§ 2-3-206 — Liability of bank; receiving deposit from fiduciary

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 payable to him as fiduciary, or of
checks drawn by him upon an account in the name of his principal
if he is empowered to draw checks thereon, or of checks payable
to his principal and endorsed by him, if he is empowered to
endorse the checks, or 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; and the bank is
authorized to pay the amount of the deposit or 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 that its action in
receiving the deposit or paying the check amounts to bad faith.