Deposit in name of fiduciary; checks;

3B:14-56. Deposit in name of fiduciary; checks;

3B:14-56. Deposit in name of fiduciary; checks; when bank liable 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 fiduciary, signed with the name in which the deposit is entered, without being liable to the principal, unless the bank pays the check with the actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing the check or with knowledge of facts that its action in paying the check amounts to bad faith. If, however, 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. L.1981, c. 405, s. 3B:14-56, eff. May 1, 1982.3B:14-57. Checks drawn by fiduciary upon principals account 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 principals account, the bank is authorized to pay the 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 the check, or with knowledge of facts that its action in paying the check amounts to bad faith. If, however, 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. 3B:14-58. Deposit in fiduciary's personal account; liability of bank receiving deposit and paying checks 3B:14-58. Deposit in fiduciary's personal account; liability of bank receiving deposit and paying checks. a. If a fiduciary makes a deposit in a bank to his personal credit of checks drawn by him upon an account in his own name as fiduciary, or of checks drawn by him upon an account in the name of his principal, if he is empowered to draw thereon, or, except as provided in subsection b. of this section, if he otherwise makes a deposit of funds held by him as fiduciary, the bank receiving the deposit is not bound to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary. The bank is authorized to pay the amount of the deposit of any part thereof upon the personal check of the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in making the deposit or in drawing the check, or with knowledge of facts that its action in receiving the deposit of paying the check amounts to bad faith. b. In the case of an instrument payable to the principal or the fiduciary as fiduciary, the bank has notice of the breach of fiduciary duty if the instrument is deposited to an account other than an account of the fiduciary, as fiduciary, or an account of the principal. Amended 1995, c.28, s.11; 1996, c.134, s.2.3B:14-59. Deposit in names of two or more trustees; liability of payee, holder or bank When a deposit is made in a bank in the names of two or more persons as trustees and a check is drawn upon the trust account by any trustee or trustees authorized by the other trustee or trustees to draw checks upon the trust account, neither the payee nor other holder nor the bank is bound to inquire whether it is a breach of trust to authorize the trustee or trustees to draw checks upon the trust account, and is not liable unless the circumstances be such that the action of the payee or other holder or the bank amounts to bad faith. L.1981, c. 405, s. 3B:14-59, eff. May 1, 1982.3B:14-60. Cases not provided for in article In any case not provided for in this article, the rules of law and equity, including the law merchant and those rules of law and equity relating to trusts, agency, commercial transactions and banking, shall continue to apply. 3B:14-61. Uniformity of interpretation The article shall be so interpreted and construed as to effectuate its general purpose to make uniform laws of those states which enact it. http://www.njlaws.com/3b-14-61.html?id=6416&a=