Virginia Code 6.2-897: Bank need not inquire as to fiduciary funds deposited in fiduciary’s personal account.
If any fiduciary or agent makes a deposit in a bank to his personal credit of checks drawn by him upon an account in his own name as fiduciary, or of checks drawn by him upon an account in the name of his principal, if he is empowered to draw checks thereon, or of checks payable to his principal and endorsed by him as fiduciary, the bank receiving the deposit:
Terms Used In Virginia Code 6.2-897
- Bank: means a corporation authorized by statute to accept deposits and to hold itself out to the public as engaged in the banking business in the Commonwealth. See Virginia Code 6.2-800
- Fiduciary: A trustee, executor, or administrator.
- 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.
1. Shall not be required to inquire whether the fiduciary is committing thereby a breach of his obligation as fiduciary; and
2. Is authorized to pay the amount of the deposit or any part thereof upon the withdrawal by the fiduciary without being liable to the principal, unless the bank receives the deposit or pays the withdrawal with (i) actual knowledge that the fiduciary, in making such deposit or in making such withdrawal, is committing a breach of his obligation as fiduciary or (ii) knowledge of such facts that its action in receiving the deposit or paying the check amounts to bad faith.
Code 1950, § 6-57; 1966, c. 584, § 6.1-75; 2010, c. 794.