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 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.
N.C. Gen. Stat. § 32-9
Deposit in name of principal
Known as the Uniform Fiduciaries Act
The act spans §§ 32–32 (13 sections).
Applied in 2 court decisions — leading case 385 Wis. 2d 261 - Koss Corporation v. Park Bank (2019)
Most recently applied in 385 Wis. 2d 261 - Koss Corporation v. Park Bank (January 2019)
1923, c. 85, s. 8; C.S., s. 1864(l).
Official source: North Carolina General Assembly. Reproduced from public-domain North Carolina statutes; confirm against the official source for the current text. Not legal advice.