The opinion of the court was delivered by: GERSHON
ORDER GRANTING SUMMARY JUDGMENT AGAINST DEFENDANT C.P.P.
WHITMAN KNAPP, District Judge.
The case is before us on plaintiff's motion for summary judgment and for the appointment of a receiver [docket entry #13].
At the close of oral argument it appeared that additional determinations were required before we could rule on this motion. Accordingly, we referred the matter to the Hon. Nina Gershon, United States Magistrate, to hear and report on the following two questions: (a) whether there was a material issue of fact as to "defendant's contention that in early 1978 officers of Frank B. Hall & Co. ['Hall'] authorized defendant to withhold [certain] funds"; and (b) if the answer to question (a) were in the affirmative, did "there exist a genuine issue of material fact as to whether Hall had real or apparent authority to give such directive."
The Magistrate has issued her Report and has concluded that, although question (a) above must be answered in the affirmative, the conclusion that Hall had neither real nor apparent authority to direct the diversion of funds is not subject to a material dispute.
[1-7] We find the Magistrate's Report to be complete and persuasive. We have also reviewed the affidavit of Phil Meisinger dated March 21, 1983 submitted in objection and conclude that it raises no meritorious issue. We thus approve Magistrate Gershon's Report and hereby adopt it as our opinion.
Accordingly, we GRANT plaintiff's motion for summary judgment. Plaintiff's application for the appointment of a receiver is denied, without prejudice to the renewal of such application if it be properly supported.
REPORT AND RECOMMENDATION
GERSHON, United States Magistrate:
In a motion for summary judgment and for the appointment of a receiver, the plaintiff insurance company seeks gross insurance premiums of $2,590,143.00 collected during the period March 1980 to February 1981. The defendant does not dispute that it collected the amount at issue or that the amount represents premiums on National Union insurance policies. However, it asserts that it was authorized by the plaintiff's managing agent Frank B. Hall & Co. of California (a third-party defendant in this action) to withhold the funds collected and use them in developing other business. The Honorable Whitman Knapp, District Judge, has referred the matter to me to report on two questions: First, is there a genuine issue of material fact as to the defendant's contention that in early 1978 officers of Frank B. Hall & Co. authorized the defendant to withhold funds collected by it and use them in developing other business? Second, if the answer to that question is "yes", is there a genuine issue of material fact as to whether Hall had real or apparent authority to give such a directive on behalf of the plaintiff? For purposes of these proceedings, Judge Knapp has directed that I assume that the defendant held the funds in question in a fiduciary capacity.
The first question is readily answered in the affirmative. Phil C. Meisinger, president of the defendant, in his affidavits, states unequivocally that Hall through its officers Fred Toland and Gary Thompson (third-party defendants in this action) specifically directed the defendant to pay the amounts collected to other parties for the purpose of developing other business (Meisinger Afft., P9; Meisinger (Suppl'l) Afft., PP22, 28, 29, 30, 31). In contrast, Fred Toland and Gary Thompson state unequivocally that they gave no such directions (Toland Afft., P3; Thompson Afft., P3).Another officer of Hall, Stephen C. Leonard, has also filed an affidavit stating that he gave no such directions (Leonard (Suppl'l) Afft., P3). Thus, there is a sharply contested issue of material fact as to whether officers of Hall advised the defendant that it could withhold funds collected on National Union insurance policies and use the funds for developing other business.
However, as to the second question, there is no genuine issue as to the fact that Hall had neither real nor apparent authority to give such directions on behalf of the plaintiff.
The affidavits of Thompson, Toland and Leonard, all vice-presidents of Hall, acknowledge that they did not have the authority claimed by the defendant (Leonard (Suppl'l) Afft., P6; Toland Afft., P7; Thompson Afft., P6). It is the plaintiff's position that not only did Hall have no actual authority but also that Hall had no apparent authority. The defendant's position ...