75A-1-204. Transfer of negotiable instruments by a fiduciary.
(1) If a fiduciary endorses a negotiable instrument that is payable or endorsed to the fiduciary or the fiduciary's principal, and the fiduciary has authority to endorse the negotiable instrument on behalf of the principal, the person that receives the negotiable instrument through the endorsement: is not bound to inquire as to whether the fiduciary is committing a breach of the fiduciary's obligation in endorsing or delivering the negotiable instrument; and is not required to provide notice that the fiduciary is committing a breach of the fiduciary's obligation, unless the person: takes the negotiable instrument with actual knowledge that the fiduciary is committing a breach of the fiduciary's obligation; or knows that taking the negotiable instrument amounts to bad faith.
(2) Notwithstanding Subsection (1), a person is liable to a principal if: the fiduciary transfers a negotiable instrument to the person and the person knows that the fiduciary is transferring the negotiable instrument: as payment of, or as a security for, a personal debt of the fiduciary; or for the personal benefit of the fiduciary; and the fiduciary commits a breach of the fiduciary's obligation in transferring the negotiable instrument to the person.