Court Opinion

ID: 9548768
Source: CourtListenerOpinion
Date Created: 2023-08-07 18:08:34.448912+00
Date Added: 2024-06-11T15:19:24.734576
License: Public Domain

Larson, J.:
Laird Noller filed a breach of contract action against GMC Truck and Coach Division, General Motors Corporation (GMC) on the theory he was a third-party beneficiary of the franchise Dealer Sales and Service Agreement (DSSA) between GMC and Jay Beard Trucks, Inc. Noller also alleged GMC tortiously interfered with his prospective business advantage and with his contract with Beard to purchase Beard’s assets conditioned upon his being approved as a GMC dealer. The trial court granted summary judgment to GMC on all three counts. Noller appeals.
Beard began business as the GMC truck dealer in Topeka in 1976. On November 1, 1980, GMC renewed Beard’s DSSA, *16which in paragraph Fourth, entitled “Changes in Management and Ownership,” provides:
“If Dealer desires to make a change in its Dealer Operator(s) or ownership or sell its principal assets to a party that wishes to become an authorized dealer, Dealer will give General Motors prior written notice of the proposed change or sale. General Motors shall not arbitrarily refuse to agree to such proposed change or sale.
“Dealer agrees to provide in the form requested and in a timely manner all applications and information customarily requested by General Motors to evaluate the proposed change or sale. General Motors agrees to consider all factors requested by Dealer and base its decision on whether the proposed change is likely to result in a successful dealership operation with acceptable management and ownership which will provide satisfactory sales and service for GMC Truck customers at the approved location.”
Article III C of the agreement, entitled, “Other Changes in Management and Ownership or Sale of Assets,” provides:
“In order for General Motors to effectively perform its responsibility to administer the authorized dealer system, Dealer agrees in Paragraph FOURTH to give General Motors prior written notice of any proposed change in its Dealer Operator(s) or ownership or any proposed disposition of its principal assets. In turn, General Motors agrees to consider Dealers proposal under the standards identified in Paragraph FOURTH and not to arbitrarily refuse to agree to such proposal. In determining whether the proposal is acceptable to it, General Motors will take into account the qualifications, personal and business reputation and financial standing of the proposed dealer operator and owners, as well as General Motors’ interest in promoting and preserving competition among General Motors dealerships, and between those dealerships and dealerships representing competing motor vehicle manufacturers.
“Dealer shall be notified in writing of General Motors’ agreement or disagreement to Dealer’s proposal within sixty days after Dealer has furnished all applications and information reasonably requested by General Motors to evaluate such proposals.”
With respect to the rights of General Motors to select dealers, the agreement provides:
“General Motors has the right to select each successor and replacement dealer and to approve its owners and principal management and the location of its dealership facilities. General Motors shall perform such responsibility as set forth in Paragraph FOURTH on the basis of evaluating each candidate’s qualifications and proposal for the conduct of dealership operations against the standards set forth in this Agreement.” (Emphasis added.)
On July 3, 1981, Jay Beard wrote to GMC’s Kansas City zone manager advising that, as a result of severe economic difficulties, a depressed market, and health problems, it was his intent to sell the assets of Jay Beard Trucks, Inc. GMC acknowledged the *17receipt of the July 3 letter and by a reply dated July 9, 1981, offered the following for Beard’s guidance in the consideration of such sale:
“1. You have the right to sell the physical assets of your company at any time to anyone you wish on whatever basis you may negotiate.
“2. The sale of the assets of your company will necessarily result in the termination of the Dealer Sales and Service Agreement for GMC Truck Motor Vehicles in effect between us.
“3. The Dealer Agreement by its own terms is not transferable, assignable or saleable by a Dealer and conveys no property right to your company. GMC Truck retains the right to select and appoint each Dealer, to approve its owners and principal management, and to do so on the basis of evaluating the candidate’s qualifications and proposal.
“4. General Motors has a policy that before prospective replacement dealer representation is considered, a review is made through the appropriate Divisional and Corporate levels of the continued viability of the particular dealer location, and the desirability of continuing dealer representation there. In your case, we anticipate completing that review in the near future and will advise you of our intentions with respect to our future representation at your location at that time.
“6. GMC Truck does not become involved in negotiations between parties for the purchase and sale of physical assets of a Dealer. Our interest in this aspect of proposals submitted to us by otherwise acceptable franchise applicants is limited to an evaluation of the projected effect of proposed investments on the capital position of the proposed dealership, and on the projected return on investment.
“7. We recommend any agreement which you make for the sale of your company’s assets should be conditioned upon the approval by GMC Truck of such party and his or her proposal for a Dealer Agreement.” (Emphasis added.)
Beard first contacted Noller concerning the possible sale of Beard’s assets in January of 1982. Noller has been an owner-operator of a Ford dealership in Topeka since 1974 and is one of the top 100 dealers in the United States for Ford automobiles and trucks. Noller also owns Laird Noller Toyota and Laird Noller Ford-Mazda in Lawrence, Kansas.
In the later part of January or early February of 1982, after continued negotiations with Noller, Beard went with Robert G. Tagtmeyer, GMC’s district manager, to view Noller’s dealership operations in Topeka. After it became apparent that an agreement could be reached with Noller, Beard arranged a meeting with Roger A. Ward, GMC’s zone manager, and Tagtmeyer at GMC’s office in Overland Park, Kansas. This meeting occurred February 19, 1982, and was instigated to obtain assurances from GMC that the Beard-Noller proposal would be a viable transac*18tion. Ward told Beard to complete the agreement with Noller and forward it for processing. Beard returned to Topeka and told Noller they had the “green light” to complete the buy-sell agreement.
On February 24, 1982, Noller and Beard entered into a buy-sell agreement for the purchase of Beard’s dealership. In accordance with the suggestion of GMC in its letter of July 9, 1981, and the DSSA agreement between Beard and GMC, paragraph 11 of the Beard-Noiler buy-sell agreement, entitled Conditions Precedent, provides: “The agreement is conditioned upon approval of this agreement by GMC Truck and Coach Division of General Motors Corporation, Pontiac, Michigan.” Noller wanted this paragraph in the agreement to assure that he was “buying” the GMC truck franchise. He was not interested in purchasing Beard’s dealership assets unless he could also obtain the GMC truck franchise.
On March 1, 1982, Beard submitted the buy-sell agreement to GMC for approval. Noller’s understanding of the approval process was that Beard would present the agreement to GMC, who would contact Noller concerning his becoming a GMC franchisee. Noller’s plans concerning the operation of the proposed franchise were flexible and he was willing to do whatever GMC requested in order to obtain the franchise. Noller was qualified based upon his strong financial condition and experience with seven other franchises.
Ward acknowledged receipt of the buy-sell agreement by a March 2, 1982, letter to Beard, which continued the same provisions as the earlier letter forwarded to Beard by GMC on July 9, 1981.
GMC never sent dealership transfer applications to Noller, never contacted Noller, never obtained any documentation or additional information from Noller, and never made any inquiry to Beard as to Noller’s qualifications and plans. Nor did Noller make any attempt to furnish GMC with this information.
During contacts with Ward and Tagtmeyer, Beard was advised that approval had not been obtained. On May 6, 1982, Ward wrote Beard the following letter:
“This is to advise you that, after careful consideration, GMC Truck & Coach Division has decided not to approve execution of a General Motors Corporation Dealer Sales and Service Agreement for GMC truck vehicles for the Topeka, *19Kansas dealership point in which Laird Noller would be dealer-operator or owner.”
Discovery of GMC files revealed a “suggested letter” dated March 5, 1982, written by Ward to Beard advising of GMC’s decision not to approve the transfer of the franchise to Noller. Discovery further revealed the regional or area manager comments on the dealer request for the Topeka area contained the notation dated March 11, 1982, stating, “I do not recommend dualing with Ford.”
The record is clear that GMC made no investigation of Noller’s qualifications, personal and business reputation, or financial standing, and appeared to deny the change solely on the grounds that he was involved in Ford dealerships.
Because of the failure to approve the granting of the GMC franchise, the buy-sell agreement between Noller and Beard was not performed.
In September of 1982, Beard sold his assets to Maurice Lombardo, an International Harvester dealer. GMC approved the transfer in December of 1982, after soliciting and receiving from Lombardo an application, financial information, a proposed dealer balance sheet, and plans for location of the dealership. In May of 1983, Lombardo notified GMC of his desire to sell the light truck line to Bill Kobach Buick, Inc. GMC subsequently approved the transfer. Kobach located the franchise at 21st and Topeka Boulevard, across the street from the location planned for sale of GMC trucks by Noller.
Noller estimated that he would have made net profits of $201,000 per year had he received the GMC truck franchise. He claimed this was a “very conservative” estimate. Noller’s computations were based upon his estimated sales of GMC trucks, projected to be 25% of sales of Ford trucks which he regularly sold at a location one block away. Noller’s estimate also relied upon past vehicle registrations of GMC, Chevrolet, and Ford vehicles. The intersection where Noller planned to place the GMC light-duty truck franchise has the second highest traffic count in the state.
Noller’s action against GMC was filed in Shawnee County District Court on May 5, 1984. Noller’s petition contained three counts: (1) Tortious interference with prospective business advantages which would have been acquired by Noller had he been permitted to buy and operate the GMC dealership; (2) *20breach of GMC’s express contractual obligation to consider a proposed franchisee’s qualifications which resulted in damages to Noller as a third-party beneficiary; and (3) interference with the contractual relationship between Beard and Noller. Beard also sued GMC, and his suit is pending in the United States District Court for the District of Kansas, Case No. 83-4346. By stipulation of the parties, discovery in this action and the United States District Court action was consolidated.
In June of 1986, GMC filed a motion to dismiss, or in the alternative, for summary judgment with an accompanying Rule 141 (1987 Kan. Ct. R. Annot. 79) statement and memorandum of law. Following the filing of Noller’s Rule 141 memorandum, brief in opposition, and oral arguments, the trial court by order dated April 14, 1987, ruled Noller was not a third-party beneficiary of the GMC-Beard contractual obligation that GMC would not arbitrarily object to the proposed franchisee and would specifically consider the proposed dealer’s qualifications, personal and business reputation, and financial standing. The trial court also ruled Noller does not have a tort action against GMC, reasoning that Noller failed to properly show the essential elements of the tort of intentional interference with contractual relationship or prospective business advantage.
The issues on appeal are whether the trial court correctly determined that Noller was an incidental, but not an intended, beneficiary of the DSSA agreement between Beard and GMC, and whether Noller failed to develop the necessary elements of his tort claim.

Is Laird Noller an intended beneficiary of the DSSA agreement between Beard and GMC?

To focus on this issue it will be helpful to trace the history and identify the current status of Kansas law dealing with third-party beneficiaries.
Kansas law is in a state of transition between categorizing beneficiaries entitled to recover as either “creditor beneficiaries” or “donee beneficiaries” under the provisions of early case law and the Restatement of Contracts, and those classified as “intended beneficiaries,” which was the more logical characterization suggested by Professor Arthur Corbin and adopted in the Restatement (Second) of Contracts. See Hunter, Modern Law of Contracts ¶ 23.03 (1987). The long-term battle between Pro*21fessor Williston (2 Williston on Contracts § 356-357 [1959]) and the view of the First Restatement and the modern view of Professor Corbin (4 Corbin on Contracts § 774 [1951]), which became the current law as recognized by the Second Restatement, is chronicled in detail in Waters, The Property in the Promise: A Study of the Third Party Beneficiary Rule, 98 Harv. L. Rev. 1111, 1165-1172 (1985).
The drafters of the Restatement (Second) of Contracts stated, “[T]he terms ‘donee’ beneficiary and ‘creditor’ beneficiary carry overtones of obsolete doctrinal difficulties.” Restatement (Second) of Contracts § 302, Introductory Note (1981). The terms “intended” beneficiary and “incidental” beneficiary are now used to distinguish beneficiaries who have rights from those who do not. The focus is now on whether the promisor and the promisee intended to benefit a third party, regardless of the nature of the transaction. Restatement (Second) of Contracts § 302 states:
“§ 302. Intended and Incidental Beneficiaries
“(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.
“(2) An incidental beneficiary is a beneficiary who is not an intended beneficiary.” (Emphasis added.)
Professor Hunter explains the reasoning which we must follow in making the critical decision as to whether a beneficiary is incidental or intended when he states:
“Intent is the critical factor, and the first question is whose intent. The second Restatement does not specifically define whose intent controls. It states only that the courts must ‘effectuate the intention of the parties.’ The majority of jurisdictions look to the promisee’s intent. This is in accord with Professor Corbin’s argument that the promisee’s intent is the relevant one because the consideration received solely motivates the promisor. A minority of jurisdictions look to the promisor’s intent.
“The next important question involves the nature of the intent. By far, the majority rule is that there must be some showing of an intent to benefit the third party. Some jurisdictions add a requirement of an intent to confer a right on the third party to enforce the agreement in addition to an intent to benefit. Many courts add this additional showing of an intent to confer a legal right or remedy in *22cases involving government contracts with private agencies that benefit numerous parties.
“Because the promisee is not normally a party to the lawsuit and because the promisor has an interest in showing that there was no intent to benefit, determination of intent is not always easy. Courts have devised various tests and rules of thumb to determine whether an intent to benefit existed at the time when the parties executed a contract. Professors Calamari and Perillo have proposed a reasonable-person standard:
“ ‘Would a reasonable man in the position of the promisor conclude that the promisee manifested an intention that the promisor’s promised performance was sought at least in part for the benefit of the alleged beneficiary, and, assuming that the answer to the first question is in the affirmative, would a reasonable man in the position of the promisee conclude that the promisor acquiesced in the intention of the promisee.’ ” Hunter, Modern Law of Contracts ¶ 23.03[4][a], pp. 23-12, 13.
Professors Calamari and Perillo explain and justify their reasonable person standard as follows:
“It is obvious that not everyone who would be benefited by performance of a contract, however remotely or indirectly, should be permitted to enforce it. The test by which the line is ordinarily said to be drawn between protected and incidental beneficiaries is the test of ‘intent to benefit’ the beneficiary.
“Of whose intent do the courts speak and how is the intent to be ascertained? One view, distinctly in the minority, is that both parties must intend to benefit the third party and that such intention must be found in the contract. In general, however, the courts are agreed that it is the promisee’s intention that is more important. Thus the original Restatement determines ‘intent to benefit’ by looking at the purpose of the promisee in the light of the terms of the promise and the accompanying circumstances.
“The Restatement Second takes the position that, ‘unless otherwise agreed,’ if ‘recognition of a right to performance in the beneficiary is appropriate to effectuate the intention of the parties,’ the beneficiary will be protected in two situations. First, if ‘performance of a promise will satisfy an obligation of the promisee to pay money to a beneficiary.’ Second, if ‘the promisee manifests an intention to give the beneficiary the benefit of the promised performance. Ultimately, according to the Second Restatement, intent to benefit is ascertained by whether ‘the beneficiary would be reasonable in relying upon the promise as manifesting an intention to confer a right on him. Where there is doubt whether such reliance would be reasonable, considerations of procedural convenience and other factors strictly dependent on the manifested intention of the parties may affect the question whether . . . recognition of a right in the beneficiary is appropriate.’
“As in other cases in which intention is to be ascertained, there are differences in opinion as to the kind of evidence which may be introduced and how it may be evaluated.
“Under any approach to contractual interpretation, however, the agreement itself is the primary evidence which must be examined. Thus, if the parties explicitly agree that the third party shall or shall not have an enforceable right, their express agreement on this point will be given effect. A key which unlocks *23many of the cases is the determination of to whom the performance is to be rendered. If the performance is to run directly to the promisee, the third party is ordinarily an unprotected incidental beneficiary, but if it is to run to the third party, he is ordinarily an intended beneficiary with enforceable rights.” Calamari & Perillo, Contracts § 17-2, pp. 607-09 (2d ed. 1977).
The Kansas Supreme Court, in Cornwell v. Jespersen, 238 Kan. 110, 115-16, 708 P.2d 515 (1985), quoted from Martin v. Edwards, 219 Kan. 466, 472-73, 548 P.2d 779 (1976):
“ ‘Generally, where a person makes a promise to another for the benefit of a third person, that third person may maintain an action to enforce the contract even though he had no knowledge of the contract when it was made and paid no part of the consideration (Burton v. Larkin, 36 Kan 246, 13 Pac. 398; Anderson v. Rexroad, 175 Kan. 676, 266 P.2d 320). But it is not everyone who may benefit from the performance of a contract between two other persons, or who may suffer from its nonperformance, who is permitted to enforce the contract by court action. Beneficiaries of contracts to which they are not parties have been divided into three classes: Donee beneficiaries, creditor beneficiaries, and incidental beneficiaries. Only those falling within the first two classes may enforce contracts made for their benefit (17A CJS, Contracts, § 519[4]b., p. 964; Accord: Burton v. Larkin, [36 Kan. 246]). These third person beneficiaries are defined in 2 Williston on Contracts, 3d ed., § 356, as follows:
“ ‘ . . (1) Such person is a donee beneficiary if the purpose of the promisee in obtaining the promise of all or part of the performance thereof, is to make a gift to the beneficiary, or to confer upon him a right against the promisor to some performance neither due [nor supposed] or asserted to be due from the promisee to the beneficiary; (2) such person is a creditor beneficiary if no intention to make a gift appears from the terms of the promise, and performance of the promise will satisfy an actual [or supposed] or asserted duty of the promisee to the beneficiary [emphasis added]; (3) such person is an incidental beneficiary if the benefits to him are merely incidental to the performance of the promise and if he is neither a donee nor a creditor beneficiary.” (pp. 824-827.)
“ ‘(Accord: Restatement of the Law of Contracts, § 133, pp. 151-152. Restatement, Contracts, 2d, Revised Tentative Draft, 1973, § 133, pp. 285-286, divides contract beneficiaries into two classes — intended and incidental).’ ”
“ ‘Various tests have been used elsewhere in drawing the line between classes of beneficiaries. In Burton v. Larkin, [36 Kan. 246], this court held: “It is not every promise made by one to another from the performance of which a benefit may inure to a third, which gives a right of action to such third person, he being neither privy to the contract nor to the consideration. The contract must be made for his benefit as its object, and he must be the party intended to be benefited in order to be entitled to sue upon it.” (Syl. Para. 3.) (Emphasis supplied [in Martin].) Under this test a beneficiary can enforce the contract if he is one who the contracting parties intended should receive a direct benefit from the contract (see anno. Contract-Enforcement by Person Benefited, 81 ALR 1271, § 111 d., p. 1286). We think this test is sound and are content to reaffirm it. Contracting parties are presumed to act for themselves and therefore an intent to benefit a third person must be clearly expressed in the contract (Ronnau v. Caravan *24International Corporation, 205 Kan. 154, 159, 468 P.2d 118). It is not necessary, however, that the third party be the exclusive beneficiary of all the promisors performance. The contract may also benefit the contracting parties as well (17 Am. Jur. 2d, Contracts, § 306, pp. 731-732; 17A CJS, Contracts, § 519[4]£, p. 983).’ (Emphasis added.)”
After citing Restatement (Second) of Contracts § 302, the Cornwell court set forth the test applicable in Kansas to determine the intent of contracting parties as to the rights of a third-party beneficiary:
“[W]e must apply the general rules for construction of contracts. The intention of the parties and the meaning of the contract are to be determined from the instrument itself where the terms are plain and unambiguous. First Nat’l Bank b Trust Co. v. Lygrisse, 231 Kan. 595, 647 P.2d 1268 (1982); Anderson v. Rexroad, 175 Kan. 676, 679, 266 P.2d 320 (1954).” 238 Kan. at 116.
Kansas is committed to the modern trend which requires us to apply the duty of good faith and fair dealing in every contract. Bonanza Inc., v. McLean, 242 Kan. 209, 222, 747 P.2d 792 (1987), states the current rule:
“The duty [of good faith and fair dealing] imposes both affirmative and negative obligations. 17 Am. Jur. 2d, Contracts § 256, pp. 653-654, states:
‘Every contract implies good faith and fair dealing between the parties to it, and a duty of cooperation on the part of both parties. Accordingly, whenever the cooperation of the promisee is necessary for the performance of the promise, there is a condition implied that the cooperation will be given. Indeed, it may be said that contracts impose on the parties thereto a duty to do everything necessary to carry them out. When one undertakes to accomplish a certain result he agrees by implication to do everything to accomplish the result intended by the parties. If the giving of notice is requisite to the proper execution of a contract, a promise to give such notice will be inferred. Moreover, there is an implied undertaking in every contract on the part of each party that he will not intentionally and purposely do anything to prevent the other party from carrying out his part of the agreement, or do anything which will have the effect of destroying or injuring the right of the other party to receive the fruits of the contract. Ordinarily if one exacts a promise from another to perform an act, the law implies a counterpromise against arbitrary or unreasonable conduct on the part of the promisee. However, essential terms of a contract on which the minds of the parties have not met cannot be supplied by the implication of good faith and fair dealing.’ ”
We must therefore reexamine the wording from the DSSA to determine the obligation assumed by GMC (as the promisor) and the rights granted to Reard (as the promisee). In doing this, we must not extend liability and recovery beyond our court’s ability to allow redress, as enumerated in the Restatement (Second) of Contracts § 302, Comment, p. 442:
*25“d. Other intended beneficiaries. . . . [I]f the beneficiary would be reasonable in relying on the promise as manifesting an intention to confer a right on him, he is an intended beneficiary. Where there is doubt whether such reliance would be reasonable, considerations of procedural convenience and other factors not strictly dependent on the manifested intention of the parties may affect the question whether under Subsection (1) recognition of a right in the beneficiary is appropriate. In some cases an overriding policy, which may be embodied in a statute, requires recognition of such a right without regard to the intention of the parties.”
Restatement (Second) of Contracts § 308 assists us in the identification of the class intended to be benefited when it states:
“§ 308. Identification of Beneficiaries
“It is not essential to the creation of a right in an intended beneficiary that he be identified when a contract containing the promise is made.”
California holds “the beneficiary need not be named in the contract, he must be a member of a class referred to and identified in it.” Strauss v. Summerhays, 157 Cal. App. 3d 806, 816, 204 Cal. Rptr. 227 (1984) (cited with approval in Karo v. San Diego Symphony Orchestra Ass’n, 762 F.2d 819, 822 [9th Cir. 1985]). Florida courts are stated to have long recognized the rule that a third-party beneficiary need not be named in a contract, but its status may be established by pre-contract and post-contractual actions of the parties. See Florida Power & Light Co. v. Mid-Valley Inc., 763 F.2d 1316, 1321 (11th Cir. 1985).
The right of the beneficiary to enforce the duty assumed by a promisor is clear from Restatement (Second) of Contracts § 304 (1979), which states:
“§ 304. Creation of Duty to Beneficiary
“A promise in a contract creates a duty in the promisor to any intended beneficiary to perform the promise, and the intended beneficiary may enforce the duty.”
GMC argues strenuously that, because it has no obligation to bestow a franchise upon the buyer of Beard’s assets, the chosen party could never become an intended beneficiary. This contention totally ignores that in order to give value and establish the benefit of the sale of an automobile franchise business, GMC agreed with Beard:

“not to arbitrarily refuse to agree to such proposal,”

“[to] take into account the qualifications, personal and business reputation and financial standing of the proposed dealer operator and owners,” 
*26
“not [to] arbitrarily refuse to agree to such proposed change or sale,” and

“to consider all factors requested by Dealer and base its decision on whether the proposed change is likely to result in a successful dealer operation with acceptable management and ownership which will provide satisfactory sales and service for GMC Truck customers at the approved location.”

It is apparent from the facts, viewed as we must to Noller’s benefit in reviewing a motion for summary judgment (McAlister v. Atlantic Richfield Co., 233 Kan. 252, 662 P.2d 1203 [1983]), that every one of the above provisions was violated by GMC. It is further clear that both Beard and GMC concluded the provisions were for the benefit of an intended class of ultimate purchasers of Beard’s assets and applicants for a GMC Truck franchise. Noller fits perfectly into this classification of intended beneficiaries of the DSSA agreement.
The increase in franchising throughout Kansas and the United States requires that courts protect the parties desiring to acquire the assets of a franchisee by compelling the franchisors to act in accordance with their negotiated franchise agreements.
K.S.A. 1987 Supp. 8-2416 precludes a vehicle manufacturer from arbitrarily or unreasonably withholding approval of a proposed sale of dealer assets. Beard is given the right to seek an administrative review of the manufacturer’s decision, but the statute grants no comparable right to a prospective purchaser. While the statute gives no direct claim to Noller, it appears to establish an overriding Kansas policy that approval of a written proposal of sale, transfer, or assignment is not to be arbitrarily or unreasonably withheld.
Cases from other jurisdictions are of some assistance. The Supreme Court of Minnesota, in Culligan Soft Water Serv. v. Culligan Intern., 288 N.W.2d 213 (Minn. 1979), approved findings that a proposed assignee of a franchisee was qualified to assume the franchise and the franchisor’s consent to the assignment was unreasonably withheld. The Tenth Circuit Court of Appeals in Larese v. Creamland Dairies, Inc., 767 F.2d 716 (10th Cir. 1985), determined the Colorado courts had never addressed the question of whether a franchisor has a duty to act reasonably in deciding whether to consent to a proposed transfer. The Larese court determined Colorado has a requirement of “reasonableness” on consent to transfer in other types of contracts and held a franchisor lacks the absolute right to refuse to consent to the sale of a franchisee’s interest to a prospective franchisee.
*27Third parties dealing with an automobile franchisee have the absolute right to negotiate with the franchisee for the purchase of assets with the expectation the franchisor will be required to faithfully comply with and follow the terms of an existing franchise agreement. Noller, as an “intended beneficiary” of the DSSA between Beard and GMC under Restatement (Second) of Contracts § 302 (l)(b), has a right to expect GMC to comply with its franchise agreement.
Does Noller have a tort action against GMC for intentional interference with a contractual relationship or a prospective business advantage?
The buy-sell contract between Noller and Beard contained an express provision making a condition precedent to performance the granting by GMC of a franchise to Noller. Noller negotiated for and obtained the right to abandon the agreement and did so when the franchise was not issued.
The fact Kansas has long recognized that a party who, without justification, induces or causes a breach of contract will be answerable for damages caused thereby (Turner v. Halliburton Co., 240 Kan. 1, 12, 722 P.2d 1106 [1986]; Vaught v. Pettyjohn & Co., 104 Kan. 174, 178 Pac. 623 [1919]); does not benefit Noller with his allegation of damages against GMC for intentional interference with a contractual relationship. There was no existing contract enforceable between Noller and Beard. This precludes any claim for tortious interference with an existing contact.
The court in Turner also recognized that a cause of action for tortious interference with a prospective business advantage or relationship exists in Kansas. The Turner court held:
“The requirements for this tort were recently set forth in Maxwell v. Southwest Nat. Bank, Wichita, Kan., 593 F. Supp. 250, 253 (D. Kan. 1984), as: (1) the existence of a business relationship or expectancy with the probability of future economic benefit to the plaintiff; (2) knowledge of the relationship or expectancy by the defendant; (3) that, except for the conduct of the defendant, plaintiff was reasonably certain to have continued the relationship or realized the expectancy; (4) intentional misconduct by defendant; and (5) damages suffered by plaintiff as a direct or proximate result of defendant’s misconduct.” 240 Kan. at 12.
Restatement (Second) of Torts § 766B (1977) states:
“One who intentionally and improperly interferes with another’s prospective contractual relation (except a contract to marry) is subject to liability to the other for the pecuniary harm resulting from loss of the benefits of the relation, whether the interference consists of
*28“(a) inducing or otherwise causing a third person not to enter into or continue the prospective relation or
“(b) preventing the other from acquiring or continuing the prospective relation.”
The introductory note in the Restatement (Second) of Torts dealing with interference with contract or prospective contractual relation recognizes the law in this area has not fully congealed but is still in a formative stage. The reasons for inclusion of the word “improper” to describe the interference giving rise to a cause of action is more fully explained therein as follows:
“The word adopted for use in this Chapter, neutral enough to acquire a specialized meaning of its own for the purposes of the Chapter, is ‘improper.’ The several forms of the intentional tort of interference with a contractual relation are set out in §§ 766, 766A and 766B. Each of them provides that the interference must be improper. Section 767 specifies and analyzes the factors to be taken into consideration in determining whether the interference is improper, and must therefore be read and applied to each of the earlier sections. The determination of whether an interference is improper depends upon a comparative appraisal of these factors. And the decision is, whether it was improper under the circumstances — that is under the particular facts of the individual case, not in terms of rules of law or generalizations.” Restatement (Second) of Torts, Ch. 37, pp. 6-7.
Prosser and Keaton on Torts § 129, p. 979 (5th Ed. 1984) states:
“Although this ‘improper’ interference was once described as ‘malicious,’ it is now clear that no actual spite has been required at all, and the term is gradually dropped from the cases, leaving a rather broad and undefined tort in which no specific conduct is proscribed and in which liability turns on the purpose for which the defendant acts, with the indistinct notion that the purposes must be considered improper in some undefined way.”
Restatement (Second) of Torts § 767 (1977), which was cited with approval in Turner, states:
“In determining whether an actor’s conduct in intentionally interfering with a contract or a prospective contractual relation of another is improper or not, consideration is given to the following factors:
“(a) the nature of the actor’s conduct,
“(b) the actor’s motive,
“(c) the interests of the other with which the actor’s conduct interferes,
“(d) the interests sought to be advanced by the actor,
“(e) the social interests in protecting the freedom of action of the actor and the contractual interests of the other,
“(f) the proximity or remoteness of the actor’s conduct to the interference and
“(g) the relations between the parties.”
Intertwined in this problem are the actions of GMC, which may be justified or privileged — that is, proper rather than *29improper. See Turner v. Halliburton Co., 240 Kan. at 13; Prosser and Keaton on Torts § 129, pp. 989-94.
Viewing Noller’s evidence as we must, it is apparent a sufficient factual basis has been established to indicate totally “improper” actions on GMC’s part sufficient to require submission to a jury of Noller’s claim for tortious interference with a prospective business advantage. The elements of this tort, as outlined in Maxwell and quoted with approval in Turner, have been established in the following manner:
(1) Noller had an expectancy of future economic benefit;
(2) GMC had knowledge of Noller’s expectancy;
(3) except for GMC’s actions, Noller was reasonably certain to realize his expectancy;
(4) GMC’s denial of the franchise without following the terms of its DSSA with Beard was intentional and improper; and
(5) Noller suffered damages as a direct or proximate result of GMC’s misconduct.
GMC may have defenses to this claim, but there are genuine issues of material facts which remain in dispute, and entry of summary judgment on the issue of tortious interference with a prospective business advantage or relationship was inappropriate.
The case is reversed and remanded for Noller to proceed on his claim as an intended beneficiary of the GMC-Beard DSSA and on his claim against GMC for tortious interference with a prospective business advantage or relationship. The trial court’s grant of summary judgment on the claim for intentional interference with a contractual relationship is affirmed.