§ 41-07-33 — (7-504) Rights acquired in absence of due negotiation - Effect of diversion - Stoppage of delivery

Stoppage of delivery.
1. A transferee of a document of title, whether negotiable or non-negotiable, to which the
document has been delivered but not duly negotiated, acquires the title and rights that
its transferor had or had actual authority to convey.
2. In the case of a transfer of a non-negotiable document of title, until but not after the
bailee receives notice of the transfer, the rights of the transferee may be defeated:
a. By those creditors of the transferor which could treat the transfer as void under
section 41-02-47 or 41-02.1-38;
b. By a buyer from the transferor in ordinary course of business if the bailee has
delivered the goods to the buyer or received notification of the buyer's rights;
c. By a lessee from the transferor in ordinary course of business if the bailee has
delivered the goods to the lessee or received notification of the lessee's rights; or
d. As against the bailee, by good-faith dealings of the bailee with the transferor.
3. A diversion or other change of shipping instructions by the consignor in a
non-negotiable bill of lading which causes the bailee not to deliver the goods to the
consignee defeats the consignee's title to the goods if the goods have been delivered
to a buyer in ordinary course of business or a lessee in ordinary course of business
and, in any event, defeats the consignee's rights against the bailee.
4. Delivery of the goods pursuant to a non-negotiable document of title may be stopped
by a seller under section 41-02-84 or a lessor under section 41-02.1-74, subject to the
requirements of due notification in those sections. A bailee that honors the seller's or
lessor's instructions is entitled to be indemnified by the seller or lessor against any
resulting loss or expense.