Tennessee Code 35-2-108 – Deposit in name of principal – Drawing checks
Terms Used In Tennessee Code 35-2-108
- Bank: includes any person or association of persons, whether incorporated or not, carrying on the business of banking. See Tennessee Code 35-2-102
- Fiduciary: A trustee, executor, or administrator.
- Fiduciary: includes a trustee under any trust, expressed, implied, resulting or constructive, executor, administrator, personal representative, guardian, conservator, curator, receiver, trustee in bankruptcy, assignee for the benefit of creditors, partner, agent, officer of a corporation, public or private, public officer, or any other person acting in a fiduciary capacity for any person, trust or estate. See Tennessee Code 35-2-102
- Obligation: An order placed, contract awarded, service received, or similar transaction during a given period that will require payments during the same or a future period.
- Principal: includes any person to whom a fiduciary as such owes an obligation. See Tennessee Code 35-2-102
- Savings institution: includes a federal or state savings and loan association or savings bank. See Tennessee Code 35-2-102
If a check is drawn upon the account of the principal in a bank or savings institution by a fiduciary who is empowered to draw checks upon the principal’s account, the bank or savings institution is authorized to pay such check without being liable to the principal, unless the bank or savings institution pays the check with actual knowledge that the fiduciary is committing a breach of the fiduciary’s 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 or savings institution and is delivered to it in payment of or as security for a personal debt of the fiduciary to it, the bank or savings institution is liable to the principal if the fiduciary in fact commits a breach of the obligation as fiduciary in drawing or delivering the check.