Illinois Compiled Statutes
760 ILCS 65/5 (2026)
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
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(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.)
Notes of Decisions
Cited in 5
cases, 1993–2013 · leading case: Time Savers, Inc. v. LaSalle Bank, NA, 863 N.E.2d 1156 (Ill. App. Ct. 2007).
Time Savers, Inc. v. LaSalle Bank, NA, 863 N.E.2d 1156 (Ill. App. Ct. 2007). “LaSalle violated sections 5 and/or 9 of the Fiduciary Obligations Act (760 ILCS 65/5, 9 (West 2004)), “by knowingly making multiple unauthorized transfers from TSI’s accounts to the account of Harrison’s creditor and to a checking account owned by Harrison’s company RDSJH.”
Cnty. of MacOn v. Edgcomb, 654 N.E.2d 598 (Ill. App. Ct. 1995). “2005 (now 760 ILCS 65/5 (West 1992)).) It is alleged that the instruments were paid to Magna "in payment of or as security for a personal debt of the fiduciary to the actual knowledge” of Magna (section 5).”
West Bend Mut. Ins. Co v. Belmont State Corp., 712 F.3d 1030 (7th Cir. 2013). “) At the end of its brief West Bend cursorily advances what had been its principal contention in the district court: that § 5 of the Uniform Fiduciaries Act, 760 ILCS 65/5, makes the Bank liable because it was Gizynski’s creditor.”
Time Savers, Inc. v. LaSalle Bank, N.A. (Ill. App. Ct. 2007). “LaSalle violated sections 5 and/or 9 of the Fiduciary Obligations Act (760 ILCS 65/5, 9 (West 2004)), "by knowingly making multiple unauthorized transfers from TSI's accounts to the account of Harrison's creditor and to a checking account owned by Harrison's company RDSJH.”
Hosselton v. K's Merch. Mart, Inc., 617 N.E.2d 797 (Ill. App. Ct. 1993). “The plaintiff claimed that the defendant accepted the payments in violation of section 5 of the Fiduciary Obligations Act (760 ILCS 65/5 (West 1992)). The trial court granted the defendant’s motion for summary judgment.”
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