Smith v. Olympic Bank

We hold that, where a bank allows a check that is made payable to a guardian to be deposited in a guardian's personal account instead of a guardianship account, the bank is not a holder in due course under the Uniform Commercial Code because it has notice that the guardian is breaching his fiduciary duty.

Facts

Charles Alcombrack was appointed guardian for his son Chad Stephen Alcombrack who was then 7 years old and the beneficiary of his grandfather's life insurance policy. The insurance company issued a check for $30,588.39 made payable to "Charles Alcombrack, Guardian of the Estate of Chad…