Insurance Specialists Inc. v. Lon

• Court: Montana Supreme Court
• Decided: October 27, 1982
• Docket: 82-094
• Status: Published

Opinion

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:

3 4 &i4e *f %J & s t i c e Ch u

Jus tm