(a) In this section:
(1) "Fiduciary" means an agent, trustee, partner, corporate officer or director, or other representative owing a fiduciary duty with respect to an instrument.
(2) "Represented person" means the principal, beneficiary, partnership, corporation, or other person to whom the duty stated in paragraph (1) of this subsection (a) is owed.
(b) If (i) an instrument is taken from a fiduciary for payment or collection or for value,
(ii) the taker has knowledge of the fiduciary status of the fiduciary, and (iii) the represented person makes a claim to the instrument or its proceeds on the basis that the transaction of the fiduciary is a breach of fiduciary duty, the following rules apply:
(1) Notice of breach of fiduciary duty by the fiduciary is notice of the claim of the represented person.
(2) In the case of an instrument payable to the represented person or the fiduciary as such, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary or (ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary.
(3) If an instrument is issued by the represented person or the fiduciary as such, and made payable to the fiduciary personally, the taker does not have notice of the breach of fiduciary duty unless the taker knows of the breach of fiduciary duty.
(4) If an instrument is issued by the represented person or the fiduciary as such, to the taker as payee, the taker has notice of the breach of fiduciary duty if the instrument is (i) taken in payment of or as security for a debt known by the taker to be the personal debt of the fiduciary,
(ii) taken in a transaction known by the taker to be for the personal benefit of the fiduciary, or
(iii) deposited to an account other than an account of the fiduciary, as such, or an account of the represented person.
Source: L. 94: Entire article R&RE, p. 857, § 1, effective January 1, 1995. L. 2000:
(b)(2) amended, p. 1173, § 3, effective May 26.
Cross references: For registration, see part 4 of this article.
Notes of Decisions
First Nat'l Bank of Denver v. Cillessen, 622 P.2d 598 (Colo. Ct. App. 1980).
· cites it 4× “It argues that, since no notice to the defendants was required, the bank was entitled to a deficiency judgment once proof under § 4-3-307, C.R.S. 1973, was given. We do not agree.”
Smith v. Weindrop, 833 P.2d 856 (Colo. Ct. App. 1992).
· cites it 3× “On the back of the notes were the official stamp and notation of the public trustee stating the amount of indebtedness owed, the amount of the bid at foreclosure, and the deficiency balance remaining due.”
Fed. Deposit Ins. Corp. v. Sarvis, 697 F. Supp. 1161 (D. Colo. 1988).
· cites it 4× “The requirements for a prima facie case in an action on a negotiable instrument are set forth in Colo.Rev.Stat. § 4-3-307(2). That section provides that “[wjhen signatures are admitted or established, production of the instrument entitles the holder to recover on it unless the…”
Willey v. Mayer, 876 P.2d 1260 (Colo. 1994).
“See § 4-3-307(1)(b). Mayer and Western Slope argue, alternatively, that we should not hold them liable on the $40,000 note because Rhodes was not acting with the intent to benefit his principal when he affixed the signature.”
— Colo. Rev. Stat. § 4-3-307(1)(b) — 1 case
Willey v. Mayer, 876 P.2d 1260 (Colo. 1994).
“See § 4-3-307(1)(b). Mayer and Western Slope argue, alternatively, that we should not hold them liable on the $40,000 note because Rhodes was not acting with the intent to benefit his principal when he affixed the signature.”
— Colo. Rev. Stat. § 4-3-307(2) — 2 cases
Smith v. Weindrop, 833 P.2d 856 (Colo. Ct. App. 1992).
“On the back of the notes were the official stamp and notation of the public trustee stating the amount of indebtedness owed, the amount of the bid at foreclosure, and the deficiency balance remaining due.”
Fed. Deposit Ins. Corp. v. Sarvis, 697 F. Supp. 1161 (D. Colo. 1988).
“The requirements for a prima facie case in an action on a negotiable instrument are set forth in Colo.Rev.Stat. § 4-3-307(2). That section provides that “[wjhen signatures are admitted or established, production of the instrument entitles the holder to recover on it unless the…”
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