Indiana Code 26-1-7-504. Rights acquired in the absence of due negotiation; effect of diversion; seller’s stoppage of delivery
(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:
Terms Used In Indiana Code 26-1-7-504
- Bailee: means a person that by a warehouse receipt, bill of lading, or other document of title acknowledges possession of goods and contracts to deliver them. See Indiana Code 26-1-7-102
- Consignee: means a person named in a bill of lading to which or to whose order the bill promises delivery. See Indiana Code 26-1-7-102
- Consignor: means a person named in a bill of lading as the person from which the goods have been received for shipment. See Indiana Code 26-1-7-102
- Good faith: means honesty in fact and the observance of reasonable commercial standards of fair dealing. See Indiana Code 26-1-7-102
- Goods: means all things that are treated as movable for the purposes of a contract for storage or transportation. See Indiana Code 26-1-7-102
(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 IC 26-1-2-705 or a lessor under IC 26-1-2.1-526 and subject to the requirements of due notification provided in those sections. A bailee that honors the seller’s or lessor’s instructions is entitled to be indemnified by the seller or the lessor against any resulting loss or expense.
Formerly: Acts 1963, c.317, s.7-504. As amended by P.L.152-1986, SEC.259; P.L.143-2007, SEC.55.