That fiduciaries who misappropriate or divert trust funds from their proper purpose are bound to make good is familiar doctrine. It is equally clear that those who guiltily participate in such. diversions by faithless fiduciaries are also liable. The point of chief difficulty is the determination of what participations are properly classified as guilty, for innocent participators clearly are not bound to make good. For example, a fiduciary with power to sell things held in trust may wish to turn the subject matter into cash preliminary to a misappropriation. A bona fide purchaser who provides the cash no doubt stands in a far better position than does one who buys for cash knowing the seller's purpose.
R. W. A.,
TRUSTS-PARTICIPATION BY BANKS IN DIVERSION OF TRUST FUNDS,
Mich. L. Rev.
Available at: https://repository.law.umich.edu/mlr/vol42/iss4/8