Defendant bank was the depository of trust funds specially earmarked for payment of an outstanding issue of trust notes. The trustee's individual account in defendant was overdrawn; and the trustee was also indebted to defendant on a promissory note. The trustee drew a fiduciary check in favor of himself for the entire amount of the trust account, indorsed it, and deposited it in his individual account. This wiped out the overdraft and left a credit balance. Then the trustee paid his note to defendant with a check drawn on his individual account in favor of defendant. Held, under the Uniform Fiduciaries Act defendant is not liable for the misappropriation of trust funds in payment of the note; but the act does not apply to the overdraft payment, and defendant is liable therefor at common law. Colby v. Riggs Nat. Bank, (App. D. C. 1937) 92 F. (2d) 183.
Michigan Law Review,
TRUSTS BANKS AND BANKING - LIABILITY OF DEPOSITORY FOR TRUSTEE'S MISAPPROPRIATION OF TRUST FUNDS - UNIFORM FIDUCIARY ACT,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol37/iss1/23