§556-3  Transfer of negotiable instrument by
fiduciary.  If any negotiable instrument payable or indorsed to a fiduciary
as such is indorsed by the fiduciary, or if any negotiable instrument payable
or indorsed to the fiduciary's principal is indorsed by a fiduciary empowered
to indorse such instrument on behalf of the fiduciary's principal, the indorsee
is not bound to inquire whether the fiduciary is committing a breach of the
fiduciary's obligation as fiduciary in indorsing or delivering the instrument and
is not chargeable with notice that the fiduciary is committing a breach of the
fiduciary's obligation as fiduciary unless the indorsee takes the instrument
with actual knowledge of such breach or with knowledge of such facts that the
indorsee's 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 the fiduciary's
obligation as fiduciary in transferring the instrument. [L 1945, c 197, §4; RL
1955, §189-4; HRS §556-3; gen ch 1985]



 



Cross References



 



  Commercial paper, see §§490:3-109, 490:3-203, 490:3-307.