If a check is drawn upon the account of the principal in a bank or savings institution by a fiduciary who is empowered to draw checks upon the principal's account, the bank or savings institution is authorized to pay such check without being liable to the principal, unless the bank or savings institution pays the check with actual knowledge that the fiduciary is committing a breach of the fiduciary's 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 or savings institution and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank or savings institution is liable to the principal if the fiduciary in fact commits a breach of the obligation as fiduciary in drawing or delivering the check.
Structure 2021 Tennessee Code
Title 35 - Fiduciaries and Trust Estates
Chapter 2 - Uniform Fiduciaries Act
§ 35-2-103. Application of Payments Made to Fiduciaries — Validity of Right or Title Acquired
§ 35-2-104. Transfer of Negotiable Instrument by Fiduciary
§ 35-2-105. Check Drawn by Fiduciary Payable to Third Person
§ 35-2-107. Deposit in Name of Fiduciary as Such — Drawing Check
§ 35-2-108. Deposit in Name of Principal — Drawing Checks
§ 35-2-109. Deposit in Fiduciary's Personal Account — Drawing Checks
§ 35-2-110. Deposit in Names of Two or More Trustees — Drawing Checks