No. 82-94 INTHE SUPREBE COURT OF THE STATE OF MONTANA i982

INSURANCE SPECIALISTS, INC., Plaintiff and Respondent,

VS

# . DALE LONGFELLOW, Defendant and Appellant.

Appeal from: District Court of the ThirteenthJudicial District, Inand forthe County of Yellowstone Honorable Diane G. Barz, Judge presiding. Counsel of Record: For Plaintiff: Law Offices of Russell K. Fillner; Russell R. Fillner, Biilings, Montana For Defendant: Towe, Ball, Enright & Mackey; NeilD. Enright, Billings, Montana

Submittedon briefs: July 29, 1982 Decided: OCT 7 1982

Filed: 

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# '!%i!Longfellow still 

### owes $1,709.63 on the note. Longfellow counterclaimed that 762 service contracts should have been credited to his account. According 

### to Longfellow, not only is the promissory note fullypaid, but IS1

### owes him $1,810 incommissions. The District Court found that the evidence did not support Longfellow's counterclaim. Longfellow 

### raises two seemingly contradictory issues on appeal. First, he 

### claims the District Court erred by apparently not construing the promissory note and the underlying agreement 

### (letter)as one instrument. Then, inthe second issue, he claims the District Court erred by misinterpreting the underlying agreement. There is nothing in the record 

### to support appellant's first contention that the District Court failed to construe the promissory note and the underlying agreement together. Nearly all of the evidence at trial went 

### to the construction of the underlying contract, and determining who had referred which 

### car dealers to ISI. We need not consider this issue since it is not based on the record. In his second issue, Longfellow basically claims that the District Court misinterpreted the word "referred" as it 

### is used in the underlying agreement. Longfellow contends that his uncontroverted testimony showed he referred certain 

### car dealers to ISI, and therefore he should be credited with the 

### service contracts sold by those dealers. According to Longfellow, evidence thatanotheragent forIS1alsoreferred 

### car dealers 

### to IS1 is irrelevant because the contract does not require that Longfellow be the sole person making the referrals. Longfellow's contention must fail simply because it is not supported by the record. It 

### is elementary that each party must prove his own affirmative allegations. Section26-1-401, MCA, and section 26-1-402, MCA. The 

### claim of satisfaction on a promissory note is an affirmative allegation and must be proved by a preponderance ofthe evidence. Baker National Bank v. Lestar (1969), 153Mont. 45, 453 P.2d 774; E.H. Coltharp & Co. 

### v. Taylor (1974), 30 Utah2d 448, 519 P.2d 885. Here, appellant Longfellow simply did not 

### meet thisburden. Attrial, appellant's 

### case consisted of hisown vague testimony and the noncommittal testimony of one 

### car dealer. Longfellow testified thatprior 

### to May 1978he had worked for Gamut Insurance Company and most of the 

### car dealers in the Billings area 

### were his customers. Specifically, Longfellow testified that prior 

### to May 1978he referred Arnlund Auto Plaza, Ryan Oldsmobile

## ,Midland Dodge, D-J Volkswagen, Town and Country GMC, and Capital Ford inHelena, to Gamut Insurance. After May 1978, when Longfellow made the loan agreement with ISI, Longfellow began 

### to make referrals forIS1 through the local 

### car dealers. He testified that he had nearly daily contact with every 

### car dealer inBillings and had repeatedly referred them to ISI. He gave no specifics concerning when the referrals took place and introduced no evidence showing how many service contracts resulted from these referrals. Longfellow just made the broad statement that he referred all of his previous Gamut customers to IS1

## , including Arnlund Auto Plaza, Ryan Oldsmobile

## , Bob SmithAutos and Midland Dodge. The only other evidence submitted by Longfellow 

### was the testimony of David Pierce, manager of Arnlund Auto Plaza. The following testimony by Mr. pierce 

### is very telling: "Q. Did Mr. Longfellow refer Plaintiff, Insurance SpecialistsIncorporated, and AWC 

### to you? A. Cliff Tophem

## -- Wehad been dealing back and forthwith Dale and Cliff, and atthe time I would say were competitors. And in dealing with Dale, we had signed with some of hiscompanies. And he had the Ming Centerand Dale worked with cars there. And it was a convenient location for us. And we did do business with him 

### at the Ming Center, 

### also. Cliff called on us numerous times. Hewaswith one and then switched to another. And Dale was working 

### at the Ming Center. And I did talk

### to him. I called him and asked him about Cliff, because 

### we were thinking of dropping the other 

### two companies entirely. And he did say that Cliff would service the account and doa good job forus. And I kind of feltthatMr. JusticeGene B. Dalydelivered the Opinion of the Court.

Dale Longfellow, the maker of a $2,000 promissory note in favor of Insurance Specialists, Inc., appeals from a judgment issued by the District Court of the ThirteenthJudicial District, Yellowstone County. The District Court found that Longfellow's counterclaim of satisfactionon the note 

### was not supported by the evidence and granted judgment forInsurance Specialists, Inc. in the amount of $2,262.84. Appellant Longfellow is an insurance agent. One type of insurance contracthe helps 

### to sell 

### is the extended warranty 

### service contract issued by Insurance Specialists, Inc. (ISI) through automobile dealers. Insurance Specialists issues these contracts under the name, Automobile Warranty Corporation (AWC)

# . Longfellow participates in the selling of these contracts by "referring" the 

### car dealer to the insurance company he represents, inthis

### case, ISI. On May 1, 1978, IS1 lent Longfellow $2,000 for 

### a promissory note due on May 1, 1980. Both parties admit that 

### a letter sent to Longfellow .by the president of IS1 is part of the loan agreement. The 

### letter contains the following relevant provisions: "1. It 

### is agreed that 

### we will credit your promissory note at the rate of $5 per Automobile Warranty Corporation service contract issued and paid 

### to Automobile Warranty Corporation from your Montana dealers that

### are referred 

### to usby yourself during the period of 5/1/78 through 5/1/80. "2. If the total servicecontracts

### are 400 

### or rnore, then the note is paid off in full. Anything less than 400 will leave 

### a balance due and payable as of 5/1/80. If the total number of service contracts exceeds 400, your promissory note willbe paid off and you will receive an additional $5 for every contract over that amount during the period of time indicated

# ." The controversy here centers upon how many service warranty contracts should have been credited to the debt Longfellow owed

on the promissory note. IS1 claims, and the District Court found, that after deducting all possible commissions,Cliff would. He would have been very persistent in trying to obtain our business upon that recommendation and talking with Burt 

### we did go with AWC." On rebuttal, IS1presented the key testimony of Cliff Tophem. Tophem testified thathe toobegan working forIS1inMay 

### or June 1978, af

### ter having represented a different insurance company. Tophem countered Longfellow's claims by stating that he, not Longfellow, had solicited the car dealers in Billings. Tophem's testimony was buttressed by the introduction intoevidence of six "DealerAgreement" contracts. In these dealer agreements, a car dealer is authorized to issue IS1 (a/k/a AWC) servicecontracts and receive a commission. Tophem stated that he had negotiated the agreements, writing in the specific 

### terms. Four of the agreements 

### were signed by Tophem as an approved special representative for ISI. In all, Tophem had negotiated dealer agreements with Arnlund Auto Plaza, Ryan Oldsmobile, Town and Country GMC, Car Market, Giv-Way Auto Sales, and Bob SmithLincoln Mercury. Tophem's specific testimony, Dave Pierce

### 's testimony and the documentation introduced at trial support the District Court's finding that Longfellowqs counterclaim is without 

### merit. This evidence also supports the conclusion that the car dealers used IS1 contracts mainly because of Tophemqsefforts. Lastly, this evidence implicitly supports the conclusion that Tophem and Longfellow 

### were competing for the commissions on the 

### service contracts, and that the commissions properly went 

### to Tophem. In contrast, Longfellow's case 

### was supported onlyby his own vague testimony. No evidence was introduced at trial showing when Longfellow made his referrals and which service contracts resulted from these referrals. The District Court had no evidence at trial 

### to determine specifically how much Longfellow should receive in commissions. No specific documentation in the trial records supports appellant's counterclaim that 762 service contractsmust be 

### credited against the promissory note.As statedpreviously, theburden was on Longfellow toprove hiscounterclaimby a preponderance of theevidence, andhehas notdone so. Therefore, theDistrict Courtproperly deniedhis counterclaim and properly grantedjudgment toISI. IS1admits thattheDistrict Court imposed an improper annual interestrateof 10percent, sincethepromissory noterequires

an 8 percent per annum interestrate. The DistrictCourt isdirectedtoamend itsjudgment toconform tothisOpinion.

Weconcur: 

# 34&4*%&

Chief Justice

Jus 

# tm