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 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
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.
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