§ 30-2-4-8 — Deposit in name of principal

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 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 his
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 his obligation as fiduciary in drawing or delivering the check.
Formerly: Acts 1927, c.17, s.8.