30-3-308. Notice of breach of fiduciary duty. (1) This section applies if an instrument is taken from a fiduciary for payment or collection or for value, the taker has knowledge of the fiduciary status of the fiduciary, and 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. Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person. "Fiduciary" means an agent, trustee, partner, corporation officer or director, or other representative owing a fiduciary duty with respect to the instrument. "Represented person" means the principal, beneficiary, partnership, corporation, or other person to whom the duty is owed.
(2) If the instrument is payable to the fiduciary, as such, or to the represented person, the taker has notice of the breach of fiduciary duty if the instrument is:
(a) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary;
(b) taken in a transaction known by the taker to be for the personal benefit of the fiduciary; or
(c) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
(3) If the instrument is made or drawn by the fiduciary, as such, 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.
(4) If the instrument is made or drawn by or on behalf of the represented person to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is:
(a) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary;
(b) taken in a transaction known by the taker to be for the personal benefit of the fiduciary; or
(c) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
History: En. Sec. 120, Ch. 410, L. 1991.