FIDUCIARIES 1637

the performance of the fiduciary obligation, and is liable for registering
such transfer only where registration of the transfer is made with actual
knowledge that the fiduciary is committing a breach of his obligation as
fiduciary in making the transfer, or with knowledge of such facts that the
action in registering the transfer amounts to bad faith.

1929, ch. 572, sec. 4.

4. (Transfer of Negotiable Instrument by Fiduciary.) If any nego-
tiable instrument payable or indorsed to a fiduciary as such is indorsed by
the fiduciary, or if any negotiable instrument payable or indorsed to his
principal is indorsed by a fiduciary empowered to indorse such instrument
on behalf of his principal, the indorsee is not bound to inquire whether the
fiduciary is committing a breach of his obligation as fiduciary in indorsing
or delivering 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. If, however, such instrument is transferred by the fiduciary in
payment of or as security for a personal debt of the fiduciary to the actual
knowledge of the creditor, or is transferred in any transaction known by
the transferee to be for the personal benefit of the fiduciary, the creditor
or other transferee is liable to the principal if the fiduciary in fact commits
a breach of his obligation as fiduciary in transferring the instrument.

1929, ch. 572, sec. 5.

5. (Check Drawn by Fiduciary Payable to Third Person.) 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, the payee is not bound to inquire whether the
fiduciary is committing a breach of his obligation as fiduciary in drawing
or delivering 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. If, however, such instrument is payable to a personal creditor of
the fiduciary and delivered to the creditor in payment of or as security 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 commits a breach of his obligation
as fiduciary in drawing or delivering the instrument.

A claim against one on account of trust funds paid to him by trustee, on account
of personal debt of latter, may be pursued in equity as well as at law, but statute
of limitations began to run from time defendant received check in absence of pro-
vision to contrary. Banking & Trust Co. v. Bender, 175 Md. 625.

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