FIDUCIARIES. 455

the personal benefit of the fiduciary, the creditor or other payee is liable
to the principal if the fiduciary in fact commits a breach of his obligation
as fiduciary in drawing or delivering the instrument.

1929, ch. 572, sec. 6.

6. 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 his
principal by a fiduciary empowered to draw such instrument in the name
of his principal, payable to the fiduciary personally, or payable to a third
person and by him transferred to the fiduciary, and is thereafter trans-
ferred 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 his obligation as fiduciary in trans-
ferring the instrument, and is not chargeable with notice that the fidu-
ciary is committing a breach of his obligation as fiduciary unless he takes
the instrument with actual knowledge of such breach or with knowledge

of such facts that his action in taking the instrument amounts to bad faith.

1929, ch. 572, sec. 7.

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 fidu-
ciary, 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 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.

1929, ch. 572, sec. 8.

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 empowered to
draw checks upon his principal's account, the bank is authorized to pay
such check 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 such 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.