Domingo Montoya was a master swordsmith, and the father of Inigo Montoya. He created a beautiful sword for Count Tyrone Rugen, but the evil Count demanded it for one tenth of the promised price. Domingo refused to sell it, not as a matter of money, but because Count Rugen could not appreciate the great work of the sword. Angered, Count Rugen slashed him through the heart, thus ending his life.
It is thought that the spirit of Domingo Montoya guided Inigo as his son searched for vengeance, but this is mere speculation.