Page:United States Statutes at Large Volume 45 Part 1.djvu/562

 SEVENTIETH CONGRESS. SEss. I. CH. 545. 1928 . that his action in taking the instrument amounts to bad faith. If, however, such instrument is payable to a personal creditor of the fid uciary a nd deliv ered to the cred itor in payment of or as securit y for a personal debt of the fiduciary to the actual knowledge of the creditor, or is drawn and delivered in any transaction known by the payee to be for the personal benefit of the fiduciary, the creditor or other payee is liable to the principal if the fiduciary in fact com- mits a breach of his obligation as fiduciary in drawing or delivering the instrument. u SEC. 6. CHECK DRAWN BY AND PAYBLE TO FIDUCIARY .-If a check or other bill of exchange is drawn by a fiduciary as such or in the name of his principal by a fiduciary empowered to draw such instru- ment in the name of his principal, payable to the fiduciary person- al ly, or payable to a third person and by him tran sferre d to the fiduciary, and is thereafter transferred by the fiduciary, w heth er in payme nt of a pe rsonal debt of the fiduciary or otherw ise, the transferee is not bound to inquire whether the fiduciary is com- mitting a breach of his obligation as fiduciary in transferring the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowl- edge of such facts that his action in taking the instrument amounts to bad faith. u SEC. 7. DEPOSIT IN NAME OF FIDUCIARY AS SUCH.-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 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 secu- rity 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. " SEC. 8 . DEPOSIT IN NAME OF PRINCIPAL .-If a check is drawn upon the account of his principal in a bank by a fiduciary who is empow- ered to draw checks upon his principal's account, the bank is author- ized t o pay su ch check without being l iable to the pri ncipal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing such chec k, or wi th knowl edge of such fac ts that its actio n in pay ing 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 obliga- tion as fiduciary in drawing or delivering the check . " SEC. 9. DEPOSIT IN FIDUCIARY'S PERSONAL ACCOUNT .-If a fiduciary makes a deposit in a bank to his personal credit of checks drawn by him upon an account in his own name as fiduciary, or of checks pay- able to him as fiduciary, or of checks drawn by him upon an account in the name of his principal if he is empowered to draw checks thereon, or of checks payable to his principal and indorsed by him, if he is empowered to indorse such checks, or if he otherwise makes a de posit of funds h eld by h im as fi duciary, the bank receivi ng such deposit is not bound to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary ; and the b ank is auth orized t o pay th e amount of the deposit or any pa rt there of upon 511 Payable to a personal creditor of fiduciary. Re spon sibi lity for check drawn by and payable to fiduciary, and transfer red in pa y- ment of his pers ona l debt. Liability of bank for paying checks drawn on deposits made by fiduciary. Paymen ts for per- sonal debt of fiduciary to the bank. Authority of bank to pay checks drawn by fiduciary upon princi- pal's account. Payment, if for per- sonal debt of fiduciary to the bank. Respon sibility of bank for deposit in per- sonal account by fidu- ciary of check drawa on account of name of principal, etc.

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