State Codes and Statutes

Statutes > Connecticut > Title42a > Art003 > Sec42a-3-307

      Sec. 42a-3-307. Notice of breach of fiduciary duty. (a) In this section:

      (1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.

      (2) "Represented person" means the principal, beneficiary, partnership, limited liability company, corporation, or other person to whom the duty stated in paragraph (1) is owed.

      (b) If (i) an instrument is taken from a fiduciary for payment or collection or for value, (ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:

      (1) Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person.

      (2) In the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

      (3) If an instrument is issued by the represented person or the fiduciary as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.

      (4) If an instrument is issued by the represented person or the fiduciary as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary, (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or (iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.

      (1959, P.A. 133, S. 3-307; P.A. 91-304, S. 33; P.A. 95-79, S. 165, 189.)

      History: P.A. 91-304 entirely replaced former provisions re burden of establishing signatures, defenses and holder in due course status with provisions re notice of breach of fiduciary duty; P.A. 95-79 redefined "represented person" to include a limited liability company, effective May 31, 1995.

      See Sec. 42a-3-308 for successor provisions to Sec. 42-3-307, revised to 1991, re proof of signatures, defenses and holder in due course status.

      Annotations to former statute (1958 Rev., S. 39-17):

      Understanding that absolute endorsement was to be without recourse cannot be shown by oral evidence under this section. 92 C. 592. Proper remedy. Id., 593. This presumption is rebuttable. 105 C. 78.

      Annotations to present section:

      Cited. 230 C. 779.

      Cited. 33 CS 641.

      Former Subsec. (1):

      Special defense was sufficient to put effectiveness of signature in issue; furthermore, failure to object to evidence waived any objection of variance or improper pleading; section 52-93 compared. 33 CS 654. Authority of agent to sign note; burden of proof. Id.

      Former Subsec. (2):

      Cited. 182 C. 530. Cited. 189 C. 591.

      Cited. 1 CA 162.

      Cited. 6 Conn. Cir. Ct. 547.

      Former Subsec. (3):

      Cited. 187 C. 637. Cited. 189 C. 591. Cited. 242 C. 17.

      Cited. 1 CA 162. Cited. 4 CA 102.