• Current through October 23, 2012

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 the 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 facts that its action in paying the check amounts to bad faith. If, however, the 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.

(Sept. 14, 1965, 79 Stat. 777, Pub. L. 89-183, § 1.)


Prior Codifications

1981 Ed., § 21-1706.

1973 Ed., § 21-1706.

Uniform Law

This section is based upon § 7 of the Uniform Fiduciaries Act. See Volume 7A, Part I Uniform Laws Annotated, Master Edition, or ULA Database on WESTLAW.