for
     the same, were false and fraudulent and oppressive
     and defendants should be assessed punitive damages
     in the amount of $10,000.00, or such amount as may
     be determined upon trial of this cause, by reason
     of said actions.
Trial was set on February 17, 1988, for April 6, 1988, giving
Vibrasonic seven week's notice to prepare for trial.       On
March 23, 1988, two weeks before trial, Vibrasonic moved for
a continuance and asked to present argument on its motion for
summary judgment on the trial date rather than try the case.
     On April 6, 1988 the plaintiff and his counsel appeared
and were ready for trial; the defendant appeared only through
counsel.   Vibrasonic's motions for continuance and summary
judgment were denied and the trial was held. The plaintiff
presented the testimony of Ward. The defendant did not put
on a case-in-chief.
     The District Court entered its findings on April 18,
1988 and judgment was entered April 27, 1988 in favor of
Ward.   Vibrasonic moved for a new trial on the grounds of
irregularities in the proceedings of the District Court and
surprise.     This motion was denied and the d-efendant,
Vibrasonic, appeals to this Court.
                              I
     Did the District Court err by allowing the plaintiff to
amend his complaint to conform to the evidence presented at
trial?
     First, the appellate procedural doctrine that matters
not raised at trial will not be considered on appeal. applies
here.
      It has long been the rule of this Court that on
      appeal we will not put a District Court in error
      for a ruling or procedure in which the appellant
      acquiesced, participated, or to which appellant
     made no objection.

Green v. Green (1978), 176 Mont. 532, 536, 579 P.2d 1235,
1237.   When plaintiff's counsel made the motion to amend,
defendant's counsel made no objection.
     Second, the   rule with   regard   to    amendments   to   the
pleadings is well-settled. As early as 1905, the position of
this Court has been:
         .
     . . the court has discretionary power to permit
     the amendment under such terms as it deemed just
     and proper. This it did.
Dorais v. Doll (1905), 33 Mont. 314, 316-17, 83 P. 884, 885.
     The policy of the law is to permit amendments to
     the pleadings in order that litigants may have
     their causes submitted upon every meritorious
     consideration that may be open to them; therefore
     - is the rule to allow amendments - -
     it                                          and the
               -
     exceptionto d'ieny_them. (Emphasis added. )
Union Interchange, Inc. v. Parker (19601, 138 Mont. 348,
353-54, 357 P.2d 339, 342.
     In addition to settled case law, Rule 15(b), M.R.Civ.P.
provides:
     When issues not raised by the pleadings are tried
     by express or implied consent of the parties, they
     shall be treated in all respects as if they had
     been raised in the pleadings..     .
                                       . the court may
     allow the pleadings to be amended and shall do so
     freely when the presentation of the merits of the
     action will be subserved thereby       . . .
                                              (Emphasis
     added. )
The purpose of Rule 15(b) allowing amendment of a complaint
to conform to the evidence presented is to "put an end to
wasteful and needless litigation and have trial on the merits
of the case." Reilly v. Maw (1965), 146 Mont. 145, 156, 405
P.2d 440, 447.
     Vibrasonic contends that to allow the amendment of the
complaint on the insurance issue raises a new theory of
recovery. This Court disagrees. Count IV of the complaint
clearly contemplates the claim of tortious misrepresentation
by Vibrasonic to Ward by requiring insurance on the hearing
aid. The policy purchased by Ward was an insurance policy as
defined by Montana law and not a guaranty or warranty as
purported by Vibrasonic.       The Montana Insurance Code,
5 33-1-210, MCA, defines property insurance as:
     Property insurance is insurance on real or personal
     property of every kind and every interest therein,
     whether on land, water, or in the air, against loss
     or damage from any and all hazard or cause, and
     against loss consequential upon such loss or
     damage, other than noncontractual legal liability
     for any such loss or damage.      (Emphasis added.)
The contract presented to Ward was indeed insurance under
this definition. Vibrasonic claims this policy was simply a
warranty. We disagree:
     A warranty promises indemnity against defects in an
     article sold, while insurance indemnifies against
     loss or damage resulting from perils outside of and
     unrelated to defects in the article itself.
State ex rel. Duffy v. Western Auto Supply Co. (0hio 1938),
16 N.E.2d 256, 259.
     The contract refers to a standard factory warranty which
lasts for one year. The insurance was sold separately by the
Vibrasonic agent approximately three weeks after the contract
was signed, and as set out above, protected against loss or
damage, not defects in the hearing aid itself.
     This Court concludes that the District Court did not err
by allowing the plaintiff to amend his complaint. to conform
to the evidence presented.

     Did the District Court err by denying defendant's motion
to vacate the trial setting?
     The thrust of Vibrasonic's argument with regard to this
issue is that it was prejudiced and surprised because of the
amendment to the plaintiff's complaint and because no
continuance was granted to allow the defendant to prepare a
defense.
     Count IV of the complaint, as set out above, contains
many references to insurance.     It expressly refers to the
issuance of insurance, the unlawful collection of a premium,
that    it   was    obtained   by    false   and   fraudulent
misrepresentations by Vibrasonic, and that punitive damages
should he assessed. This pleading standing alone is enough
to cover the unlawful activities of Vibrasonic in the
insurance business.    There was no surprise, there was no
change in theory, there was no prejudice to Vibrasonic.
Vibrasonic employees or agents did not appear at trial, after
seven weeks notice of a trial date and over a year's notice
of Count IV. It appears such motions were filed simply for
delay. Ward died soon after trial and a continuance at the
time would have been fatal to Ward's case.
     This Court concludes that the District Court did not err
by denying Vibrasonic's motion to continue.

     Did the District Court err by not presenting findings
pursuant to 5 27-1-221, MCA, regarding punitive damages?
     This Court agrees with both the plaintiff and defendant
on the point that punitive damages were awarded without
making    all   the   required findings pursuant to   S
27-1-221 (7)(b)(i-ix), MCA:

    When an award of punitive damages is made by the
    judge, he shall clearly state his reasons for
    making   the award    in findings of     fact and
    conclusions of law, demonstrating consideration of
    each of the following matters:
    (i) the   nature   and  reprehensibility         of   the
    defendant's wrongdoing;
     (ii) the   extent   of   the   defendant's   wrongdoing;
    (iii) the intent of the defendant in committing the
    wronq ;
     (iv) the   profitability     of   the   defendant's
     wrongdoing, if applicable;
     (77)the amount of actual damaqes awarded by the
     jury;
     (vi) the defendant's net worth;
     (vii) previous awards of punitive or exemplary
     damages against the defendant based upon the same
     wrongful act;
     (viii) potential  or   prior   criminal  sanctions
     against the defendant based upon the same wrongful
     act; and
    (ix) any other circumstances which may operate to
    increase or reduce, without wholly defeating,
    punitive damages.
     Although the District Court did not specifically state
in its findings with regard to punitive damages that the
findings were being made pursuant to the above statute, the
court did make partial findings in accordance with the
statute.    Findings of fact no. 9 and no. 10 state the
District Court's findings as related to Count IV and the sale
of insurance by Vibrasonic.    The findings are set out as
follows:

    9. That at the time of delivery of said hearing
    aid, the agent, Richards, sold Plaintiff an
    insurance policy thereon (which was provided for by
    written addition in the agreement) being called
    "The   Ultimate    Hearing  Aid   Protection   Plan"
     (Plaintiff's Exhibit 3).   The policy provided for
    loss against physical damage to the aid caused by
     ". . .   external sources such as theft, fire,
    accidental breakage, water, auto accident, plus
    many others."    It also covers loss by mysterious
    disappearance.    The "policy" also provides for a
    $75 deductible for the replacement of the hearing
    aid "in case of loss." The Court finds that "The
    Ultimate    Hearing    Aid  Protection   Plan"    is
    "insurance" within the meaning of the insurance
    code of the state of Montana, there being many
     terms used that are indicative of insurance
     policies such as the application containing the
     "Insured's Name,I the terms "policies, coverage,
                        '
     premiums, uninsured shipping, protection," among
     others, all of which clearly spell out an attempt
     to write an insurance policy in the state of
     Montana by an unlicensed insurer; that a premium of
     $ 2 0 was collected and constituted an illegal act on
     the part of Defendant, and which was fraudulent and
     deceptive.
     10.  That Richards, acting on behalf of the
     Defendant VIBRASONICS, falsely and fraudulently
     sold insurance to the Plaintiff and collected a
     premium therefor.    This act was done with the
     knowledge that neither he nor Defendant were
     authorized to sell insurance in the state of
     Montana. This was a wrongful, tortious act, which
     justifies the imposition of punitive damages by way
     of example in an amount hereinafter fixed.
These findings address (i) through (iv) of the statutory
requirements.             Section (v) relates to amount of actual
damages awarded by the jury; although this was not a jury
trial; actual damages in the amount of $ 4 4 0 were awarded by
the judge. It was subdivisions (vi) through (ix) that were
not addressed.                In order to consider these statutory
requirements, evidence must be presented for the court to
consider. This Court remands on this issue so that evidence
may be presented to the District Court for consideration and
so that findings and conclusions may be made in accordance
with S 2 7 - 1 - 2 2 1 ( 7 ) (b)(i-ix), MCA.
     With respect to subdivision (vi), as to the defendant's
net worth, either party may present such evidence at trial.
The plaintiff may want to introduce evidence of this kind in
an effort to obtain a greater damage award and the defendant
may want to present evidence of its wealth in an effort to
mitigate the damage award. The purpose of punitive damages
is to punish and deter the party found liable, but not to hit
so hard as to bring about financial ruin. In the usual case
"a defendant which presents no evidence of financial worth
cannot complain that the jury did not have such evidence."
Hicks v. Lilly Enterprises (0r.App. 1980), 608 P.2d 186, 189.
     Finally, the defendant argues that if indeed the sale of
the insurance is a violation of the Montana Insurance Code,
the State Auditor's office is the agency which should proceed
against the defendant, not the plaintiff.         This Court
disagrees.    The plaintiff has a common-law tort action
against the defendant for fraud and misrepresentation. The
State Auditor's office may also proceed against the defendant
under its penalty provisions for violation of the insurance
code.
     The award of compensatory damages is affirmed and the
punitive damages judgment is reversed and remanded for
proceedings in accordance with this Opinion. Costs of appeal
to plaintiff.
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We Concur:
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Mr. Justice John C. Sheehy, in special concurrence:


     This case demonstrates how silly the results can be when
the legislature, in the guise of "tort reform" interjects
itself in matters that are properly in the province of the
courts.   In my opinion, the District Court was measurably
conservative in assessing punitive damages against a company
that took advantage of the ill and the elderly, and violated
our state's insurance laws.     It is safe to predict that
punitive damages awards will be larger in the future because
of the rites of passage now required by the legislature to be
followed.   The notion that torts can be handled in the
legislative halls instead of in courts at law is prevalent
now, and unfortunately it will keep muddying the legal
waters.


                                           Justice
