§ 18-4-17 - Transfer of negotiable instrument by fiduciary. - Rhode Island Statutes

SECTION 18-4-17

   § 18-4-17  Transfer of negotiableinstrument by fiduciary. – If any negotiable instrument payable or indorsed to a fiduciary is indorsed bythe fiduciary, or if any negotiable instrument payable or indorsed to his orher principal is indorsed by a fiduciary empowered to indorse the instrument onbehalf of his or her principal, the indorsee is not bound to inquire whetherthe fiduciary is committing a breach of his or her obligation as fiduciary inindorsing or delivering the instrument, and is not chargeable with notice thatthe fiduciary is committing a breach of his or her obligation as fiduciary,unless he or she takes the instrument with actual knowledge of the breach, orwith knowledge of any facts that his or her action in taking the instrumentamounts to bad faith. If, however, the instrument is transferred by thefiduciary in payment of or as security for a personal debt of the fiduciary tothe actual knowledge of the creditor, or is transferred in any transactionknown by the transferee to be for the personal benefit of the fiduciary, thecreditor or other transferee is liable to the principal if the fiduciary infact commits a breach of his or her obligation as fiduciary in transferring theinstrument.