           IN THE COURT OF APPEALS OF TENNESSEE
                       AT NASHVILLE

OWNER-OPERATOR                           )
INDEPENDENT DRIVERS                      )
ASSOCIATION, INC., HAROLD
LAN DRY , JIMM Y HU X d/b/a
HUX TRUCKING, RICHARD
                                         )
                                         )
                                         )
                                                          FILED
KERSHMAN, and LAUREL                     )                 February 29, 2000
BAR RICK , Individually and On Be half   )
of All Others Similarly Situated,        )                Cecil Crowson, Jr.
                                         )              Appellate Court Clerk
      Plaintiffs/Appellants,             )     Appeal No.
                                         )     M1999-02560-COA-R3-CV
VS.                                      )
                                         )     Williamson Ch ancery
CONCORD EFS, INC., EFS                   )     No. 125387
NATION AL BAN K, FLYING J,               )
INC., and PILOT CORPORATION,             )
                                         )
      Defendants/Appellees.              )


                 APPEALED FROM THE CHANCERY C OURT
                      OF WILLIAMSON COUNTY AT
                         FRANKLIN, TENNESSEE

          THE HONORABLE CORNELIA A. CLARK, CHANCELLOR

FOR THE APPELLAN TS:                     FOR THE APPELLEES
W. GARY BLACKBURN                        CONCOR D EFS, INC. and
JOHN R. CALLCOTT                         EFS NATIONAL BANK:
Nashville, Tennessee                     J. RICHARD BUCHIGNANI
                                         DOUGLAS A. BLACK
PAUL D. CULLEN, SR.                      Memphis, Tennessee
AMY IRENE WASHBURN
Washington, DC                           FOR APP ELL EE FL YING J, INC .:
                                         J. O. BASS, JR.
                                         Nashville, Tennessee

                                         JONATHAN A. DIBBLE
                                         ERIC D. BARTON
                                         Salt Lake City, Utah

                                         FOR APP ELL EE PI LOT COR P.:
                                         ROBERT R. CAMPBELL
                                         AMY V. HOLLARS
                                         Knoxville, Tennessee


                  AFFIRMED IN PART; REVERSED IN PART;
                            AND REMANDED


                                               BEN H. CANTRELL,
                                               PRE SIDIN G JU DGE , M.S.


                               OPINION
             The primary question in this breach of contract case is whether the

plaintiff independent truckers were third-party beneficiaries of promises made

by the defendant truck stop owners to the defendant bank and the credit card

organizations that they would not add a surcharge to purchases. The trial court

found that they were not third-party beneficiaries and granted summary judgment

to the defendants. We believe, however, that as holders of credit cards issued by

Visa and MasterCard, the truckers were intentional beneficiaries of the no-

surcharge provisions in those contracts. We accordingly reverse the trial court’s

award of summary judgment to the defendant truck stop owners. We affirm the

trial court in other respects, including its dismissal of claims by the truckers’

organization.



                        I. A CLASS ACTION LAWSUIT



             Harold Landry, Jimmy Hux, Richard Kershman and Laurel Barrick

were independent truckers who used credit cards issued by Visa and MasterCard

to purchase diesel fuel at truck stop chains owned by two of the defendant

companies. Contracts between the Visa and MasterCard organizations, the

defendant bank, and the truck stop operators all provided that no surcharge

would be imposed against users of the cards. Nonetheless, the truckers had to

pay at least three cents more for each gallon of fuel than did customers who paid

by other means.



             The above named truckers are members of the Owner-Operator

Independent Drivers Association (OOIDA). On April 7, 1998 OOIDA joined

with them in a class action lawsuit to enjoin the practice of imposing a surcharge

on the use of the credit cards. The individual truckers also asked for damages

resulting from the practice. The plaintiffs’ claims were based on the theory that

they were third-party beneficiaries of the contracts in question. The defendants

were truck stop operators Flying J and Pilot Corporation; EFS National Bank

                                       -2-
(EFSNB), which processes Visa and MasterCard charges for the truck stop

operators; and Concord EFS, Inc., the parent company of EFSNB. Visa and

MasterCard were not named as defendants.



             The plaintiffs filed a Motion for Partial Summary Judgment on the

issue of liability. They contended that as there was no dispute that the truck stop

operators breached their contracts not to impose surcharges on credit card

transactions, the cardholders were entitled to prevail. The defendants filed a

Motion to Dismiss, arguing that since the plaintiffs were not parties to the

contracts at issue, they had no standing to sue.



             After two hearings and a vigorous struggle about discovery of

contract documents (which continued even after the final order was filed), the

trial court finally granted summary judgment to the defendants on all claims, and

dismissed the plaintiffs’ Motion for Partial Summary Judgment. The court

agreed with the defendants that the plaintiff truckers association and the

individual plaintiffs had no standing to sue, finding that they were not intended

third-party beneficiaries of the contracts. The court also found that Concord EFS,

as a parent corporation, could not be held liable for the actions of its subsidiary.

This appeal followed.



                        II. THE CREDIT CARD SYSTEM



             It is not possible to discuss the contracts at issue without reference

to the complex web of contractual obligations between banks, merchants, and

individual cardholders which makes modern consumer credit possible. The

structure of the system is something like a pyramid, with the credit card

associations at the top. Only banks and other financial institutions are eligible

for membership in the voluntary Visa and MasterCard associations.



                                        -3-
             The member banks, which number in the thousands, constitute the

second level of the pyramid. The credit card associations recognize two kinds

of members, each performing a different function within the system: issuing

banks contract with customers such as the plaintiff drivers and issue credit cards

to them; acquiring banks, also known as merchant banks, process credit card

transactions for merchants, such as Flying J and Pilot.



             Hundreds of thousands of retail merchants make up the next level

of the pyramid. When a cardholder uses his credit card to buy something from

a merchant, the merchant must of necessity contact both an issuing bank and a

merchant bank, for the issuing bank must approve the credit of the cardholder

before the merchant bank can process the transaction through its electronic

communications network.



             The lowest level of the pyramid is made up of many millions of

cardholders. When a cardholder desiring to make a purchase presents his card

to a participating merchant, the merchant “swipes” the card through the point of

sale device supplied by the merchant bank. The information on the card’s

magnetic stripe, together with information about the intended purchase, is

transmitted to the Visa or MasterCard association, then to the issuing bank.



             If the issuing bank approves the sale, an intricate sequence of

electronic transactions is set into motion which involves the issuing bank, the

Visa or MasterCard association, the merchant bank, and the merchant.

Essentially, the merchant bank pays the merchant a discounted sum, and is

subsequently reimbursed by the issuing bank, which makes payment through the

credit card association. The issuing bank then bills the cardholder for the full

amount of the transaction. The merchant bank, the issuing bank, and the credit

card association each make a small profit from the sale, but action by the

cardholder is necessary to both open and close the sequence of transactions.

                                       -4-
                              III. THE CONTRACTS



              There are four separate contracts at issue in this case. The contracts

between Visa and EFSNB (the merchant bank) and between MasterCard and

EFSNB are both made up of several documents, including the by-laws and rules

promulgated by the respective credit card associations.            Both Visa and

MasterCard prohibit surcharges. Rule 9.04 of the MasterCard rules demonstrates

the comprehensiveness of the prohibition:



                    Charges to Cardholders. The merchant shall
              not directly or indirectly require any MasterCard
              cardholder to pay a surcharge, to pay any part of any
              merchant discount, whether through an increase in
              price or otherwise, or to pay any contemporaneous
              finance charge in connection with the transaction in
              which a MasterCard is used. A surcharge is any fee,
              charged directly or indirectly, deemed by this
              corporation to be associated with the use of a
              MasterCard card that is not charged if another
              payment method is used.


              The MasterCard rules further specify how the desired result is to be

achieved:

              Because an issuer must be able to rely on certain basic
              terms in merchant agreements that affect the use of its
              MasterCard cards in interchange transactions, each
              merchant agreement must contain the substance of the
              prohibitions set forth in Rule 9.04(b) . . .

              Each member and each affiliate shall use its best
              efforts to cause each of its merchants to observe the
              provisions of the merchant agreement required by
              Rule 9.04(b) . . .



              The MasterCard rules also state that “these rules are intended to be

solely for the benefit of the Corporation [MasterCard] and its members.” A

similar provision is found in the Visa by-laws. However, the record shows that

both organizations used several methods to notify consumers of the benefits of

the no-surcharge provision, including publication of those provisions on their

internet sites.

                                        -5-
             The contracts between EFSNB and Pilot, and between EFSNB and

Flying J specifically reference the documents that make up the Visa-EFSNB and

the MasterCard-EFSNB contracts, and require the merchants to comply with

those contracts. They both also state that “Merchant . . . shall not impose any

surcharge on transactions,” and warrant that “each Sales Draft prepared and each

transaction transmitted to EFSNB represents a valid obligation for the amount

set forth therein, . . . and that there have been no services, carrying or any special

charges or any special agreements, conditions or securities extracted in

connection with the sale . . . .” It is undisputed that Pilot and Flying J charged

more for fuel purchased with Visa and Mastercard than for fuel purchased by

other means.



         IV. THE CARDHOLDERS AS THIRD-PARTY BENEFICIARIES



             The law presumes that a contract has been executed solely for the

benefit of those who are parties to it. Thus, the general rule is that an individual

who is not a party to a contract cannot sue for its breach. However, the general

rule gives way when a non-party can prove that he is an intended beneficiary of

the contract. First Tenn. Bank Nat’l Ass’n v. Thoroughbred Motor Cars, Inc.,

932 S.W.2d 928, 930 (Tenn. Ct. App. 1996). A non-party who wishes to enforce

a contract has the burden of proving that he is entitled to recover as a third-party

beneficiary. Moore Construction Co. v. Clarksville Dept. of Electricity, 707

S.W.2d 1, 9 (Tenn. Ct. App. 1985).



              The law draws a sharp distinction between an intentional beneficiary

(who may maintain an action on the contract) and an incidental beneficiary (who

may not). The fact that a party may reap a substantial benefit from the

performance of a contract does not, in and of itself, entitle it to the status of an

intentional beneficiary. United American Bank of Memphis v. Gardner, 706

S.W.2d 639 (Tenn. Ct. App. 1985). Rather, he must show that the contract was

                                         -6-
entered into, at least in part, for that party’s benefit (the “intent to benefit” test)

or that one party to the contract assumed a duty that the other party owed to the

third-party (the “duty owed” test). Moore Construction v. Clarksville Dept. of

Electricity, supra at 9. The appellants contend that they satisfy both of these

tests.



              Although the intent to benefit test may sound as if it sets out a clear

standard to follow, its application still begs the question of just what constitutes

an intent to benefit. In attempting to answer the question, courts frequently find

themselves having to apply definitions that suffer from an unhelpful circularity.

The following excerpt from Restatement (Second) of Contracts § 302 (quoted in

footnote 18, Moore Construction Co. v. Clarksville Dept. of Electricity, 707

S.W.2d 1, 9 (Tenn. Ct. App. 1985) serves as an example:

                     (1) Unless otherwise agreed between promisor
              and promisee, a beneficiary of a promise is an
              intended beneficiary if recognition of a right to
              performance in the beneficiary is appropriate to
              effectuate the intention of the parties and either

                    (a) the performance of the promise will satisfy
              an obligation of the promisee to pay money to the
              beneficiary; or

                    (b) the circumstances indicate that the promisee
              intends to give the beneficiary the benefit of the
              promised performance. . . (emphasis added)


              While acknowledging the validity of the general principles stated

above, the court did not attempt to more precisely define how one determines

what “the promisee intends,” but concluded that ultimately, “[e]ach case must be

decided on its own unique facts considered in light of the specific contractual

agreements and the circumstances under which they were made.” 707 S.W.2d

at 10.



              With respect to the merchants (Pilot and Flying J) we think that the

truckers were clearly third-party beneficiaries of the merchants’ contract with the


                                         -7-
merchant bank. In that agreement the merchants said in effect, “We promise not

to add a surcharge to purchases made with your credit cards.” Only if the

merchants now say “Well, we never intended to keep that promise” can they

escape the conclusion that the benefit of the agreement was intended for the card

holders. They do not insist that they were that cynical. We accordingly find that

the truckers have standing to maintain this suit against Pilot and Flying J, and

that the trial court erred in granting summary judgment to those defendants.



             With respect to the merchant bank (EFSNB) its promise does not

affect the cardholders so directly. Its promise to Visa and MasterCard was to

“use its best efforts to cause each of its merchants to observe the provisions of

the merchant agreement required by Rule 9.04(b).” Does that promise give the

cardholders a right to sue the merchant bank for failing to prevent the merchants

from adding a surcharge to credit card purchases?



             We are convinced that the merchant bank’s promise only

incidentally confers a benefit on the cardholders. “Using my best efforts to

prevent” another from adding a surcharge is a far different thing from the

merchant’s promise of “I will not add a surcharge.” Therefore, we think the

lower court properly granted summary judgment to the merchant bank. It follows

that EFSNB’s parent company, Concord EFS, was also entitled to summary

judgment.



  V. THE STANDING OF THE OWNER-OPERATORS DRIVERS ASSOCIATION



             The trial court explicitly found that aside from the question of third-

party beneficiary status, OOIDA lacked standing to maintain a class action in its

own name on behalf of its members, because it did not meet all three

requirements set out for such standing in Redbud Cooperative Corporation v.

Clayton, 700 S.W.2d 551 (Tenn. Ct. App. 1985).

                                       -8-
             As stated in Redbud, the three requirements a membership

association must meet before it can maintain suit in its own name are (1) its

members would otherwise have standing to sue in their own right; (2) the

interests it seeks to protect are germane to the organization’s purpose; and (3)

neither the claim asserted, nor the relief requested, requires the participation of

individual members in the lawsuit. 700 S.W.2d at 556. The court correctly

found that OOIDA met the first two requirements, but not the third.



             We have already determined that the four OOIDA members have

standing to sue in their own right. It is also apparent that OOIDA is seeking to

protect the interests of its members. OOIDA is a national trade organization of

independent truckers. Its members each drive on average more than 100,000

miles per year, and surcharges of even a few cents per gallon on the fuel they use

can result in substantial monetary damages to their operations. Because of their

geographic dispersion, it is difficult for members to pursue claims for relatively

small sums of money. OOIDA has accordingly set up a department to help

owner-operators collect funds rightfully due to them, and this department handles

an average of 140 phone calls a day from members.



             As appropriate as it may be for OOIDA to pursue claims on behalf

of its individual members, it cannot maintain this suit without the participation

of those members. In the Redbud case, the court ruled that a homeowner’s

association could maintain suit against residential developers who had

negligently planned and executed a drainage system to carry rainwater away from

the development. The developers themselves had incorporated the homeowner’s

association to own, maintain and control the common areas of the development

for the benefit of the homeowners. Thus the homeowner’s association could be

considered an injured party when the development (including the common areas)

repeatedly flooded.



                                       -9-
              The truck drivers’ association cannot claim any similar relationship

to the defendants, and it has not claimed any injury to itself, apart from the injury

to its members. OOIDA is not mentioned in the contracts at issue, and cannot be

considered a third-party beneficiary of those contracts. There are also no

allegations in the record that it purchased gas from the defendants using Visa or

MasterCard.



              Although OOIDA lacks several ingredients required for standing,

we see no obstacle to prevent it from continuing to support its members in their

attempt to obtain redress. Our holding does not prevent the individual plaintiffs

from seeking class certification “on behalf of all those similarly situated,”

whether members or non-members of OOIDA, nor does it prevent them from

continuing to seek the same remedy OOIDA sought, an injunction, in addition

to their damages.



                                        VII.



              The trial court’s grant of summary judgment to Flying J, Inc., and

Pilot Corporation is reversed, and the claims of Harold Landry, Jimmy Hux,

Richard Kershman and Laurel Barrick against those entities are reinstated. We

affirm the summary judgment in favor of EFSNB and Concord EFS. Remand

this cause to the Chancery Court of Williamson County for further proceedings

consistent with this appeal. Tax one-half the costs on appeal to the Owner-

Operator Independent Drivers Association, and one-half to Flying J, Inc., and

Pilot Corporation.




                                         _______________________________
                                         BEN H. CANTRELL,
                                         PRESIDING JUDGE, M.S.

CONCUR:


                                        -10-
___________________________
WILLIAM C. KOCH, JR., JUDGE


____________________________
WILLIAM B. CAIN, JUDGE




                               -11-
