Chapter 20 - 431R - I Ver of SB1061 - Title: fiduciaries; actual knowledge
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Chapter 20 - 431R - I Ver of SB1061
Reference Title:
fiduciaries; actual knowledge
AN ACT
AMENDING SECTIONS 14-7503, 14-7504, 14-7505, 14-7506, 14-7507 AND 14-7508,
ARIZONA REVISED STATUTES; RELATING TO THE UNIFORM FIDUCIARIES ACT.
Be it enacted by the Legislature of the State of Arizona:
Section 1. Section 14-7503, Arizona Revised Statutes, is amended to
read:
14-7503
.
Transfer of negotiable instrument by fiduciary
If any negotiable instrument payable or endorsed to a fiduciary as such
is endorsed by the fiduciary, or if any negotiable instrument payable or
endorsed to his principal is endorsed by a fiduciary empowered to endorse
such instrument on behalf of his principal, the endorsee is not bound to
inquire whether the fiduciary is committing a breach of his obligation as
fiduciary in endorsing 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
constructive
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
constructive
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. 2. Section 14-7504, Arizona Revised Statutes, is amended to read:
14-7504
.
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 a 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
constructive
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 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
constructive
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. 3. Section 14-7505, Arizona Revised Statutes, is amended to read:
14-7505
.
Check drawn by and payable to fiduciary
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, 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
constructive
knowledge of such breach or with knowledge of such facts that his action in taking the instrument amounts
to bad faith.
Sec. 4. Section 14-7506, Arizona Revised Statutes, is amended to read:
14-7506
.
Deposit in name of fiduciary as such
If a deposit is 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
constructive
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 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. 5. Section 14-7507, Arizona Revised Statutes, is amended to read:
14-7507
.
Deposit in name of principal
If a check is drawn upon 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
constructive
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 payable 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. 6. Section 14-7508, Arizona Revised Statutes, is amended to read:
14-7508
.
Deposit in fiduciary's personal account
If a fiduciary 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 endorsed by him, if he is empowered
to endorse 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 the personal check of the fiduciary without being liable
to the principal, unless the bank receives the deposit or pays the check with
actual
constructive
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.
APPROVED BY THE GOVERNOR MARCH 27, 1997.
FILED IN THE OFFICE OF THE SECRETARY OF STATE MARCH 27, 1997.
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