§ 30-2-4-7 — Deposit in name of fiduciary

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 such 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 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 his obligation
as fiduciary in drawing or delivering the check.
Formerly: Acts 1927, c.17, s.7.