§ 34.1-3-307 — Notice of breach of fiduciary duty

(a) In this section:
(i) "Fiduciary" means an agent, trustee, partner,
corporate officer or director, or other representative owing a
fiduciary duty with respect to an instrument;
(ii) "Represented person" means the principal,
beneficiary, partnership, corporation, or other person to whom
the duty stated in paragraph (i) is owed.
(b) If (1) an instrument is taken from a fiduciary for
payment or collection or for value, (2) the taker has knowledge
of the fiduciary status of the fiduciary, and (3) 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:
(i) Notice of breach of fiduciary duty by the
fiduciary is notice of the claim of the represented person;
(ii) 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 (1)
taken in payment of or as security for a debt known by the taker
to be the personal debt of the fiduciary, (2) taken in a
transaction known by the taker to be for the personal benefit of
the fiduciary, or (3) deposited to an account other than an
account of the fiduciary, as such, or an account of the
represented person;
(iii) 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;
(iv) 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 (1) taken in payment of or as security for a debt
known by the taker to be the personal debt of the fiduciary, (2)
taken in a transaction known by the taker to be for the personal
benefit of the fiduciary, or (3) deposited to an account other
than an account of the fiduciary, as such, or an account of the
represented person.