§ 18-4-18 - Check drawn by fiduciary payable to third person.
SECTION 18-4-18
§ 18-4-18 Check drawn by fiduciary payableto third person. – If a check or other bill of exchange is drawn by a fiduciary, or in the name ofhis or her principal by a fiduciary empowered to draw the instrument in thename of his or her principal, the payee is not bound to inquire whether thefiduciary is committing a breach of his or her obligation as fiduciary indrawing or delivering the instrument, and is not chargeable with notice thatthe fiduciary is committing a breach of his or her obligation as fiduciary,unless he or she takes the instrument with actual knowledge of the breach, orwith knowledge of any facts that his or her action in taking the instrumentamounts to bad faith. If, however, the instrument is payable to a personalcreditor of the fiduciary and delivered to the creditor in payment of or assecurity for a personal debt of the fiduciary to the actual knowledge of thecreditor, or is drawn and delivered in any transaction known by the payee to befor the personal benefit of the fiduciary, the creditor or other payee isliable to the principal if the fiduciary in fact commits a breach of his or herobligation as fiduciary in drawing or delivering the instrument.