§12A-3-307. Notice of Breach of Fiduciary.
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NOTICE OF BREACH OF FIDUCIARY DUTY
(a)In this section:
(1)"Fiduciary" means an agent, trustee, partner,
corporate officer or director, or other representative
owing a fiduciary duty with respect to an instrument;
and
(2)"Represented person" means the principal, beneficiary,
partnership, corporation, or other person to whom the
duty stated in paragraph
(1)of this subsection is
owed.
(b)If
(i)an instrument is taken from a fiduciary for payment or collection or for value,
(ii)the taker has knowledge of the fiduciary status of the fiduciary, and
(iii)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:
(1)Notice of breach of fiduciary duty by the fiduciary is
notice of the claim of the represented person;
(2)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
(i)taken in payment of or as security
for a debt known by the taker to be the personal debt
of the fiduciary,
(ii)taken in a transaction known by
the taker to be for the personal benefit of the
fiduciary, or
(iii)deposited to an account other than
an account of the fiduciary, as such, or an account of
the represented person;
(3)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; and
(4)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
(i)taken in payment of or as
security for a debt known by the taker to be the
personal debt of the fiduciary,
(ii)taken in a
transaction known by the taker to be for the personal
benefit of the fiduciary, or
(iii)deposited to an
account other than an account of the fiduciary, as
such, or an account of the represented person. Laws 1961, p. 110, § 3-307. Amended by Laws 1991, c. 117, § 58, eff. Jan. 1, 1992.