Deposit in name of fiduciary
Sec. 7. If a deposit is made in a bank to the credit of a fiduciary as
such, the bank is authorized to pay the amount of the deposit or any
part thereof upon the check of the fiduciary, signed with the name in
which such deposit is entered, without being liable to the principal,
unless the bank pays the check with the actual knowledge that the
fiduciary is committing a breach of his obligation as fiduciary in
drawing the 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.7.)
Last modified: May 27, 2006