§556-5 Check drawn by and payable to fiduciary. If a check or other bill of exchange is drawn by a fiduciary as such or in the name of the fiduciary's principal by a fiduciary empowered to draw such instrument in the name of the fiduciary's principal, payable to the fiduciary personally, or payable to a third person and by the third person transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of the fiduciary's obligation as fiduciary in transferring the instrument, and is not chargeable with notice that the fiduciary is committing a breach of obligation as fiduciary unless the transferee takes the instrument with actual knowledge of such breach or with knowledge of such facts that the transferee's action in taking the instrument amounts to bad faith. [L 1945, c 197, §6; RL 1955, §189-6; HRS §556-5; gen ch 1985]
Cross References
Uniform Commercial Code, see chapter 490, Article 3.
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