Chapter 545. Concerning liability for participation in breaches of fiduciary obligations and to make uniform the law with reference thereto
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Chap. 545: Concerning liability for participation in breaches of fiduciary obligations and to make uniform the law with reference thereto. Chapter 545 45 Stat. 509 1928-05-14 United States Government Publishing Office text/xml EN Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain. Digitization Vendor 2025-01-24 70 1 public Chapter 545.— An Act Concerning liability for participation in breaches of fiduciary obligations and to make uniform the law with reference thereto.
May 14, 1928.[[H. R. 6844](/us/bill/70/hr/6844).][[Public, No. 380](/us/pl/70/380).] *Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled*, That the followingDistrict of Columbia.Uniform Fiduciaries Act. provisions concerning liability for participation in breaches of fiduciary obligations, and to make uniform the law with reference thereto, shall be in force in the District of Columbia, namely: " “Section 1. Definition of terms.—
(1)In this Act unless theTerms defined. context or subject matter otherwise requires: “‘Bank’ includes any person or association of persons, whether “Bank.”incorporated or not, carrying on the business of banking. 510 “Fiduciary.”“‘Fiduciary’ includes a trustee under any trust, expressed, implied, resulting or constructive, executor, administrator, guardian, conservator, curator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a corporation, public or private, public officer, or any other person acting in a fiduciary capacity for any person, trust, or estate. “Person.”“‘Person’ includes a corporation, partnership, or other association, or two or more persons having a joint or common interest. “Principal.”“‘Principal’ includes any person to whom a fiduciary as such owes an obligation.
(2)A thing done “in good faith.” A thing is done ‘in good faith’ within the meaning of this Act, when it is in fact done honestly, whether it be done negligently or not. “Sec. 2.Persons paying to fiduciaries not responsible for application thereof. Application of payment s made to fiduciaries.— A person who in good faith pays or transfers to a fiduciary any money or other property which the fiduciary as such is authorized to Rights acquired not invalid by misapplication.receive, is not responsible for the proper application thereof by the fiduciary; and any right or title acquired from the fiduciary in consideration of such payment or transfer is not invalid in consequence of a misapplication by the fiduciary. “Sec. 3.No inquiry required whether fiduciary has committed breach of his obligation in transfer of securities registered in his name as such. Registration of transfer of securities held by fiduciaries.— If a fiduciary in whose name are registered any shares of stock, bonds, or other securities of any corporation, public or private, or company or other association or of any trust, transfers the same, such corporation or company or other association, or any of the managers of the trust, or its or their transfer agent, is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in making the transfer, or to see to the performance of Liability if transfer registered with knowledge of breach.the fiduciary obligation, and is liable for registering such transfer only where registration of the transfer is made with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in making the transfer, or with knowledge of such facts that the action in registering the transfer amounts to bad faith. “Sec. 4.Indorsee not bound to inquire if negotiable instrument was indorsed by fiduciary without committing breach of obligation. Transfer of negotiable instrument by fiduciary.— 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 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 Transfers in payment of personal debt of fiduciary.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. “Sec. 5.Responsibility as to checks by fiduciary to a third person. Check drawn by fiduciary payable to third person.— If a check or other bill of exchange is drawn by a fiduciary as such, or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, the payee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in drawing 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 511that his action in taking the instrument amounts to bad faith. If, Payable to a personal creditor of fiduciary.however, such instrument is payable to a personal creditor of the fiduciary and delivered to the creditor in payment of or as security for a personal debt of the fiduciary to the actual knowledge of the creditor, or is drawn and delivered in any transaction known by the payee to be for the personal benefit of the fiduciary, the creditor or other payee is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the instrument. “Sec. 6. Check drawn by and payble to fiduciary.— If a check Responsibility for check drawn by and payable to fiduciary, and transferred in payment of his personal debt.or other bill of exchange is drawn by a fiduciary as such or in the name of his principal by a fiduciary empowered to draw such instrument in the name of his principal, payable to the fiduciary personally, or payable to a third person and by him transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in transferring 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. “Sec. 7. Deposit in name of fiduciary as such.— If a deposit isLiability of bank for paying checks drawn on deposits made by fiduciary. made in a bank to the credit of a fiduciary as such, the bank is authorized to pay the amount of the deposit or any part thereof upon the check of the fiduciary, signed with the name in which such deposit is entered, without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his obligation as fiduciary in drawing the 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 Payments for personal debt of fiduciary to the bank. to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check. “Sec. 8. Deposit in name of principal.— If a check is drawn uponAuthority of bank to pay checks drawn by fiduciary upon principal’s account. the account of his principal in a bank by a fiduciary who is empowered to draw checks upon his principal’s account, the bank is authorized to pay such check without being liable to the principal, unless the bank pays the check with actual knowledge that the fiduciary is committing a breach of his 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 payablePayment, if for personal debt of fiduciary to the bank. to the drawee bank and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank is liable to the principal if the fiduciary in fact commits a breach of his obligation as fiduciary in drawing or delivering the check. “Sec. 9. Deposit in fiduciary’s personal account.— If a fiduciaryResponsibility of bank for deposit in personal account by fiduciary of check drawn on account of name of principal, etc. 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 indorsed by him, if he is empowered to indorse such checks, or if he otherwise makes a deposit of funds held by him as fiduciary, the bank receiving such 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 512 Liability if bank has knowledge of breach of obligation, etc. 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 such deposit or in drawing such check, or with knowledge of such facts that its action in receiving the deposit or paying the check amounts to bad faith. “Sec. 10.Authority to draw on deposits in name of two or more trustees. Deposit in names of two or more trustees.— When a deposit is made in a bank in the name of two or more persons as trustees and a check is drawn upon the trust account by any trustee or trustees authorized by the other trustee or trustees to draw checks upon the trust account, neither the payee nor other holder nor the bank is bound to inquire whether it is a breach of trust to authorize such trustee or trustees to draw checks upon the trust account, and is not liable unless the circumstances be such that the action of the payee or other holder or the bank amounts to bad faith. “Sec. 11.Act not retroactive. Act not retroactive.— The provisions of this Act shall not apply to transactions taking place prior to the time when it takes effect. “Sec. 12.Application of general rules of law and equity to cases not provided for hereby. Cases not provided for in Act.— In any case not provided for in this Act the rules of law and equity, including the law merchant and those rules of law and equity relating to trusts, agency, negotiable instruments, and banking, shall continue to apply. “Sec. 13.Uniformity of interpretation with State laws. Uniformity of interpretation.— This Act shall be so interpreted and construed as to effectuate its general purpose to make uniform the law of those States which enact it. “Sec. 14.Title of Act. Short title.— This Act may be cited as the Uniform Fiduciaries Act. “Sec. 15.Inconsistent laws repealed. Inconsistent laws repealed.— All Acts or parts of Acts inconsistent with this Act are hereby repealed. “Sec. 16.Effective upon passage. Time of taking effect.— This Act shall take effect upon the date of its passage.” " Approved, May 14, 1928.
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Chapter 545
Concerning liability for participation in breaches of fiduciary obligations and to make uniform the law with reference thereto
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