(1) If a fiduciary deposits a check in a bank in the name of the fiduciary's principal and to the credit of the fiduciary and the bank is authorized to pay the amount of the deposit or any part of the deposit, the bank is not liable to the principal unless: (a) the bank pays the check with actual knowledge that the fiduciary is committing a breach of the fiduciary's obligation in drawing the check; or (b) the bank knows that paying the check amounts to bad faith. (2) Notwithstanding Subsection (1), a bank is liable to a principal if: (a) the fiduciary deposits a check in the name of the principal as payment to the bank for payment of, or as security for, a personal debt of the fiduciary; and (b) the fiduciary commits a breach of the fiduciary's obligation in drawing or delivering the check to the bank. Renumbered and Amended by Chapter 364, 2024 General Session
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