§490:7-504  Rights acquired in absence of
due negotiation; effect of diversion; stoppage of delivery.  (a)  A
transferee of a document of title, whether negotiable or nonnegotiable, 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.



(b)  In the case of a transfer of a
nonnegotiable document of title, until but not after the bailee receives notice
of the transfer, the rights of the transferee may be defeated:



(1)  By those creditors of the transferor which could
treat the transfer as void under section 490:2-402 or 490:2A-308;



(2)  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;



(3)  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



(4)  As against the bailee, by good-faith dealings of
the bailee with the transferor.



(c)  A diversion or other change of shipping
instructions by the consignor in a nonnegotiable 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.



(d)  Delivery of the goods pursuant to a
nonnegotiable document of title may be stopped by a seller under section
490:2-705 or a lessor under section 490:2A-526, 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. [L 2004, c 163, pt of §1]