386.140 Checks drawn by a fiduciary payable to third person or to himself. (1) If a check or other bill of exchange is drawn by a fiduciary as such, or in the name of his principal by a fiduciary empowered to draw the instrument in the name of his principal, the payee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in drawing or delivering the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary, unless he takes the instrument with actual knowledge of the breach or wit h knowledge of such facts that his action in taking the instrument amounts to bad faith. (2) If a check or other bill of exchange is drawn by a fiduciary as such or in the name of his principal by a fiduciary empowered to draw the instrument in the name o f his principal, payable to the fiduciary personally, or payable to a third person and by him transferred to the fiduciary, and is thereafter transferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as sferred by the fiduciary, whether in payment of a personal debt of the fiduciary or otherwise, the transferee is not bound to inquire whether the fiduciary is committing a breach of his obligation as fiduciary in transferring the instrument, and is not chargeable with notice that the fiduciary is committing a breach of his obligation as fiduciary unless he takes t he instrument with actual knowledge of the breach or with knowledge of such facts that his action in taking the instrument amounts to bad faith. Effective: October 1, 1942 History: Recodified 1942 Ky. Acts ch. 208, sec. 1, effective October 1, 1942, from K y. Stat. secs. 4711 -4, 4711 -5.
Kentucky Legal Code