(760 ILCS 65/5) (from Ch. 17, par. 2005)
Sec. 5.
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 such
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 such breach or with
knowledge of such facts that his action in taking the instrument amounts to
bad faith. If, however, such instrument is payable to a personal creditor
of the fiduciary and delivered to the creditor in payment of or as security
for a personal debt of the fiduciary to the actual knowledge of the
creditor, or is drawn and delivered in any transaction known by the payee
to be for the personal benefit of the fiduciary, the creditor or other
payee is liable to the principal if the fiduciary in fact commits a breach
of his obligation as fiduciary in drawing or delivering the instrument.
(Source: Laws 1931, p. 676.)
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