§ 26-1-3.1-307 — Notice of breach of fiduciary duty

Indiana § 26-1-3.1-307

• Jurisdiction: Indiana
• Title 26: COMMERCIAL LAW
• Art. 1: UNIFORM COMMERCIAL CODE
• Ch. 3.1: Negotiable Instruments

Text

(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, corporation, or other person to whom the duty stated
in subdivision (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:
(A) taken in payment of or as security for a debt known by the
taker to be the personal debt of the fiduciary;
(B) taken in a transaction known by the taker to be for the
personal benefit of the fiduciary; or
(C) deposited to an account other than an account of the
fiduciary, as such, or an account of the represented person and
the bank receiving the deposit has:
(i) actual knowledge that the fiduciary is committing a breach
of its obligation as fiduciary in making the deposit; or
(ii) knowledge of other facts that the bank's action in
receiving the deposit constitutes bad faith.
(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:
(A) taken in payment of or as security for a debt known by the
taker to be the personal debt of the fiduciary;
(B) taken in a transaction known by the taker to be for the
personal benefit of the fiduciary; or
(C) deposited to an account other than an account of the
fiduciary, as such, or an account of the represented person and
the bank receiving the deposit has:
(i) actual knowledge that the fiduciary is committing a breach
of its obligation as fiduciary in making the deposit; or
(ii) knowledge of other facts that the bank's action in
receiving the deposit constitutes bad faith.

Legislative History

As added by P.L.222-1993, SEC.5. Amended by P.L.129-1994, SEC.1.