If a principal authorizes a fiduciary to write or endorse a check for the principal, and the fiduciary writes a check payable to the fiduciary and deposits the check in a bank into the fiduciary's personal account:

1. (1) the bank is not bound to inquire whether a fiduciary is committing a breach of the fiduciary's obligation to a principal; and

2. (2) the bank is authorized to pay the amount of the deposit or any part of a personal check of the fiduciary without being liable to the principal unless:

   1. (a) the bank deposits the check for a fiduciary with actual knowledge that the fiduciary is committing a breach of the fiduciary's obligation in depositing the check; or
   2. (b) the bank knows that depositing the check for the fiduciary amounts to bad faith.

Renumbered and Amended by Chapter 364, 2024 General Session