Sec. 8. If a check is drawn upon the account of his principal in a
bank by a fiduciary who is empowered to draw checks upon his
principal's account, the bank is authorized to pay such check without
being liable to the principal, unless the bank pays the check with
actual knowledge that the fiduciary is committing a breach of his
obligation as fiduciary in drawing such check, or with knowledge of
such facts that its action in paying the check amounts to bad faith. If,
however, such a check is payable to the drawee bank and is delivered
to it in payment of or as security for a personal debt of the fiduciary
to it, the bank is liable to the principal if the fiduciary in fact
commits a breach of his obligation as fiduciary in drawing or
delivering the check.
(Formerly: Acts 1927, c.17, s.8.)

Last modified: May 27, 2006