If any negotiable instrument payable or indorsed to a fiduciary as such is indorsed by the fiduciary, or if any negotiable instrument payable or indorsed to his principal is indorsed by a fiduciary, or if any negotiable instrument payable or indorsed to his principal is indorsed by a fiduciary empowered to indorse such instrument on behalf of his principal, the indorsee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in indorsing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes the instrument with actual knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith. If, however, such instrument is transferred by the fiduciary in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor, or is transferred in any transaction known by the transferee to be for the personal benefit of the fiduciary, the creditor or other transferee is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in transferring the instrument.
Structure Code of Alabama
Title 19 - Fiduciaries and Trusts.
Chapter 1 - Uniform Fiduciaries Act.
Section 19-1-3 - Application of Payments Made to Fiduciaries.
Section 19-1-4 - Transfer of Negotiable Instrument by Fiduciary.
Section 19-1-5 - Check Drawn by Fiduciary Payable to Third Person.
Section 19-1-6 - Check Drawn by and Payable to Fiduciary.
Section 19-1-7 - Deposit in Name of Fiduciary as Such.
Section 19-1-8 - Deposit in Name of Principal.
Section 19-1-9 - Deposit in Fiduciary's Personal Account.
Section 19-1-10 - Deposit in Names of Two or More Fiduciaries.
Section 19-1-11 - Chapter Not Retroactive.