§ 25-7-504. Rights acquired in absence of due negotiation; effect of diversion; stoppage of delivery.
§ 25‑7‑504. Rights acquired in absence of due negotiation; effect of diversion; stoppage ofdelivery.
(a) A transferee of adocument of title, whether negotiable or nonnegotiable, to which the documenthas been delivered but not duly negotiated, acquires the title and rights thatits transferor had or had actual authority to convey.
(b) In the case of atransfer of a nonnegotiable document of title, until but not after the baileereceives notice of the transfer, the rights of the transferee may be defeated:
(1) By those creditorsof the transferor which could treat the transfer as void under G.S. 25‑2‑402or G.S. 25‑2A‑308;
(2) By a buyer from thetransferor in ordinary course of business if the bailee has delivered the goodsto the buyer or received notification of the buyer's rights;
(3) By a lessee from thetransferor in ordinary course of business if the bailee has delivered the goodsto the lessee or received notification of the lessee's rights; or
(4) As against thebailee, by good‑faith dealings of the bailee with the transferor.
(c) A diversion orother change of shipping instructions by the consignor in a nonnegotiable billof lading which causes the bailee not to deliver the goods to the consigneedefeats the consignee's title to the goods if the goods have been delivered toa buyer in ordinary course of business or a lessee in ordinary course ofbusiness and, in any event, defeats the consignee's rights against the bailee.
(d) Delivery of thegoods pursuant to a nonnegotiable document of title may be stopped by a sellerunder G.S. 25‑2‑705 or a lessor under G.S. 25‑2A‑526,subject to the requirements of due notification in those sections. A baileethat honors the seller's or lessor's instructions is entitled to be indemnifiedby the seller or lessor against any resulting loss or expense. (1917, c. 37, s. 42; 1919, c.65, s. 32; c. 290; C.S., ss. 314, 4082; 1965, c. 700, s. 1; 2006‑112, s.25.)