§ 11-7-504. Rights Acquired in the Absence of Due Negotiation; Effect of Diversion; Stoppage of Delivery

1. 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.
2. 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 Code Section 11-2-402 or 11-2A-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.
3. 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.
4. Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under Code Section 11-2-705 or a lessor under Code Section 11-2A-526, subject to the requirements of due notification in those Code 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.

History. Code 1933, § 109A-7-504, enacted by Ga. L. 1962, p. 156, § 1; Ga. L. 2010, p. 481, § 1-1/HB 451.

Editor’s notes.

Ga. L. 2010, p. 481, § 3-1/HB 451, not codified by the General Assembly, provides that: “This Act applies to a document of title that is issued or a bailment that arises on or after the effective date of this Act. This Act does not apply to a document of title that is issued or a bailment that arises before the effective date of this Act even if the document of title or bailment would be subject to this Act if the document of title had been issued or bailment had arisen on or after the effective date of this Act. This Act does not apply to a right of action that has accrued before the effective date of this Act.” This Act became effective May 27, 2010.

Ga. L. 2010, p. 481, § 3-2/HB 451, not codified by the General Assembly, provides that: “A document of title issued or a bailment that arises before the effective date of this Act and the rights, documents, and interests flowing from that document or bailment are governed by any statute or other rule amended or repealed by this Act as if such amendment or repeal had not occurred and may be terminated, completed, consummated, or enforced under that statute or other rule.” This Act became effective May 27, 2010.