No. 13302 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978

HAROLD STURDEVANT, Plaintiff and Appellant,

-vsGARY MILLS, Defendant and Respondent.

Appeal from: District Court of the Eighteenth Judicial District, HonorableW. W. Lessley, Judge presiding. Counsel of Record: For Appellant: Tipp and Hoven, Missoula, Montana Raymond P. Tipp argued, Missoula, Montana For Respondent: Bennett and Bennett, Bozeman,Montana Lyman H. Bennett I11 argued, Bozeman,Montana

Filed: Submitted: March 9, 1978 Decided: 

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## 191978Mr. Justice Daniel J. Shea delivered the Opinion of the Court.

Plaintiff Harold Sturdevant, an insurance general agent, appeals from a judgment of the District Court, Gallatin County, denying recovery of advancesmade by him to Gary Mills, an insurance agent. Plaintiff is an insurance general agent residing in Missoula, Montana. He recruited defendant to sell life insurance written by Minnesota Mutual Life Insurance Company of St. Paul, Minnesota, a company for which plaintiff was a general agent. Defendantwas to sell Minnesota Mutual policies out of an office located in Bozeman, Montana. By an agreement signed by plaintiff (hereinafterGeneral Agent) and defendant (hereinafterAgent) on December 15, 1969, and approved by Minnesota Mutual two weeks later,Minnesota Mutual agreed to advance $1,000per month to GeneralAgent for Agent's

use in financinghis new operation. By the terms of this "Agent's Advance Agreement", the advances were to be made against firstyear commissions the Agent was expected to earn in the course of selling life insurancepolicies. The agreement provided that the advancesmay be made if theAgent had met each of three conditions:

(1)Satisfactory performance on certain tests; (2) completion of all precontract training; and, (3) selling of sufficient policies to generate minimummonthly premium amounts set forth as "validation requirements" in the agreement. The agreement also provided: "TheAgent and General Agent agree that: "A. All advances are loans to the General Agent and Agent repayable on demand, and guarantee the Company against loss on any indebtedness created by these advances." By early spring of 1970 the Agent was in financial difficulty. His insurance sales had not met the "validationrequirements" of the Agent's Advance Agreement since his firstmonth on the job.H he GeneralAgent was aware of the Agent's predicament and discussed the continuation of the advanceswith him and with Minnesota Mutual. The General Agent testified the insurance company "took the position that it probably wasn't good business but it

was my money so if Iwanted to advance it to go ahead." The General Agent then continued tomake $1,000 monthly advances to the Agent. TheAgent's financialproblems grewmore acute. Hemet with a Bozeman attorney and attempted to work out an assignment for the benefit of creditors. The General Agent knew of the assignmentplan and thereafterwithheld certain amounts from the Agent's monthly advances to pay the Agent's creditors and the Agent's attorney. The assignment plan proved to be ineffective, and in September 1970 the Agent filed for bankruptcy. The GeneralAgent's participation in the preparation of theAgent's bankruptcy petition was a matter in dispute at trial of the cause, with each side presenting sharply conflicting evidence. The District Court resolved those issues against the GeneralAgent. TheAgent's testimonyplaced the General Agent at the center of the bankruptcy preparations. He testified the General Agent knew of his plan to filebankruptcy, that both were present at a meeting with the Agent's attorney when bankruptcy was decided, and that the General Agent advised him regarding creditors to be listed on the bankruptcypetition. TheAgent further testified the General Agent warned him that if either the GeneralAgent or Minnesota Mutual was listed as a creditor for the advances received, the Agent would most likely lose his job. The General Agent denied he had anything to do with the bankruptcy. He denied discussing bankruptcy during the meeting with theAgent's attorney. He also denied advising theAgent hewould be terminated from employment if he listed either the petition. General Agent or Minnesota Mutual in the bankruptcy/ He testified he knewnothing about the bankruptcy plan until after the bankruptcy had already occurred. The Agent's attorney testified all threewere present at themeeting and bankruptcy was discussed. However,he could not recall anything specific about what was said at that or any other meeting between the three. When the Agent's bankruptcy petition was filed,neither the General Agent nor Minnesota Mutual was included in its list of creditors. TheAgent continued to receive advances through October 1970,even though his sales production remainedminimal. All commissionshe had earned were retained as partial repayment of money previously advanced. The advances ultimately totalled approximately $11,000 and the retained commissions amounted to between $1,100 and $3,500. After theAgent's bankruptcy the General Agent paid Minnesota Mutual the balance owing on the amount the insurance company had advanced to the General Agent for theAgent's use. Ey this time, the Agent had terminated his relationshipwith the General Agent and Minnesota Mutual. The General Agent then demanded repayment from the formerAgent. Repaymentwas refused, and three years later,on February 11, 1974, the General Agent brought the present action to recover the advances. The District Court, sitting without a jury,entered findings of fact and conclusions of law onNovember 24, 1975. On December 2, 1975,the District Court entered judgment in the Agent's favor. The General Agent appeals from this judgment and from the DistrictCourt's denial of his motions to amend the findings of fact and conclusionsof law and to set aside and vacate ormodify the judgment and for a new trial. he issue the GeneralAgent presents for review iswhether the District Court erred in ruling that the Agent was not obligated to repay the advances he received. The General Agent first contends he is entitled to contribution from the Agent because both parties were jointly obligated to repay Minnesota Mutual any money received from the insurance company under theAgent's Advance Agreement. While the agreementwas consideredby the District Court, and by its terms it imposes joint liability upon the Agent and the General Agent for repayment of advances funded by the insurance company,nothing in the General Agent's pleadings indicates the suit was based in any way on a joint obligation or alleges the General Agent was compelled to pay what theAgent should have paid. The complaint

was not based on a theory of contribution,but on the simple theory the Agent was indebted on a loan. Since the question of whether contribution applies on the facts of this case is raised for the first time on appeal,and was notproperly presented to the District Court,we will not review it. Montana Association of Underwriters v. State of Montana, (1977) Mont

# . , 563 P.2d 577, 34 St.Rep. 297, 302. The GeneralAgent's next contention is that the Agent must repay the advances he received because those advanceswere loans which he agreed to repay by signing theAgent's Advance Agreement. The General Agent acknowledges he and theAgent made no agreement between themselves regarding repayment of advances,and he also concedes the Agent failed tomeet the validation requirements set forth in the Agent's Advance Agreement. Nevertheless,he argues those facts have no effect on theAgent's obligation to reimburse him formoney advanced because allparties waived the validation requirements and the agreement therefore remained in full force and effect.However,his reliance on a waiver ismisplaced. He testified Minnesota Mutual told him he was on his ownwith respect to continuing advances under the circumstances. The insurance company's response does not constitute a waiver of theAgent's nonperformance of theAgent's Advance Agreement. At most, it reflects the company's judgment that it had little to lose in any event. The risk was the General Agent's alone, not Minnesota Mutual

### 's. The risk was taken due to the General Agent's desire to reap the benefits of continuing advancesmade to the Agent; benefitswhich would resultwhen a sufficient amount of insurancewas sold through the Bozeman operation. The General Agent knewhe would have to repay Minnesota Mutual any money disbursed to the Agent from the advances received from the insurance companyc He also knew those advanceswere terminable at any time at the option of either himself or Minnesota Mutual. He continued the advances knowing theAgent did not meet theAgent's Advance Agreement and after being told by Minnesota Mutual that he was on his own. Under these circumstances,the advanceswere voluntary payments to the Agent. As defined at 70 C.J.S. Payment S134,a voluntary payment is: 

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## * * a payment made without amistake of fact or fraud,duress,coercion,or extortion, on a demand which is not enforceable against the payor 

## * * * and whether in a given case a payment is voluntary depends on the facts of the particular case, as indicating an intention on the part of the payor to waive his legal rights. 

## * * *'I There was no mistake involved here, nor were the advances continued because(of fraud, duress, coercion or extortion. Theywere continued because the General Agent envisioned a benefit from their continuation. He did nothing to preserve his recovery rights against theAgent. There was no agreement between him and the agent requiring the Agent to repay the advances. Nor was thereany understanding between them that the Agent was incurring individual liability as each advancewas received. Moreover, the General Agent's conduct with regard to the Agent's bankruptcy is further indication of his right to demand repayment of the advances. The District Court found the Agent did not receive a discharge in bankruptcy of any indebtedness resulting from the advances received because of the GeneralAgent's representation that the Agent would lose his employment if he named either the General Agent or Minnesota Mutual in his bankruptcy petition. The General Agent's representations induced the Agent to change his position for the worse. Facing a future in which his job would be the only thing remaining after bankruptcy,he relied

on those representations in foregoing immediate discharge. When

a detrimental change in position is made in reliance on the conduct of another indicating a waiver of present rights,a waiver of recovery rights is established. See,McDonald v. Northern Benefit Assn., (1942), 113 Mont. 595, 610, 131 P.2d 479. We hold on the facts of this case the General Agent has

no right to recover money voluntarily paid to theAgent in the form of advances against sales. This is consistentwith the rule stated by the Oregon Supreme Court in Adams v. Crater Well Drilling, Inc., (1976),276 Or. 789, 556 P.2d 679, 681: "Asa general rulemoney which isvoluntarily paid with full knowledge of facts which would excuse payment cannot be recovered.

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It is also consistentwith our conclusion that in equity and good conscience theAgent should not be held liable for advances voluntarily made to him and not scheduled by him in reliance

on the General Agent's representations. The GeneralAgent stood to benefit from the risk of continuing advances,and under thecircumstances should not be able to avoid the consequences of his enterprise. The judgment of the District Court is affirmed.

We Concur:

Judge,Isr)tting with the Court.

Mr. Chief Justice Frank I. Haswell concurs with the result.