author: J. THOMAS GREENE, District Judge.

text:
    Sherrell K. BERRETT and University Financial Concepts, Inc., a Utah corporation, Plaintiffs, v. LIFE INSURANCE COMPANY OF THE SOUTHWEST, a Texas corporation, Richard Lee, Douglas Neill and John Lancaster, Defendants.
    Civ. No. C85-669G.
    United States District Court, D. Utah, C.D.
    Dec. 4, 1985.

      Kent Murdock, Thomas Kay, Salt Lake City, Utah, for plaintiffs.
    Michael L. Deamer, Salt Lake City, Utah, for defendants.
   MEMORANDUM DECISION AND ORDER

J. THOMAS GREENE, District Judge.

This matter came on regularly for hearing on October 3, 1985, on defendants’ Motions to Dismiss. Kent Murdock and Thomas L. Kay appeared on behalf of all defendants, and Michael L. Deamer appeared on behalf of all plaintiffs. The issues were thoroughly briefed, counsel presented extensive oral argument, and the Court took the matter under advisement.

FACTS

Plaintiff Berrett and his insurance agency, University Financial Concepts, Inc., (“UFC”) entered into an agency agreement with defendant Life Insurance Company of the Southwest (“Southwest”) which authorized plaintiffs to write insurance policies for Southwest. The agency agreement contained a so-called “forum selection” clause which provided as follows:

Situs. This agreement is made and performable in Dallas, Dallas County, Texas. The parties agree that any action at law or in equity hereunder shall be brought in Dallas County, Texas____

Pursuant to the said agency agreement, plaintiffs sold numerous Southwest insurance policies to residents of Utah. Southwest became aware of alleged wrongful conduct on the part of plaintiffs in connection with sales in Utah, whereupon certain employees of Southwest in Texas telephonically contacted various Southwest policyholders in Utah. In substance and effect, the policyholders were told that plaintiffs no longer were authorized to sell Southwest insurance, and were encouraged to discontinue relations with plaintiffs. Plaintiffs claim that Southwest personnel also telephoned the Utah Insurance Commission and made false representations concerning plaintiffs.

Plaintiffs brought this action for breach of the agency agreement and failure to pay commissions and renewal commissions. The action also contains counts alleging tortious interference with contractual relations and defamation based upon the telephone calls placed from Texas to Utah by three Southwest personnel. Jurisdiction is based upon diversity of citizenship. Service of process upon the individual defendants who are residents of Texas was effected pursuant to Utah’s “long arm” statute.

The issues here presented are:

(1) Is the forum selection clause here applicable and enforceable against the defendants as to (a) contract claims and (b) tort claims?

(2) Does this court have personal jurisdiction over the persons of the individual defendants?

(3) Are the individual defendants shielded as a matter of law by the “fiduciary shield doctrine”?

I. Forum Selection Clause

Defendants argue that this lawsuit should be brought, if at all, in Dallas County, Texas, the principal place of business for defendant Southwest, under the terms of the forum selection clause set forth above. Defendants concede that the clause does not deprive this court of jurisdiction, but assert that it creates proper venue in Texas.

The Complaint herein sets forth eight (8) claims sounding in both contract and tort. Counts 1, 2 and 3 have to do with alleged breach of the agency agreement and Count 8 is a claim under the theory of quantum meruit for value of services rendered thereunder. The remaining counts sound in tort for intentional interference with existing business relations (Count 4), wrongful inducement to breach the agency agreement (Count 5), defamation (Count 6), and punitive damages (Count 7).

A. Enforceability. Historically, forum selection clauses were disfavored by the courts. See, e.g., Benson v. Eastern Bldg. & Loan Assn., 174 N.Y. 83, 66 N.E. 627 (1903). In the landmark decision of Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 92 S.Ct. 1907, 32 L.Ed.2d 513 (1972), however, the Supreme Court held that in the context of an international commercial agreement forum selection clauses are presumed valid unless proven unreasonable. Most courts which have addressed the issue have extended the Bremen rationale to the context of agreements between domestic corporations. See, e.g., Bense v. Interstate Battery System of America, 683 F.2d 718 (2d Cir.1982), Mercury Coal & Coke, Inc. v. Mannesmann Pipe & Steel Corp., 696 F.2d 315 (4th Cir.1982); D’Antuono v. CCH Computax Systems, Inc., 570 F.Supp. 708 (D.R.I.1983).

Under the Bremen analysis, a party challenging the validity of a forum selection clause must demonstrate that the clause is either invalid as a matter of contract law, or that enforcement would be unreasonable under the circumstances of the particular case. Id. 407 U.S. at 15, 92 S.Ct. at 1916. Applying the Bremen standard to this case, plaintiffs have failed to meet the burden placed upon them to demonstrate the unreasonableness of the forum selection clause, or that the clause is invalid as a matter of law. Plaintiffs did not file affidavits in connection with their motion, and rely on general statements to the effect that conducting this litigation in Texas would be more burdensome than in Utah. Even if this is true, plaintiffs must show more than mere inconvenience. Plaintiffs have failed to make a showing of facts on the record before us that the clause was the result of fraud, duress, overwhelming bargaining power or any other circumstance to come within the Bremen test of unreasonable enforcement.

B. Applicability. Whether tort claims are to be governed by forum selection provisions depends upon the intention of the parties reflected in the wording of particular clauses and the facts of each case. Some courts have held on public policy grounds that tort as well as contract claims may be governed by forum selection clauses. See, e.g., Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd,., 709 F.2d 190 (3d Cir.1983), cert. denied, 464 U.S. 938, 104 S.Ct. 349, 78 L.Ed. 315 (1983), Clinton v. danger, 583 F.Supp. 284 (N.D.Ill.1984). But compelling factual considerations may dictate that claims otherwise governable by forum selection clauses be retained for disposition in the District where filed. See Bankers Trust Company v. Worldwide Transportation, Inc., et al, 537 F.Supp. 1101, 1112 (E.D.Ark.1982). In this case, plaintiffs allege tortious acts by the individual defendants unrelated to the interpretation of the agency agreement which caused direct damage to plaintiffs’ business and reputation. It is claimed that defendants contacted large numbers of plaintiffs’ clients to whom plaintiffs had already sold. Southwest insurance products and encouraged them not to renew their policies through plaintiffs. In addition, it is alleged that defendants defamed plaintiffs by informing these policyholders and the Utah Division of Insurance that plaintiffs were engaged in fraudulent business practices. It is highly unlikely that in entering into the agency agreement the parties contemplated that tort claims such as are here alleged would be governed by the forum selection clause. Neither do we consider that such claims arise “hereunder” so as to come within the scope of the language of this forum selection clause. We therefore hold that plaintiffs’ claims for intentional interference with business relations, wrongful inducement to breach and defamation are not governed by the forum selection clause. We also rule that the forum selection clause is applicable to and governs plaintiffs’ contract and quantum meruit claims under the agreement, absent a showing of unreasonableness as to enforcement thereof. Accordingly, those claims are dismissed, without prejudice to refiling m the forum District in Texas, or in the alternative with leave to conduct discovery and move for reinstatement of those claims here conditioned upon a proper showing of unreasonableness as to enforcement.

II. Personal Jurisdiction

The Utah long arm statute provides in pertinent part:

Any person ... whether or not a citizen of this state, who in person or through an agent does any of the following enumerated acts, submits himself, and if an individual, his personal representative, to the jurisdiction of the courts of this state as to any claim arising from:
... (3) the causing of any injury within this state whether tortious or by breach of warranty; ... (Emphasis added).

Utah Code Ann. § 78-27-24 (1953 Supp. 1985).

Plaintiffs contend that regardless of where the acts occurred, if such cause injury in this state, defendants are subject to suit in this state. Defendants argue that both the acts causing injury and the injury itself must occur in this state in order to invoke the statute.

In determining applicability of the Utah long arm statute, we must determine whether the language of the act is broad enough to create jurisdiction as to the individual defendants based solely upon the alleged telephone conversations initiated by defendants in Texas. Then, assuming the Utah statute is broad enough to reach the defendants in this case, we must determine whether application of the statute here comports with due process requirements. We conclude that the Utah Long Arm Statute reaches the individual defendants and that its application does not violate due process of law.

A. Utah Long Arm Statute

Are telephone conversations initiated outside the State of Utah alone sufficient to create personal jurisdiction under the facts of this case? The question is a difficult one, especially in the context of “non-impact” torts such as defamation and tortious interference with contractual relations. Unlike auto accidents, for instance, these torts do not necessarily require physical presence within the state. Under one line of cases construing long arm statutes which provide for personal jurisdiction over persons who commit “a tortious act” in the state, jurisdiction is proper if the last element necessary to a prima facie cause of action is committed in the forum state. Thus, where a defendant writes a defamatory letter outside the forum and mails it to a person within the forum, publication, a necessary element of the tort, is completed in the state, and the statute would create jurisdiction. Burt v. Board of Regents of Nebraska, 757 F.2d 242 (10th Cir.1985) (construing Colorado’s long arm statute). In Gray v. American Radiator & Standard Sanitary Corporation, 22 Ill.2d 432, 176 N.E.2d 761 (1961), the Illinois Supreme Court held that a foreign corporation which manufactured a valve in Ohio was subject to personal jurisdiction in Illinois where the valve was sent to Pennsylvania, incorporated into a water heater, and then sent to Illinois where the injury occurred. In the context of telephone calls from outside the forum state, the Supreme Court of Oregon in State ex rel. Advanced Dictating Supply, Inc., 269 Or. 242, 524 P.2d 1404 (1974), on facts similar to this case, held that a telephone conversation initiated by defendant from outside Oregon defaming a person inside Oregon was sufficient to warrant exercise of personal jurisdiction under the Oregon long arm statute for the commission of a “tortious act” within this state. A contrary result was reached in McBreen v. Beech Aircraft Corp., 543 F.2d 26 (7th Cir.1976) but the apparent discrepancy may be grounded in a factual distinction. Other courts have required overt acts to occur within the state for jurisdiction to lie. See St. Clair v. Righter, 250 F.Supp. 148 (W.D.Va.1966). We reject this analysis, and hold, subject to due process considerations, that it is sufficient if the injury occurs in the forum state. The express public policy of Utah calls for a broad reach of the long arm statute, “... to the fullest extent permitted by the due process clause of the Fourteenth Amendment of the United States Constitution.” Utah Code Ann. § 78-27-22. (Emphasis added.) We consider the Utah statute to be broad enough to reach the individual defendants in this case based upon the causation of tortious injury within Utah, if the requirements of due process are met.

B. Due Process Limitations

The named individual defendants, all employees of defendant Southwest, must have sufficient “minimum contacts” with the State of Utah to justify the exercise of personal jurisdiction over them. International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945). We think the recent 10th Circuit case of Burt v. Board of Regents of the University of Nebraska, 757 F.2d 242 (10th Cir.1985) is dispositive on this issue. In Burt, a Colorado physician filed suit in Colorado alleging a libel claim against his former supervisor at the University of Nebraska while plaintiff was an orthopedic resident there. On completion of his residency, plaintiff moved to Colorado and sought staff privileges at several Colorado hospitals. The hospitals directed inquiries to defendant about plaintiff’s residency and general competence. In response, defendant sent a “very unfavorable” letter to the hospitals, and plaintiff was denied staff privileges. Based on the letter alone, the Tenth Circuit found sufficient contacts to meet due process requirements. Id. at 245. In reaching its conclusion, the Tenth Circuit Court relied heavily on two recent Supreme Court cases, Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 104 S.Ct. 1473, 79 L.Ed.2d 790 (1984), and Colder v. Jones, 465 U.S. 783,104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). In both of those cases, the Supreme Court of the United States recognized that minimum contacts analysis “properly focuses on the relationship among the defendant, the forum and the litigation.” Keeton, 104 S.Ct. at 1478 (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2579, 53 L.Ed.2d 683 (1977)); Colder, 104 S.Ct. at 1486 (same). In Keeton, the Court further indicated that the “fairness” of requiring a defendant who is not a resident of the forum state to appear in the forum depends in part on the expressed public policy interest of the forum state, noting the particular interest of a forum state in connection with tort claims;

A state has an especial interest in exercising judicial jurisdiction over those who commit torts within its territory. This is because torts involve wrongful conduct which a state seeks to deter, and against which it attempts to afford protection, by providing that a tortfeasor shall be liable for damages which are the proximate result of his tort. Leeper v. Leeper, 114 N.H. 294, 298, 319 A.2d 626, 629 (1974)

465 U.S. 770, 104 S.Ct. 1473, 1479, 79 L.Ed.2d 790 (1984). In Colder, the Supreme Court held that where a Florida resident caused tortious injury in California by acts outside the forum, the defendants were subject to the personal jurisdiction of the California courts:

... jurisdiction over [the Florida residents] in California is proper because of their intentional conduct in Florida calculated to cause injury to [the plaintiff] in California, at 1488. 104 U.S. at 1488. (Emphasis added.)

In this case, a strong public policy of the state of Utah is embodied in its long arm statute for redress of tortious acts which cause injury in this state. The analysis applied by the Tenth Circuit in Burt applies here as well, and we therefore hold that personal jurisdiction over the persons of the defendants exists in this Court.

C. Fiduciary Shield

The individual defendants finally argue that even if the court may exercise personal jurisdiction they are entitled to absolute immunity because all acts complained of were perpetrated in their several capacities as agents, officers or representatives of defendant Southwest. We do not consider that the acts alleged necessarily constitute representation of the corporation within the scope of employment, but in any event we hold that the “fiduciary shield” doctrine would not relieve the individual defendants from personal liability in tort.

The so-called fiduciary shield doctrine originated in cases construing the New York long arm statute. See R. Casad, Jurisdiction in Civil Actions, 114.03[3] (1983) (tracing development of fiduciary shield doctrine). To the extent the doctrine is applied to contract cases, it may be merely a reflection of the contract principle that an agent is not personally liable for the obligation of the principal. While some courts have extended the doctrine to tort claims, see, e.g., Midland Bank v. Miller, 512 F.Supp. 602 (S.D.N.Y.1981) [rev’d on other ground 664 F.2d 899 (2d Cir.1981)], the Supreme Court laid the doctrine to rest in Colder v. Jones, 104 S.Ct. 1482 (1984). In Colder, Shirley Jones, an entertainer, brought a libel suit in California Superior Court based on publication of an article in the National Enquirer. Petitioners were individuals, one a reporter for the Enquirer and one its president and editor. Both were Florida residents who were served by mail. Both moved to quash service and apparently raised the fiduciary shield doctrine as a defense to jurisdiction. Justice Rehnquist, writing for the Court, held that “[petitioners] contacts with California are not to be judged according to their employers activities there. On the other hand, their status as employees does not somehow insulate them from jurisdiction ... petitioners are primary participants in an alleged wrongdoing intentionally directed at a California resident, and jurisdiction over them is proper on that basis.” (Emphasis added) 104 S.Ct. at 1487.

The only post-CaZcZer case cited by defendants here is Thompson McKinnon Securities, Inc. v. Hamiltonian Industries, 610 F.Supp. 5 (S.D.N.Y.1985). That case, in a tortured analysis, held that the fiduciary shield doctrine survived in New York despite Calder because New York’s long arm statute was not coterminous with due process requirements. Id. at 6. The Thompson McKinnon opinion distinguishes Calder based upon New York law inapplicable here. In another (unreported) decision from the Southern District of New York, Judge Sweet held that in light of Calder the fiduciary shield doctrine had been rejected by the Supreme Court. Guccione v. Flynt, 1984 Copyright L.Rep. (CCH) paragraph 25,654 at 18,942 (S.D.N.Y.1984).

We rule that the Calder opinion is fatal to the claim that the fiduciary shield doctrine deprives this court of jurisdiction as to the alleged tortious acts of the individual defendants.

Based upon the foregoing, the defendants’ Motion to Dismiss concerning the forum selection issue is granted as to Counts 1, 2, 3. and 8, and denied as to the other counts; the individual defendants’ motion to dismiss as to the other issues is denied.

IT IS SO ORDERED.

      . The Court said in Bremen that the challenging party has the heavy burden to show that enforcement of a forum selection clause would be so seriously unreasonable that the challenging party would for practical purposes be deprived of its day in court. Bremen, supra, 407 U.S. 1, 18-19, 92 S.Ct. 1907, 1917-1918.

      . At hearing on this matter, counsel for plaintiff's stated that roughly 4,000 such policyholders were potential witnesses in this case.

      . In McBreen, the defendant neither solicited nor initiated the phone call in which the alleged defamation occurred, while the phone call in Advanced Dictating was initiated by the defendant. This distinction may be crucial in a due process analysis, because a crucial test for minimum contacts is "purposeful availment” as in Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958), and “intentional conduct” as in Calder v. Jones, 465 U.S. 783, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984), discussed below.


source: Caselaw Access Project

author: JOHN W. OLIVER, Senior District Judge.

license: Public Domain

text:
    Walter GRIBBEN, et al., Plaintiffs, v. LUCKY STAR RANCH CORP., Defendant.
    No. 84-0316-CV-W-1.
    United States District Court, W.D. Missouri, W.D.
    Dec. 5, 1985.

      Arthur J. Kase, Rubins Kase Rubins & Cambiano, Kansas City, Mo., for plaintiffs.
    John R. Cleary, Linde Thomson Fairchild Langworth Kohn & Van Dye, Kansas City, Mo., for defendant.
   MEMORANDUM AND ORDER

JOHN W. OLIVER, Senior District Judge.

I.

This case pends on defendant’s motion for summary judgment based primarily on res judicata and statute of frauds grounds. It is appropriate that we outline the procedural steps followed by the parties before we make our findings of fact and state the conclusions of law in support of our ultimate conclusion that defendant’s motion, for summary judgment should be granted.

The files and records in this case reflect that counsel for the respective parties commendably recognized that almost all of the complicated factual circumstances could be agreed upon by stipulation of the parties. Accordingly, the parties entered into their first stipulation on December 14, 1984. Thereafter, on April 26, 1985 a further stipulation was agreed upon which incorporated the December 14, 1984 stipulation as a part of the April 26, 1985 joint stipulation.

Defendant filed a motion for summary judgment on May 25, 1985. Extensive briefs in support and opposition were thereafter filed by the parties. On September 16, 1985, however,_ defendant’s pending motion for summary judgment was fully discussed at a pretrial conference held that day. In an order entered on September 16, 1985 this Court determined that genuine issues of material fact existed on the question of whether plaintiff Gribben and International Genetics, the named defendant in the New York judgment, were in privity. We accordingly denied the motion at that time and set the case for jury trial to commence on October 14, 1985.

The parties, however, filed a joint application to remove the case from the jury trial docket. On October 1, 1985 we granted that application under procedures that anticipated that any and all disputed issues of fact would be presented at a non-jury hearing to commence on October 21, 1985. Our October 1, 1985 order required the parties to file proposed findings of fact and proposed conclusions of law together with their respective lists of witnesses to be called at the hearing, a list of depositions to be admitted in evidence, and an index of all documentary evidence that would be offered as exhibits.

The transcript of the proceedings held on October 21, 1985, the date on which the hearing was scheduled to be held, established that neither side wished to adduce any testimony by live witnesses. The parties agreed that the deposition testimony of the witnesses identified by the parties should be considered as the trial testimony of the particular witness whose deposition testimony was identified. Further proceedings were directed on October 21, 1985 which required the parties to file a crossfire to opposing counsel’s proposed findings of fact and proposed conclusions of law on or before November 11, 1985. The purpose of the cross-fire was to obtain further agreement in regard to both questions of fact and questions of law. The parties complied with those directions in an exemplary manner.

Plaintiffs’ cross-fire response to defendant’s proposed findings of fact admitted substantially all of the findings of fact proposed by the defendant. Indeed, a substantial number of the findings of fact are based on the two stipulations agreed to by the parties.

Because we find and conclude that defendant’s proposed findings of fact set forth the relevant and material circumstances of this case, we adopt all findings of fact that defendant proposed that have been admitted to be true by plaintiffs’ cross-fire response. The very small number of findings proposed by the defendant which the plaintiffs denied will be identified by underlining such portions of defendant’s proposed findings that plaintiffs denied in their cross-fire response. We will, however, append a footnote to all portions of the defendant’s proposed findings which plaintiffs have denied to indicate the reason why we will adopt the findings denied by plaintiffs’ cross-fire response as part of our findings of fact in this case.

Plaintiffs have also admitted a substantial number of defendant’s proposed conclusions of law. We will state all of the conclusions of law which plaintiffs have admitted to be true in subpart A of part III, infra, and will therefore state in sub-part B of part II, infra, a number of additional conclusions of law which we believe must be applied to the findings of fact made in part II to follow.

We now make the findings of fact in accordance with what we have stated above. It will be understood, of course, that all findings of fact which are not underlined were admitted to be true by plaintiffs’ cross-fire response. The portions of the findings that are underlined are made by the Court for the reasons stated in the footnotes appended to those portions of the underlined findings.

II.

Findings of Fact

1. On July 25, 1983, the defendant Lucky Star Ranch Corp. purchased from a company named VM Farming Corporation 233 head of simmental cattle. The cattle that are at issue in this lawsuit were included in these 233 head. Defendant’s Exhibit A is an authentic copy of the bill of sale for this purchase of these 233 head of cattle. (Paragraph 1, Joint Stipulation; defendant’s Exhibit A.)

2. At the time the defendant Lucky Star Ranch Corp. purchased the 233 head of cattle from VM Farming Corporation, it was agreed between it and VM Farming Corporation that the latter would care for the cattle at a farm in Rhinebeck, New York known as the VM Farming farm. James Reardon was employed by VM Farming Corporation as farm manager of the farm. (Paragraph 18, Joint Stipulation.)

3. From the time the defendant purchased the cattle from VM Farming Corporation until on or about January 4, 1984, the cattle were, except for four head, located at the VM Farming farm in Rhinebeck, New York. (Paragraph 33, Stipulation.) The four head were located on the VM Farming farm until December, 1983. (Paragraph 34, Stipulation.)

4. In 1981 or 1982, Henry Holt talked with the plaintiff, Walter Gribben, about Gribben financing a real estate time share development located in New Zealand with which Holt was involved. Gribben, after having a number of discussions with Holt, did not provide the financing. (Walter Gribben deposition, pages 15 and 16.)

5. In early 1983, Henry Holt advised the plaintiff, Walter Gribben, that Holt was involved in selling cattle embryo contracts to third-party investors who were being induced to purchase these contracts because of the tax benefits associated with them. Holt told Gribben that these investors were financing their purchases through a Holt controlled business entity. Holt told Gribben that he had a substantial amount of these receivables which he wanted to discuss. Gribben agreed to finance the receivables by loaning Holt $500,000.00 against approximately $1,250,000.00 of the embryo receivables. (Walter Gribben deposition, pages 14 and 15.)

6. In the latter half of 1983, Holt repaid the $500,000.00 loaned by Gribben. At the time Holt repaid the money, he informed Gribben that he anticipated a massive sales program in 1983 and felt he was going to have some problems- with respect to acquiring recipient cattle. Holt informed Gribben that he had been successful in working out with one or two individual investors a program under which they would buy the cattle and then lease them back to him. Gribben asked Holt to call him if Holt found that he needed additional investor help and if he was willing to arrange it on a bulk transaction base. (Walter Gribben deposition, pages 17, 18, and 19.)

7. In October of 1983, Henry Holt, the president of International Genetics, Inc., and the plaintiff, Walter Gribben, entered into discussions concerning Gribben purchasing cattle and then leasing the cattle purchased back to International Genetics for its use in its embryo transplant program. (Paragraph 2, Joint Stipulation.) On November 9, 1983, Gribben wrote a memorandum in which he outlined the terms of the cattle transaction he was corn sidering with Holt. Defendant’s Exhibit B is an authentic copy of the memorandum. (Paragraph 3, Joint Stipulation.) The terms outlined in the memorandum are, among others, the following: (a) Holt was to sell Gribben 300 cows owned by Holt for a price of $100.00 each; (b) Gribben was to purchase 1,500 cows from Holt, or a third party, at a cost not to exceed $750.00 per cow; (c) Gribben would lease all the cows purchased to Holt for an amount equal to 40% of the original purchase price, payable per month on a 29-month lease; and (d) Gribben would have an unconditional right to purchase the entire herd at the conclusion of the lease. , (Defendant’s Exhibit B.)

8. Since the cattle purchased by Gribben were to be leased back to International Genetics, it was understood between Holt and Gribben that International Genetics was to locate cattle which were suitable to be purchased and then leased back to it. (Paragraph 6, Joint Stipulation.) It was understood that Holt would negotiate the purchase price for the cattle. (Lynda St. James’ deposition, page 21.)

9. Plaintiff, Walter Gribben, and International Genetics entered into an agreement entitled “Bovine Lease Agreement” which is dated December 15, 1983. Defendant’s Exhibit C is an authentic copy of this Agreement. (Paragraph 4, Joint Stipulation; defendant’s Exhibit C.) This Agreement provides for Gribben to purchase the cattle identified in Schedule A of the Agreement. (Paragraph 1, defendant’s Exhibit C.) The cattle at issue in the instant action are included in the 227 head of cattle described in this Schedule A. (Paragraph 5, Joint Stipulation.) The Agreement also provides that the cattle purchased by Gribben are to be leased back by Gribben to International Genetics for a 29-month period. (Paragraphs 2 and 3, defendant’s Exhibit C.) The Agreement provides that, during the term of the lease, Gribben was to pay, with certain described limitations, the costs of feed and veterinary fees for the cattle. (Paragraph 5, defendant’s Exhibit C.) The Agreement also provides that International Genetics is to defend, indemnify and hold Gribben harmless from and against any claim or cause of action relating to the ownership, sale or removal of the cattle or by reason, or as a result, of any act or omissions by International Genetics for itself or as agent or attorney-in-fact for Gribben. (Paragraph 13, defendant’s Exhibit C.) Additionally, the Agreement provides that International Genetics is to keep the cattle free and clear of any and all liens, charges, encumbrances or adverse claims. (Paragraph 14, defendant’s Exhibit C.) Under the Agreement, International Genetics could elect to purchase the cattle. The Agreement provides that International Genetics intends to sell cattle embryos to investors and provides that the embryos are to be implanted in the cows that are the subject of this Agreement. Investors whose creditworthiness was approved by Gribben were, according to the Agreement, to execute promissory notes for the balance of the embryo purchase price not paid by them in cash. (Paragraph 23.1, defendant’s Exhibit C.) Under the Agreement, International Genetics pledged and granted a security interest to Gribben in these investor promissory notes. (Paragraph 23.2, defendant’s Exhibit C.)

10. Curt Rodgers was, at all times relevant to this action, the owner and operator of North American Auction Company in Platte City, Missouri and of Rodger’s Land & Cattle Co. in Huntsville, Missouri. Rodgers was involved in International Genetics’ embryo transplant program in that he maintained the donor and recipient cows involved in the transplanting. (Paragraph 13, Joint Stipulation.)

11. Curt Rodgers and Henry Holt first looked at the cattle at issue in this action in late October of 1983. (Paragraph 13, Joint Stipulation.) Rodgers first contacted the plaintiff, Walter Gribben, on November 11 or 12 of 1983 about Gribben purchasing these cattle for lease back to International Genetics. (Paragraph 14, Joint Stipulation.)

12. In December of 1983, James Rear-don and Curt Rodgers moved four head of the cattle that are at issue in this action from the VM Farming farm to International Genetics’ premises in Terrel, Texas. (Paragraph 34, Stipulation.) On or about January 4,1984, the balance of the cattle at issue were moved from the VM Farming farm to the following locations: part to Dr. O’Leary’s farm in Salt Point, New York; part to Jay Roebuck’s farm at or near Salt Point, New York; and, the balance to Curt Rodgers’ premises in Huntsville, Missouri, known as Rodger’s Land & Cattle Co. (Paragraph 35, Stipulation.) At the time the cattle were moved to Dr. O’Leary’s farm and to Jay Roebuck’s farm, both farms were leased to International Genetics. (Paragraph 15, Joint Stipulation.)

13. On or about January 26, 1984, Lucky Star Ranch Corp. instituted a lawsuit in the Supreme Court of the State of New York, County of Dutchess, against International Genetics. (Paragraph 7, Joint Stipulation.) International Genetics was served with process in this case on January 30, 1984. (Paragraph 7, Joint Stipulation.) In the complaint filed by Lucky Star in this action it alleged that in early January of 1984, International Genetics converted cattle owned by Lucky Star and it prayed for a judgment for possession of the cattle. (Paragraph 8, Joint Stipulation.) Defendant’s Exhibit D is an authentic copy of the complaint filed in the New York action. (Paragraph 7, Joint Stipulation.) The cattle which were at issue in the New York action are the same cattle that are at issue in the instant action. (Paragraph 8, Joint Stipulation.) On February 17, 1984, the law firm of Sherman & Citron of New York City entered International Genetics’ appearance in this New York action. (Exhibit B of the Affidavit of Raymond M. Maguire, defendant’s Exhibit G.) By agreement between the attorneys of record for Lucky Star and for International Genetics the date for International Genetics to file a responsive pleading in the New York action was extended twice. The first extension was to March 5, 1984, and the second was to March 12, 1984. (Affidavit of Raymond M. Maguire, defendant’s Exhibit G; Exhibits C, D, and E of defendant’s Exhibit G.)

14. On January 28, 1984, Raymond Maguire, the attorney representing Lucky Star in the New York action, sent a letter to Curt Rodgers in which he enclosed a copy of the complaint filed in that action, a copy of an Affirmation by Maguire filed in that action and a copy of a show cause order entered in the action. (Paragraph 16, Joint Stipulation.) Defendant’s Exhibit E is an authentic copy of the letter and its enclosures. (Paragraph 16, Joint Stipulation.) Rodgers received the letter and its enclosures on February 1, 1984. (Defendant’s Exhibit E; Curt Rodgers’ deposition, page 44.) By early February of 1984, the plaintiffs in the instant action knew of the New York action. (Paragraph 17, Joint Stipulation.)

15. On April 3, 1984, the court in the New York action entered a judgment against International Genetics and in favor of Lucky Star Ranch Corp. for possession of the cattle. (Paragraph 7, Joint Stipulation.) Defendant’s Exhibit F is an authentic copy of the judgment entered. (Paragraph 7, Joint Stipulation.)

16. No contract for sale of the cattle at issue in the instant action was made between the defendant Lucky Star Ranch Corp. and any of the plaintiffs. (Paragraph 9, Joint Stipulation.) No contract for the sale of the cattle at issue in the instant action was made between Lucky Star Ranch Corp. and Hollow Circle Holsteins. (Paragraph 10, Joint Stipulation.) No writings signed by International Genetics or Hollow Circle Holsteins exist which indicate that a contract for the sale of the cattle at issue was made between International Genetics and Hollow Circle Holsteins. (Paragraph 11, Joint Stipulation.)

17. Defendant’s Exhibit K is, except for the handwritten name “Henry Holt” which appears thereon, an authentic copy of a document prepared by Raymond Maguire and sent by him to Henry Holt, upon the latter’s request, as the form of promissory note which Lucky Star would require in the event a contract for the sale of the cattle was made between Lucky Star and International Genetics. (Paragraph 36, Stipulation, Raymond Maguire deposition, page 29.)

18. On or about December 29, 1983, the plaintiff, Walter Gribben, had an employee of International Genetics, a Ken McKay, deliver a cashier’s check for $142,600.00 in New York to Jay Roebuck of Hollow Circle Holsteins for the purchase of 200 head of cattle. (Paragraph 21, Joint Stipulation.) Jay Roebuck was on Henry Holt’s payroll. (Walter Gribben deposition, page 58.) The 200 head of cattle for which this $142,-600.00 cashier’s check was delivered did not include any of the cattle at issue in the instant action (Paragraph 21, Joint Stipulation.)

19. On December 30, 1983, International Genetics issued a $50,000.00 check on its account at The First National Bank of Rhinebeck, payable to that bank for the purchase of a $50,000.00 cashier’s check payable to Lucky Star. (Paragraph 21, Joint Stipulation.) This $50,000.00 cashier’s check was delivered by International Genetics’ employee, Ken McKay, on December 30, 1983 to Lucky Star’s attorney, Raymond Maguire, in New York. (Paragraph 21, Joint Stipulation.) The proceeds of the cashier’s check were deposited into a bank account of Lucky Star. (Paragraph 21, Joint Stipulation.) Raymond Maguire did not understand that the $50,000.00 cashier’s check was being tendered as a payment under any contract between Lucky Star and International Genetics nor did he accept it as such. At the same time the $50,000.00 cashier’s check was delivered to Maguire, Lucky Star’s position was that there was no contract with International Genetics which was in existence (Raymond Maguire deposition, pages 24 through 28.)

20. On December 3, 1983, neither Jay Roebuck nor Hollow Circle Holsteins owned the cattle at issue in the instant action. (Jay Roebuck deposition, page 54.)

21. The plaintiff, Walter Gribben, received a document entitled “BILL OF SALE” which bears the date of December 3, 1983, and purports to be signed by Jay Roebuck. (Paragraph 24, Joint Stipulation; defendant’s Exhibit H.) After receiving this document, Gribben’s .attorneys wanted a bill of sale that was in a different form. (Walter Gribben deposition, page 28; Lynda St. James’ deposition, page 31.) Henry Holt and the plaintiff, Walter Gribben, arranged for Ken McKay, an employee of International Genetics to go to New York in late December, 1983, to have Jay Roebuck sign a bill of sale in a different form. (Walter Gribben deposition, pages 29 and 30.) The first page of defendant’s Exhibit I is the changed bill of sale form and was received by the plaintiff Gribben in the early part of 1984. (Walter Gribben deposition, page 31; Lynda St. James’ deposition, page 31.) It bears the date of November 29, 1983, and purports to be signed by Jay Roebuck. (Defendant’s Exhibit I.) This bill of sale was not signed by Jay Roebuck. (Paragraph 22, Stipulation; Walter Gribben deposition, page 31.) When Ken McKay went to New York to get the changed bill of sale form signed by Roebuck, he lost it in the airport. So, late at night in a bar, he asked Roebuck to sign two blank pieces of paper intending that the bill of sale form would then later be typed around the signature. (Lynda St. James’ deposition, pages 68 and 69.)

22. The document identified as defendant’s Exhibit J which bears the date of December 30, 1983, and which purports to be a bill of sale signed by Jay Roebuck, was not signed by him. (Paragraph 23, Stipulation.) The majority of the cattle described in this document were non-existent. (Lynda St. James’ deposition, page 59.)

23. The plaintiffs’ claim of ownership of the cattle at issue in this action is predicated on their claim that they purchased the cattle from Hollow Circle Holsteins. They claim that Hollow Circle Holsteins acquired ownership of the cattle by virtue of an assignment to it by International Genetics of the ownership rights to the cattle. The plaintiffs claim International Genetics acquired ownership of the cattle under a contract with Lucky Star Ranch Corp. (Paragraphs 13, 14, and 17, plaintiffs’ “Complaint For Replevin”, filed in the instant action on March 8, 1984.)

III.

Conclusions of Law

Plaintiffs’ cross-fire admitted the conclusions of law which we state in subpart A of this part III. We have renumbered those admitted conclusions of law and have added defendant’s paragraph number in parenthesis after the new consecutive number of the particular admitted paragraph.

In subpart B of this part III we shall state additional conclusions of law which plaintiffs do not admit but which we have concluded are applicable to the undisputed material factual circumstances of this case.

A.

1. The doctrine of res judicata operates as an absolute bar to the relitigation of the same cause of action between parties and their privies. Jefferson School of Social Science v. Subversive Act Con. Bd., 331 F.2d 76 (D.C.Cir.1963). Its conclusive effect extends to all matters of fact and law that were, or could have been, determined in the initial action. Cantor v. Multiple Listing Service of Dutchess County, Inc., 568 F.Supp. 424 (S.D.N.Y.1983). The doctrine of res judicata is applicable whether the judgment involved was rendered by the same or by a different court. Forsyth v. Hammond, 166 U.S. 506, 17 S.Ct. 665, 41 L.Ed. 1095 (1897).

2. When a prior judgment is rendered in a state court, 28 U.S.C. § 1738 requires federal courts to give the judgment the same preclusive effect as the judgment would have received in the state in which it was rendered. Kremer v. Chemical Construction Corp., 456 U.S. 461, 102 S.Ct. 1083, 72 L.Ed.2d 262 (1982). Therefore, in the instant action, since it is a New York state judgment which the defendant contends acts as the bar to the instant action, it is New York law which controls for the purposes of determining whether or not the New York judgment has, under the doctrine of res judicata, a preclusive effect on the instant action.

3. The elements necessary for the imposition of the preclusive effects of res judicata are as follows: a prior judgment is rendered by a court of competent jurisdiction; the prior judgment is a final judgment on the merits; the same cause of action is involved in both actions; and, the same parties, or their privies, are involved in both actions. Williams v. Codd, 459 F.Supp. 804 (S.D.N.Y.1978); In re Pugach, 25 A.D.2d 642, 268 N.Y.S.2d 197 (1966).

4. The New York court which entered the judgment on April 3,1984, in the Lucky Star Ranch Corp. v. International Genetics action was a court of competent jurisdiction. N.Y. Civil Practice Law and Rules § 301.

5. A judgment is final when the time for appeal has expired. The New York judgment was rendered on April 3, 1983. The time for appeal has clearly expired and, therefore, the New York judgment is a final judgment.

6. In order for a prior judgment to have a res judicata effect, it must have been one on the merits. Kilduff v. Donna Oil Corp., 74 A.D.2d 562, 424 N.Y.S.2d 282 (1980). For res judicata purposes, a judgment is “on the merits” if the purpose of the action in which it was entered was to dispose of the claim on substantive rather than procedural grounds. Saylor v. Lindsley, 391 F.2d 965 (2d Cir.1968). Since a judgment by default substantively disposes of an entire claim, it is a judgment “on the merits” for res judicata purposes. Moyer v. Mathas, 458 F.2d 431 (5th Cir.1972); Willametz v. Munch, 37 A.D.2d 695, 322 N.Y.S.2d 1016 (1971). Therefore, the judgment entered by the New York court on April 3, 1984, was on the merits.

7. It is well settled that a final judgment bars future actions between the same parties, or their privies. Reilly v. Reid, 45 N.Y.2d 24, 407 N.Y.S.2d 645, 379 N.E.2d 172 (1978). Causes of action, for res judicata purposes, are the same if the two causes of action have such a measure of identity that a different judgment in the second action would destroy or impair rights or interests established by the judgment entered in the first action. Schuylkill v. B & C Nieberg Realty Co., 250 N.Y. 304, 165 N.E. 456 (1929).

8. (9) The preclusive effect of res judicata may be applied not only to the parties to a prior action in which a judgment has been entered but, also to persons in privity with them. Andrasko v. Calkins, 47 Misc.2d 816, 263 N.Y.S.2d 256 (1965). Persons are in privity for res judicata purposes when the interests of the non-party are so closely related to the interests of the party, that the non-party can fairly be considered to have had his day in court. In re Gottheiner, 703 F.2d 1136 (9th Cir.1983).

9. (12) A privity relationship for res judicata purposes exists when the interests of a non-party are represented by a party in the former action. Restatement (Second) of Judgments, § 41 (1982), provides that a person who is not a party to an action, but who is represented by a party, is bound by a judgment rendered in the action as though he were a party. The non-party’s representative may be constituted as such through some transaction antedating the litigation wherein the representative is given authority to manage and safeguard interest of the non-party. In such circumstances, the authority and responsibility to represent the non-party in the litigation is concomitant to the representatives’ general managerial authority and responsibility for the matter entrusted to him. The effect is to confer on the representative the requisite authority to participate as a party on behalf of the represented person. Such representation is equivalent to participation by the represented person himself.

10. (15) Even if it could be said that the reasoning of Gramatan, Home Investors Corp. v. Lopez, 46 N.Y.2d 481, 414 N.Y.S.2d 308, 386 N.E.2d 1328 (1979), in an assignor-assignee relationship had application to a relationship such as that which existed between the plaintiffs and International Genetics, it must be recognized that the law provides, under special circumstances, for an assignee to be held to be in privity with the assignor even if the assignment predates the institution of the action against the assignor. Wright, Miller & Cooper, Federal Practice and Procedure, § 4462, at 554, 555. Under the uncontroverted facts of the instant case, such special circumstances exist. The plaintiff Gribben entered into the Bovine Lease Agreement with International Genetics. Therefore, as a matter of law, the plaintiffs were in privity with International Genetics in the New York action because they authorized International Genetics, in the Bovine Lease Agreement, to defend against any claims relating to the ownership of the cattle and to keep the cattle free and clear of any adverse claims. Therefore, by contract, the plaintiffs appointed International Genetics as their representative to defend the New York action. As such, the plaintiffs were clearly in privity with International Genetics in that action.

B.

11. The plaintiffs’ claim is predicated on their contention that they are entitled to possession of the cattle at issue in this action. The cattle at issue in this action are the same cattle that were at issue in the New York action. The New York court in the judgment it entered determined that the defendant was entitled to possession of the cattle. Under the principles stated in Schuylkill v. B & C Nieberg Realty Co., supra, we conclude that the cause of action in this Court and the New York cause of action are the same for res judicata purposes. Rankin v. Wyatt, 335 Mo. 628, 73 S.W.2d 764 (1934), relied on by plaintiffs, does not support plaintiffs’ argument to the contrary.

12. Plaintiffs’ contention that only a lessor-lessee relationship existed between Gribben and International Genetics is untenable under the undisputed factual circumstances of this case. Rather, we conclude that under the findings of fact stated in part II above, the interests of the plaintiffs and International Genetics, so far as the cattle at issue are concerned, were so intertwined, so paralleled one another and were so inseparable that their interests were, at minimum, closely related and, therefore, the plaintiffs were in privity with International Genetics in connection with the New York action.

13. The representative relationship described in § 41, Restatement (Second) of Judgments, is virtually identical to the uncontroverted facts in this case. Plaintiffs gave International Genetics authority to locate cattle for plaintiffs to purchase and lease back to it. All responsibilities associated with the purchase of the cattle, including all price negotiations with the owners of the cattle, were delegated by the plaintiffs to International Genetics. Additionally, in the Bovine Lease Agreement plaintiffs, through their representative Walter Gribben, authorized International Genetics to defend them from and against any claim relating to the ownership of the cattle and invested International Genetics with the authority to keep the cattle free and clear of adverse claims. As set forth in § 41 of the Restatement, the effect of a person conferring upon another the authority to act for and on his behalf is equivalent to participation by the person conferring the authority. Therefore, the authorization of International Genetics to defend the plaintiffs against any claim relating to the ownership of the cattle and to keep the cattle free and clear of adverse claims was equivalent to participation by the plaintiffs themselves in the New York action.

14. Although we have concluded that plaintiffs are precluded by the New York judgment on res judicata grounds, it is appropriate that we also rule the statute of frauds question that the parties have briefed and submitted for decision pursuant to the procedures agreed upon when the case was called for hearing on October 23, 1985. For the parties agreed at that time that the deposition testimony of the various witnesses identified by the defendant may be considered as the trial testimony of the particular witness whose deposition testimony was so designated.

15. Plaintiffs proposed only one conclusion of law in regard to the statute of frauds question. That conclusion of law stated that the “Statute of Frauds does not apply to the purchase of the cattle referred to in plaintiffs’ petition because the payment for the cattle had been received and accepted by the defendant.” (Paragraph 5 of plaintiffs’ suggested findings of fact.) Quite apart from the fact that the legal question presented was one that could have been litigated in the New York action, we find and conclude that the plaintiffs’ position in regard to the statute of frauds is untenable and we accordingly refuse to adopt plaintiffs’ proposed conclusion of law.

16. Section 2-201 of the Uniform Commercial Code, as adopted in both New York and Missouri, provides that a contract for the sale of goods for a price of $500.00 or more is not enforceable unless there is some writing, signed by the party to be charged or his agent, sufficient to indicate that a contract for sale has been made between the parties or unless payment for the goods has been made and accepted.

17. We conclude under the findings of fact above stated that no writing was ever signed by Lucky Star sufficient to indicate a sale of the cattle at issue to International Genetics. We further find and conclude that the circumstances relating to the $50,-000.00 cashier’s check and the alleged $110,000.00 promissory note did not establish a contract of sale outside the statute of frauds.

We recognize that plaintiffs proposed in paragraph 25 of their suggested findings of fact that we find that at some unspecified time “defendant’s attorney, Raymond Maguire, was aware that Henry Holt had disappeared and that he was being sought by the FBI, his staff was looking for their salary, and the office furniture from the International Genetics office in California had disappeared.” That factual circumstance, assuming it be true, when considered in light of the “very strange” circumstances under which the $50,000.00 cashier’s check was delivered to defendant’s attorney Maguire, supports our finding and conclusion that Lucky Star was insisting on a written contract of sale of the cattle as required by the statute of frauds.

18. The parties have stipulated that no writings were signed by International Genetics or Hollow Circle Holsteins which indicated that a contract for sale of the cattle at issue was made between them. Plaintiffs contend, however, that an alleged oral contract between International Genetics and Hollow Circle Holsteins was enforceable outside the statute of frauds because Jay Roebuck paid $98,268.00 for cattle purchased from International Genetics. It is undisputed that the $98,260.00 was part of the proceeds of a $142,600.00 cashier’s check sent by Gribben to Hollow Circle Holsteins for the purchase of 200 head of cattle, which 200 head did not include any of the cattle that are at issue in this action. (Paragraph 21, Joint Stipulation.) We therefore find and conclude that the alleged oral contract between International Genetics and Hollow Circle Holsteins was not rendered enforceable outside the statute of frauds by virtue of payment of the $98,260.00. Under the undisputed facts, the $98,260.00 was paid by the plaintiffs for the purchase of cattle other than the cattle alleged to be the subject matter of the alleged oral contract between International Genetics and Hollow Circle Holsteins.

19. We further conclude the fact that Gribben may have “mistakenly believed that the funds sent to Hollow Circle Holstein ... was for the purchase of the cattle in question,” as plaintiffs proposed we find in their November 15, 1985 supplemental request for findings of fact, even if true, is immaterial to the question of whether the statute of frauds bars plaintiffs’ claim.

IV.

For the reasons stated, it is

ORDERED (1) that defendant’s motion for summary judgment should be and the same is hereby granted. It is further

ORDERED (2) that the Clerk, pursuant to Rule 58 of the Federal Rules of Civil Procedure, set forth and enter judgment for the defendant on a separate document.

      . Plaintiffs denied that International Genetics, rather than Gribben would have the unconditional right to purchase the entire herd. Exhibit B attached to the Joint Stipulation, written by Gribben, expressly states that “I will have an unconditional right to purchase the entire herd at the conclusion of the lease____” We find the underlined portion of the above finding to be true.

      . Plaintiffs denied the use of the term "leased back". Paragraph 6 of the Joint Stipulation expressly states that "it was understood by Henry Holt and by the plaintiff Walter Gribben that International Genetics, Inc. was to locate the cattle for the plaintiffs to purchase and lease back to International Genetics, Inc.” We find the underlined portion Of the above finding to be true.

      . Plaintiffs again complain about the use of the words “leased back". See footnote 2 above for the parties use of the words "leased back” in paragraph 6 of the Joint Stipulation.

      . Plaintiffs state in their cross-fire response that paragraph 15 above is "incomplete." Paragraph 7 of the Joint Stipulation stated the following: "On or about January 26, 1984, Lucky Star Ranch Corp. instituted a lawsuit in the Supreme Court of the State of New York, County of Dutchess, against International Genetics, Inc. and James Reardon. The document attached to this Stipulation as Exhibit D is a true and authentic copy of the Complaint filed by Lucky Star Ranch Corp. in that action. International Genetics, Inc. was served with process in that action on January 30, 1984, and on February 17, 1984, entered a general appearance. On April 3, 1984, the Supreme Court of the State of New York, County of Dutchess, entered a judgment. A true and authentic copy of the judgment entered is attached to this Stipulation at Exhibit E."
      We have, of course, carefully considered all of the exhibits attached to the Joint Stipulation in ruling defendant’s motion for summary judgment and find that paragraph 15 of our findings is an accurate statement of the stipulated facts and of the judgment entered in the New York court.

      . Plaintiffs deny only the clause that is underlined above. Paragraph 36 of the Stipulation of the parties expressly states that Exhibit K was “a true and authentic copy of a document which Raymond Maguire, upon Henry Holt’s request that Maguire send him a form of a promissory note that Lucky Star would require in the event a sale was made____" (Emphasis added.) That exhibit shows on its face that the note was prepared for the signature of Holt as president of International Genetics and that Lucky Star Ranch Corp. was the payee of the $110,000.00 note. We find that Maguire's deposition testimony was consistent with the stipulation of the parties and that there was no evidence in the case to support a contrary finding.

      . Plaintiffs deny only the sentence underlined above. Paragraph 21 of the Joint Stipulation expressly states that: "On or about December 29, 1983, Gribben sent a cashier’s check for $142,600.00 to Hollow Circle Holsteins directly for the purchase of 200 head of cattle" and that ”[t]his 200 head of cattle did not include any of the cattle that are at issue in this action." We find the underlined portion of the above finding to be true.

      . Plaintiffs deny only the sentence and the clause of the following sentence underlined above. Plaintiffs’ November 15, 1985 cross-fire reply to defendant’s proposed findings of fact, however, expressly states that ”[i]t is admitted that there was no written contract with International Genetics, but the jury is entitled to find from the evidence that an oral agreement existed." We disagree. We find the underlined portion of the above finding to be true.
      Our determination that defendant’s motion for summary judgment should be granted does not rule the question of whether the defendant may or may not be entitled to retain the proceeds of the $50,000.00 cashier’s check. It must, however, be noted that even Maguire thought it was “very strange" when McKay delivered the $50,000.00 cashier’s check that Lucky Star Ranch Corporation would be able to have both the $50,000.00 cashier’s check and also still have its cattle. See pages 24 and 26 of Maguire’s deposition. As will be apparent from the admitted findings in paragraphs 20, 21, and 22, infra, there were a number of other strange circumstances that produced the litigation of the New York case and this case.

      . Plaintiffs did not admit or deny paragraph 23 above. We find that paragraph 23 is an accurate summary of plaintiffs’ original complaint for replevin filed March 8, 1984. We further find that plaintiffs’ first amended complaint for replevin, filed June 5, 1984, and plaintiffs' second amended complaint, filed December 4, 1984, did not change the factual circumstances alleged by plaintiffs to support the pending action.

      . Plaintiffs admitted paragraph 10(15) as above stated on page 1 of plaintiffs’ cross-fire. On page 2, however, plaintiffs apparently denied that paragraph. We state the conclusion as our own independent conclusion of law if plaintiffs intended to deny rather than admit that particular paragraph.

      . As we have already indicated, the question of Lucky Star's right to retain the proceeds of the $50,000.00 cashier's check is not ruled in this case. It is further obvious that such a question was not ruled in the New York litigation. The New York case simply ruled that Lucky Star was entitled to the cattle; it did not rule that Lucky Star was also entitled to retain the $50,-000.00 cashier’s check.


author: BARBOUR, District Judge.

text:
    Ottis B. CROCKER, Jr., et al. Plaintiffs, and Federal Deposit Insurance Corporation, in its Corporate Capacity, Plaintiff/Intervenor, v. W.P. McMULLAN, et al. Defendants.
    Civ. A. No. J84-0603(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    Dec. 4, 1985.

      Grady F. Tollison, Charles M. Powers, Oxford, Miss., Luke Dove, Chill, Chill, & Dove, Jackson, Miss., for plaintiffs.
    Paul Stephens, Jackson, Miss., for FDIC.
    Michael Hartung, Royals, Hartung & Davis, and Kenneth G. Perry, Shell, Buford, Bufkin, Callicutt & Perry, Jackson, Miss., for McMullen.
    Calvin L. Wells, Jackson, Miss., for John Baxter Burns, III.
    Earl Keyes, Keyes, Moss, Piazza & Woods, Jackson, Miss., for Clancy.
    David W. Clark, Jackson, Miss., for Burns & Wise.
    Russell D. Moore, III, Jackson, Miss., for Denson.
   MEMORANDUM OPINION AND ORDER

BARBOUR, District Judge.

This matter is before the Court on the Motion of Plaintiff/Intervenor, Federal Deposit Insurance Corporation (“FDIC”), in its corporate capacity, to Dismiss the Complaint filed by Plaintiffs, Ottis B. Crocker, et al., (“Crocker”), and Plaintiffs’ as yet uncertified class of all minority shareholders of the Mississippi Bank (“TMB”), for lack of standing to pursue their claims against Defendants, W.P. McMullan, Jr., et al., as majority shareholders, directors and officers of the now-defunct The Mississippi Bank.

FACTS

Prior to May 11, 1984, TMB was a banking institution organized and existing under the laws of the State of Mississippi. On May 11, 1984, the Commissioner of Banking and Consumer Finance of the State of Mississippi closed TMB pursuant to Miss. Code Ann. § 81-9-5 (1972). Immediately upon closing, the Commissioner petitioned the Chancery Court of the First Judicial District of Hinds County, Mississippi, for an adjudication of TMB’s insolvency and for the appointment of FDIC as receiver of TMB. On May 11, 1984, TMB was adjudicated insolvent and FDIC was appointed receiver.

Thereafter, FDIC accepted appointment as receiver of TMB and took control of the assets and affairs of TMB. FDIC, as receiver, then entered into a purchase and assumption agreement with Grenada Bank whereby Grenada Bank assumed certain liabilities and purchased certain assets from FDIC as receiver. The FDIC, as receiver, also entered into the contract of sale with the FDIC in its corporate capacity whereby the corporation purchased all assets not purchased by the Grenada Bank pursuant to the purchase and assumption agreement. Specifically, the FDIC, in its corporate capacity, purchased all contracts, rights, claims, demands and choses in action whatsoever not purchased by Grenada Bank; all loans subject to an option in favor of the Grenada Bank; and all pending claims, actions or judgments, whether known or unknown, which the receiver owned, held, or had against any surety, insurer or other person or persons including, without limitation, any claim against any director, officer or employee arising out of any act or acts of any such person in respect to TMB or its property by virtue of the non-performance or manner of performance of their duties or against any shareholder or holding company of TMB.

On August 13, 1984, Plaintiffs, minority shareholders of TMB, filed suit for themselves and on behalf of a class of minority shareholders in TMB, for damages against certain former directors and/or officers of TMB who were the controlling, or majority, shareholders of TMB. The Plaintiffs’ Complaint asserts three separate claims. Count I alleges a violation by Defendants of the Racketeer Influenced and Corrupt Organization Act (“RICO”), 18 U.S.C. § 1961, et seq. Count II asserts a claim based upon various misrepresentations to Plaintiffs as to the financial condition of TMB. Count III is based upon violations by Defendants of fiduciary duties owed as directors and/or officers and controlling shareholders of TMB to TMB minority shareholders.

FDIC moves to dismiss the Plaintiffs’ Complaint on the basis that Plaintiffs lack standing to prosecute their claims since such claims are derivative in nature and belong to the FDIC, in its corporate capacity, pursuant to the contract of sale. Alternatively, FDIC moves to stay Plaintiffs’ Complaint on the basis that the FDIC is entitled to preferential recovery from Defendants under the “absolute priority rule.”

LAW

1. Non-Derivative Versus Derivative.

As a general rule, an action to redress injuries to a corporation, whether arising out of contract or tort, cannot be maintained by a shareholder in his own name but must be brought in the corporate name because the cause of action belongs to the corporation and not the shareholders whose rights are merely derivative. Warren v. Manufacturers National Bank of Detroit, 759 F.2d 542, 544 (6th Cir.1985); Schaffer v. Universal Bundle Corporation, 397 F.2d 893, 896 (5th Cir.1968); Vickers v. First Mississippi National Bank, 458 So.2d 1055, 1061 (Miss.1984); Bruno v. Southeastern Services, Inc., 385 So.2d 620, 622 (Miss.1980). According to Empire Life Insurance Company of America v. Valdak Corporation, 468 F.2d 330, 335 (5th Cir.1972),

[t]he reason for this rule is that each shareholder suffers relatively in proportion to the number of shares he owns and each will be made whole if the corporation obtains compensation or restitution from the wrongdoer. If each shareholder could sue individually for his losses, the wrongdoer would be subject to “as many suits ... as there were stockholders in the corporation.”

Consequently, a shareholder cannot maintain suit in his own name for injuries which affect the corporation as a whole or all its shareholders. See, e.g., Stevens v. Lowder, 643 F.2d 1078 (5th Cir.1981); Gregory v. Mitchell, 634 F.2d 199 (5th Cir.1981); Imperial Motors, Inc. v. Chrysler Corporation, 559 F.Supp. 1312 (D.Mass.1983); Stirling v. Chemical Bank, 382 F.Supp. 1146 (S.D.N.Y.1974).

A well-recognized exception to the general rule exists where the injury complained of creates not only a cause of action in favor of the corporation but also a cause of action in favor of a shareholder, as an individual, for violation of a duty owed directly to him. Empire Life, supra. at 335. Where the injury to the shareholder’s stock is peculiar to him and does not fall alike on other shareholders, the shareholder may maintain an individual action. Id. As one court explained,

[a] derivative suit is brought to enforce a cause of action which the corporation itself possesses against some third party, a suit to recompense the corporation for injuries which it suffered as a result of the acts of third parties____ A stockholder’s individual suit, on the other hand, is a suit to enforce a right against the corporation which the stockholder possesses as an individual. Smith v. Tele-Communication, Inc., 134 Cal. App.3d 338, 184 Cal.Rptr. 571, 573 (1982).

Moreover, the wrong necessary to support an individual action by a minority shareholder need not be unique to that shareholder, but may be shared in common by other minority shareholders. Jones v. H.F. Ahmanson & Co., 1 Cal.3d 93, 81 Cal.Rptr. 592, 460 P.2d 464, 471 (1969).

This Court, applying Mississippi law , concludes that the claims asserted by Plaintiffs, as minority shareholders, against Defendants, as majority shareholders and directors and/or officers, state individual causes of action. Plaintiffs’ suit is clearly not an application for recovery by the corporation or all its shareholders. Damages are sought only on behalf of minority shareholders.

Moreover, the FDIC’s contract of sale does not preclude the Plaintiffs’ maintenance of this suit. Under the contract of sale, the FDIC, in its corporate capacity, purchased

“all contracts, rights, claims, demands, and choses in action whatsoever not purchased by the Assuming Bank (Grenada Bank) ... and all pending claims, actions or judgments, whether known or unknown, which the receiver owns, holds or has against any surety, insurer, or any person or persons whomsoever including, without being limited to, any claim or claims against its directors, officers, or employees arising out of any act or acts of such persons in respect to the Bank or its property, by virtue of the non-performance or manner of performance of their duties or against any shareholder or holding company of the bank.”

The FDIC, as receiver, took control of the assets and affairs of TMB. The FDIC, in its corporate capacity, purchased only corporate claims belonging to the receiver— not individual claims belonging to minority shareholders.

Further, the authorities cited by the FDIC are inapposite. None involved a situation analogous to the one sub judice where minority shareholders sued majority shareholders for misrepresentation, breach of fiduciary duty, and for RICO violations.

In Yanow v. Teal Industries, 178 Conn. 262, 422 A.2d 311 (1979), the plaintiff, a minority shareholder, brought an individual action and a shareholder’s derivative action against the defendant corporation and its director and officer, claiming that the defendants had committed a series of corporate wrongs resulting in damages to the plaintiff individually and to the corporation. Specifically, the plaintiff alleged that the defendant engaged in nineteen transactions which were not disclosed to him and which had the effect of dismantling the corporation “step-by-step, transaction-by-transaction,” depriving the corporation and the plaintiff of income and assets. Id. at 322.

The court held that plaintiff’s claims were individual and not derivative. In so ruling, the court stated that the plaintiff’s

... allegations claim a pervasive breach of the fiduciary duty owed by the corporate majority to the sole minority stockholder____ [Tjhese causes of action are based upon alleged unlawful acts relating solely to the stock owned by the plaintiff, in violation of the fiduciary duty owed the plaintiff by the defendants, and they thus state individual, and not derivative, claims, [citations omitted].

Id. See also, Jones v. H.F. Ahmanson & Company, 1 Cal.3d 93, 81 Cal.Rptr. 592, 460 P.2d 464 (Cal.1969).

In Traylor v. Marine Corporation, 328 F.Supp. 382 (E.D.Wis.1971), plaintiffs, minority shareholders, sued for damages for the wrongful disposition of corporate assets. The court rejected the contention that the complaint sounded in the nature of a shareholder’s derivative action and stated

[m]y reading of the complaint leads me to the conclusion that it may not be treated as a stockholders’ derivative action. While accounting and restitution are sought in connection with the alleged improprieties, it is clearly not an application for recovery by the corporation or all its shareholders; damages are sought only on behalf of the minority shareholders ____
Sj! ifc jfc Jfc 5}= H!
While the conduct described by plaintiffs may have warranted a derivative action on behalf of the corporation, that does not foreclose these plaintiffs from suing in their own right____ Thus, the plaintiffs could have said “You cheated the corporation”; however, they are also entitled to charge “You cheated us as minority stockholders.’’

Id. at 384. [Emphasis added].

Plaintiffs claim that between 1982 and 1984, Defendants, as controlling shareholders, directors and/or officers, engaged in a course of mismanagement which resulted in the ruination of TMB. Plaintiffs claim that Defendants prepared false and misleading financial statements and withheld the results of a 1984 Bank audit which would have revealed a net loss of $16,433,-721 and a negative net worth of $499,545. According to Plaintiffs, Defendants finally mailed a letter from TMB to its shareholders which enclosed an unaudited statement of conditions and which glossed over the true financial condition of the Bank.

In Count I, Plaintiffs claim Defendants committed RICO violations by mailing false financial statements and by withholding the 1984 audit. Plaintiffs allege that these acts were a part of a common plan or conspiracy designed to defraud minority shareholders and delay inquiry into the operation of TMB which was being operated solely for the economic benefit of majority shareholders. Plaintiffs maintain that Defendants’ conduct constitutes “racketeering activity” and that they were injured in their property by such activity.

Count II asserts a claim for misrepresentation based on the release of false and misleading financial statements which Plaintiffs claim they relied upon in retaining their stock and in taking no action regarding the management or financial condition of TMB.

Count III alleges a claim for breach of fiduciary duty owed by Defendants as controlling shareholders, directors and/or officers to minority shareholders.

This Court cannot state, on FDIC’s Motion to Dismiss, that these claims are not personal to Plaintiffs, as minority shareholders. Taking all allegations of Plaintiffs’ Complaint as true, as we are required to do on a motion to dismiss, the Court is not prepared to find, at this time, that it appears beyond all doubt that Plaintiffs can prove no set of facts which would entitle them to the relief requested. A review of the Complaint reveals that the gravamen of the Plaintiffs’ Complaint does not allege an injury to TMB or all of its shareholders. Instead, Plaintiffs allege that particular shareholders profited and other shareholders were wronged. See, e.g., Traylor v. Marine Corporation, 328 F.Supp. at 384. Specifically, Plaintiffs allege that the controlling majority shareholders injured the Plaintiffs, as minority shareholders, by their mismanagement and false and misleading financial statements. As a result of the alleged misconduct by Defendants, Plaintiffs’ stock was rendered worthless. This, the courts have found, is sufficient to constitute an individual cause of action. See, e.g., Davis v. United States, 451 F.2d 659, 662 (3rd Cir.1971); Traylor v. Marine Corporation, 328 F.Supp. at 384; Yanow v. Teal Industries, 422 A.2d at 322. As Plaintiffs note, where majority shareholders are the wrongdoers, a derivative action is not an effective remedy because the wrongdoers—the majority shareholders—would be the beneficiaries of any recovery obtained by a derivative action. Accordingly, the FDIC’s Motion to Dismiss is denied.

In light of this Court’s holding that Plaintiffs are entitled to maintain this action individually, we now consider FDIC’s alternate Motion to Stay this proceeding based on the “absolute priority rule” which allows general creditors of a corporation to recover against corporate assets before shareholders. In support of its Motion, FDIC relies upon FDIC v. American Bank Trust Shares, 412 F.Supp. 302 (D.S.C. 1976), vacated on other grounds, 558 F.2d 711 (4th Cir.1977), on remand, 460 F.Supp. 549 (1978), aff'd. on other grounds, 629 F.2d 951 (1980) (ABTS).

FDIC’s Motion to Stay is denied for two reasons. First, ABTS involved derivative claims against the officers, directors and employers of the bank. 460 F.Supp. at 551. Since Plaintiffs’ action is non-derivative, ABTS is not applicable.

Second, Plaintiffs seek damages against the majority shareholders, directors and/or officers—not against TMB. Consequently, the absolute priority rule, which seeks to preserve corporate assets for the benefit of general creditors, does not come into play here where corporate assets are not involved. Accordingly, FDIC’s Motion to Stay is denied.

      . State law determines who has suffered the injury and whether or not an action is, in reality, a shareholder's derivative action. Gadd v. Pearson, 351 F.Supp. 895, 900 (M.D.Fla.1972). Mississippi adheres to the rule stated above, Vickers v. First Mississippi National Bank, 458 So.2d 1055 (Miss.1984); Bruno v. Southeastern Services, Inc., 385 So.2d 620 (Miss.1980).

      . FDIC relies on Warren v. Manufacturers National Bank, 759 F.2d 542 (6th Cir.1985); Gallagher v. Canon U.S.A., Inc., 588 F.Supp. 108 (N.D.Ill.1984) and Club Assistance Program, Inc. v. Zukerman, 594 F.Supp. 341 (N.D.Ill.1984), for the proposition that Plaintiffs’ RICO claim against the majority shareholders, directors and/or officers of TMB is a derivative cause of action, belonging only to TMB. However, these cases do not preclude a shareholder with an individual claim from pursuing a RICO violation. These cases only hold that the plaintiffs failed to establish a personal, non-derivative cause of action. Gallagher specifically recognized that a shareholder can assert RICO violations if it can show injury in its own right. The Court, on the FDIC’s Motion to Dismiss, cannot, at this time, declare that Plaintiffs can prove no set of facts which would entitle them to relief under RICO.


author: JOSEPH C. HOWARD, District Judge.

text:
    Edward O. UHRIG, Plaintiff, v. Donald T. REGAN, Secretary of the Treasury, USA and Roscoe Egger, Commissioner Internal Revenue Service and Teddy R. Kern, District Director Internal Revenue Service and Woodland R. Morris, Special Agent Internal Revenue Service and William Mcllmail, Examiner Internal Revenue Service, Defendants.
    Civ. No. JH-83-366.
    United States District Court, D. Maryland.
    Dec. 6, 1985.

      Edward O. Uhrig, pro se.
    Catherine C. Blake, U.S. Atty., Baltimore, Md., Gregory S. Hrebiniak, Trial Atty., Tax Div., U.S. Dept, of Justice, Washington, D.C., for defendants.
   MEMORANDUM

JOSEPH C. HOWARD, District Judge.

Pending before the Court is defendants’ joint motion to dismiss, under Fed.R.Civ.P. 12, the latest effort by taxpayer Edward 0. Uhrig (“Uhrig”) to delay tax assessment. Uhrig, proceeding pro se, has claimed jurisdiction under 28 U.S.C. §§ 1331, 1340, and 1343, and demanded a written statement of Internal Revenue Service jurisdiction under 26 U.S.C. § 6001. Uhrig has responded to the Court’s perhaps gratuitous notice of defendants’ motion to dismiss under Roseboro v. Garrison, 528 F.2d 309 (4th Cir. 1975). The Court has thoroughly reviewed the record and finds that no hearing is necessary to resolve the motion. Local Rule 6(E).

I.

The facts of this case are uncontested. Uhrig paid no taxes in 1979, 1980, or 1981. In 1982, the Internal Revenue Service (“IRS”) initiated an investigation and audit to determine if Uhrig had any tax liability. Pursuant to its investigation, the IRS issued summonses of certain of Uhrig’s records. Uhrig petitioned this Court to quash those summonses, and his petition was denied. Uhrig v. United States, 592 F.Supp. 349 (D.C.Md.1984) (Kaufman, C.J.). Undaunted, Uhrig then tried again to quash the IRS summonses, and also to enjoin future summonses, on the grounds that the IRS gathering of evidence constituted a criminal investigation and therefore was a Justice Department Referral. This Court found that no Justice Department Referral existed and again denied Uhrig relief. Uhrig v. United States, 601 F.Supp. 881 (D.C.Md.1985) (Kaufman, C.J.).

In the instant case, Uhrig has sued the Secretary of the Treasury and a range of IRS personnel seeking an order to restrain the IRS from issuing further summonses of his books and records, initiating audits, making assessments, fines, or penalties, or conducting investigations, without first determining jurisdiction pursuant to 26 U.S.C. § 6001 and informing him in writing of that jurisdictional authority.

Every person liable for any tax imposed by this title, or for the collection thereof, shall keep such records, render such statements, make such returns, and comply with such rules and regulations as the Secretary [of the Treasury] may from time to time prescribe. Whenever in the judgment of the Secretary it is necessary, he may require any person, by notice served upon such person or by regulations, to make such returns, render such statements, or keep such records, as the Secretary deems sufficient to show whether or not such person is liable for tax under this title.

26 U.S.C. § 6001 (emphasis added). Uhrig alleges that he is not a “person liable” for tax within the meaning of § 6001 and that the IRS may not investigate him in the absence of a written jurisdictional determination that he is such a person liable for tax.

Uhrig has had tax withheld from past salary but has now renounced any past liability. Plaintiff’s Motion to Deny Defendants’ Motion to Dismiss, at 3. He has described his current principal occupation to be in real estate transactions. Id. at 2. He has determined that he has no tax liability and is “immune” from liability. Id. He apparently contends that the assessment and collection of taxes conflicts with his rights as a United States citizen. Id. at 2-3. Uhrig also alleges that the IRS inquiries into his tax liability have been designed to harass and frighten him, but this allegation is unsupported by facts.

After careful consideration, this Court finds that it lacks jurisdiction and therefore grants defendants’ motion to dismiss. Fed.R.Civ.P. 12(b)(1). Bob Jones University v. Simon, 416 U.S. 725, 94 S.Ct. 2038, 40 L.Ed.2d 496 (1974); see also Steele v. Regan, 755 F.2d 1091 (4th Cir.1985).

II.

At issue is whether this Court has jurisdiction to grant an injunction against tax assessment and collection in a pre-enforcement action by a taxpayer. The Court concludes that such jurisdiction is lacking. The controlling cases are Bob Jones, supra, and Enochs v. Williams Packing & Navigation Co., 370 U.S. 1, 82 S.Ct. 1125, 8 L.Ed.2d 292 (1962).

The statute at issue is the Anti-Injunction Act, 26 U.S.C. § 7421, which reads in pertinent part:

Except as provided in sections 6212(a) and (c), 6213(a), and 7426(a) and (b)(1), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person____

The purpose of the statute is to protect the government’s right to assess and collect taxes with a minimum of judicial interference. Bob Jones, supra, 416 U.S. at 736, 94 S.Ct. at 2045; Williams Packing, supra, 370 U.S. at 7, 82 S.Ct. at 1129.

Uhrig’s action does not fall within the enumerated statutory exceptions, despite his unsupported allegation to the contrary. Exceptions under §§ 6212 and 6213 apply to a tax deficiency. Uhrig has neither filed returns nor yet been assessed, so that he cannot yet have a deficiency. Koch v. Alexander, 561 F.2d 1115 (4th Cir.1977) (per curiam) (a deficiency is the difference between the amount reported on the taxpayer’s return and the amount assessed by the IRS). The third exception, under § 7426, applies only to third-party actions. Uhrig is a taxpayer and not a third party.

The judicial exception to the prohibition against injunctions occurs where under no circumstances could the government ultimately prevail on the merits and where the Court has equity jurisdiction because the taxpayer will be irreparably harmed and lacks an adequate remedy at law. Bob Jones, supra; Williams Packing, supra, 370 U.S. at 6-7, 82 S.Ct. at 1128-1129. Uhrig fails to fall within this exception for three reasons.

First, Uhrig has demonstrated no irreparable harm. In fact, he has shown no harm other than perhaps the inconvenience of an IRS investigation and the payment of assessments, interest and penalties should tax liability be found. These minor injuries, if they are injuries at all, are insufficient to trigger equity jurisdiction. See Williams Packing, supra, 370 U.S. at 6-7, 82 S.Ct. at 1128-1129.

Second, Uhrig has an adequate remedy at law. The usual remedies for challenging tax liability are either to appeal the tax assessment to the Tax Court or to pay the liability and sue for a refund. See Bob Jones, supra, 416 U.S. at 746, 94 S.Ct. at 2050.

Third, Uhrig has failed to show that under no circumstances would the government ultimately prevail. Viewing liberally the law and the facts available to the government at the time of this suit, Williams Packing, supra, 370 U.S. at 7, 82 S.Ct. at 1129, this Court finds that the government could prevail. Uhrig admits having paid no taxes for three years. He denies liability for the years in which he did pay taxes. Uhrig has had a salary, on which he apparently had liability, although the record is silent as to whether Uhrig was still salaried during the years for which he paid no tax. Uhrig, as a self-described real estate investor, might have property transactions resulting in taxable gain. The facts on the record allow no interpretation other than that Uhrig might have tax liability.

Of course, Uhrig might not have tax liability, but the determination of his liability is currently up to the IRS. Although our tax system is one of self-assessment generally, a taxpayer’s own assessment is not necessarily final on the issue of liability. Under § 6001, a person has an obligation “to show whether or not [he] is liable for tax” if the Secretary finds such a showing to be necessary. The facts that Uhrig paid no taxes, that his occupation is one where tax liability often occurs, and that he thoroughly denies liability, are sufficient to prompt the Secretary to request such a showing and to trigger the IRS power to investigate, assess, and collect taxes under 26 U.S.C. § 6201.

Uhrig’s contention that he is not a “person liable” for tax until the IRS determines that he is a “person liable” for tax is circular nonsense. If a taxpayer has filed no return, it is virtually impossible for the IRS to determine if the taxpayer has a liability until it investigates to determine if the taxpayer does have a liability. This Court has already informed Uhrig, in the context of IRS summonses, that his contention that he is not a person liable for tax is frivolous. Uhrig v. United States, 592 F.Supp. 349, 353 (1984), quoting United States v. McAnlis, 721 F.2d 334, 336 (11th Cir.1983). The Court reaffirms its position.

Similarly, the Court reaffirms its position that Uhrig’s claim of immunity from tax is utterly without merit. See Uhrig v. United States, 592 F.Supp. 349, 353 (1984). Uhrig misunderstands our tax system and his rights and obligations thereunder. The Constitution of the United States grants Congress the power to tax. Art. I, § 8, cl. 1 (Congress “shall have power to lay and collect taxes”); sixteenth amendment (Congress “shall have power to lay and collect taxes on incomes, from whatever source derived ... ”). Congress has delegated this power to the IRS. 26 U.S.C. § 6201 et seq. The IRS has not merely the power but the duty to investigate, assess, and collect taxes. 26 U.S.C. §§ 6201, 7601(a); Uhrig v. United States, 592 F.Supp. 349, 353 (1984). There may be any one of a number of reasons why a person is not liable for tax, such as certain exemptions or deductions, but a person is not simply immune from tax liability and a bald assertion to that effect does not make it so. Uhrig’s contentions that his rights as a citizen immunize him from tax liability are insupportable. As a citizen, Uhrig has not just rights but obligations, and he cannot evade the obligation to pay taxes owed by claiming immunity.

For the foregoing reasons, Uhrig cannot show that under no circumstances would the government ultimately prevail on the merits. Because of this lack of showing, and because this Court lacks equity jurisdiction since Uhrig has an adequate remedy at law and has not shown irreparable harm, the Anti-Injunction Act applies and this Court lacks jurisdiction to grant the relief requested.

III.

A second, independent basis for lack of jurisdiction in this action is the sovereign immunity doctrine. It is axiomatic that the United States may not be sued without its consent. Malone v. Bowdoin, 369 U.S. 643, 82 S.Ct. 980, 8 L.Ed.2d 168 (1962); see generally 77 Am.Jur.2d § 114. Uhrig has alleged jurisdiction under 28 U.S.C. §§ 1331, 1340, and 1342. Section 1331 grants original jurisdiction in all civil actions arising under the Constitution, laws, or treaties of the United States; § 1340 grants original jurisdiction in any civil action arising under any Act of Congress providing for internal revenue; and § 1342 grants jurisdiction in certain civil rights actions. These broad grants of jurisdiction are insufficient to confer jurisdiction on this Court because they do not contain consent by the United States to be sued. See Aqua Bar & Lounge, Inc. v. United States, 539 F.2d 935 (3d Cir.1976).

The doctrine of sovereign immunity protects not just the United States but government officials acting within the scope of their official duties. Malone v. Bowdoin, 369 U.S. 643, 82 S.Ct. 980, 8 L.Ed.2d 168 (1962). No facts exist on the record to support a claim that defendants acted beyond the scope of official duty. Uhrig’s allegation that the IRS designed its investigation to harass and frighten him implies unofficial conduct. Perhaps Uhrig felt harassed and frightened, but no evidence supports his conclusory allegation. To the contrary, the evidence supports the conclusion that defendants have acted within the scope of their official duties. They, consequently, are insulated from suit by the sovereign immunity doctrine.

IV.

Accordingly, a separate order will be entered granting the defendants’ motion to dismiss for lack of jurisdiction.

      . Uhrig actually alleged jurisdiction under 28 U.S.C. § 1331(a). The Court deems this a § 1331 allegation because no § 1331(a) exists.

      . Uhrig further requests restitution of an unspecified amount of money withheld—or, as he says, stolen, Count III of Complaint at 3—from his salary at an unspecified past time; $10,000 in compensatory damages; and $10,000 in punitive damages. He additionally alleges that the IRS has invaded his privacy rights, conspired to deny his rights, and violated his due process rights; he demands a jury trial.

      . Plaintiffs Motion to Deny Defendants’ Motion to Dismiss, at 1.

      . If this Court had jurisdiction, jurisdiction would be in equity, and, given the successive attempts to delay assessment, the Court might consider an in personam decree compelling Uh-rig’s compliance, on threat of contempt, with the IRS investigation and audit.