8.7-504 - Rights acquired in the absence of due negotiation; effect of diversion; seller's stoppage of delivery.
§ 8.7-504. Rights acquired in the absence of due negotiation; effect ofdiversion; seller's stoppage of delivery.
(1) A transferee of a document, whether negotiable or nonnegotiable, to whomthe document has been delivered but not duly negotiated, acquires the titleand rights that his transferor had or had actual authority to convey.
(2) In the case of a nonnegotiable document, until but not after the baileereceives notification of the transfer, the rights of the transferee may bedefeated:
(a) by those creditors of the transferor who could treat the sale as voidunder § 8.2-402 or § 8.2A-308; or
(b) by a buyer from the transferor in ordinary course of business if thebailee has delivered the goods to the buyer or received notification of hisrights; or
(c) by a lessee from the transferor in ordinary course of business if thebailee has delivered the goods to the lessee or received notification of thelessee's rights; or
(d) as against the bailee by good faith dealings of the bailee with thetransferor.
(3) A diversion or other change of shipping instructions by the consignor ina nonnegotiable bill of lading that causes the bailee not to deliver to theconsignee defeats the consignee's title to the goods if they have beendelivered to a buyer or lessee in ordinary course of business and, in anyevent, defeats the consignee's rights against the bailee.
(4) Delivery pursuant to a nonnegotiable document may be stopped by a sellerunder § 8.2-705 or a lessor under § 8.2A-526, subject to the requirement ofdue notification there provided. A bailee honoring the seller's or lessor'sinstructions is entitled to be indemnified by the seller or lessor againstany resulting loss or expense.
(Code 1950, §§ 61-44, 61-45; 1964, c. 219; 2004, c. 200.)