§556-7  Deposit in name of principal. 
If a check is drawn upon the account of its principal in a bank by a fiduciary
who is empowered to draw checks upon the fiduciary's 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 the fiduciary's 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 the fiduciary's obligation as fiduciary in drawing or
delivering the check. [L 1945, c 197, §8; RL 1955, §189-8; HRS §556-7; gen ch
1985]



 



Cross References



 



  Uniform Commercial Code, see chapter 490, Articles 3 and 4.