1. A document of title confers no right in goods against a person that before issuance of the document had a legal interest or a perfected security interest in the goods and that did not: a. Deliver or entrust the goods or any document of title covering the goods to the bailor or the bailor's nominee with: (1) Actual or apparent authority to ship, store, or sell; (2) Power to obtain delivery under section 41-07-28; or (3) Power of disposition under section 41-02-48, subsection 2 of section 41-02.1-34, subsection 2 of section 41-02.1-35, section 41-09-40, subsection 3 of section 41-09-41, or other statute or rule of law; or b. Acquiesce in the procurement by the bailor or its nominee of any document. 2. Title to goods based upon an unaccepted delivery order is subject to the rights of any person to which a negotiable warehouse receipt or bill of lading covering the goods has been duly negotiated. That title may be defeated under section 41-07-34 to the same extent as the rights of the issuer or a transferee from the issuer. 3. Title to goods based upon a bill of lading issued to a freight forwarder is subject to the rights of any person to which a bill issued by the freight forwarder is duly negotiated. However, delivery by the carrier in accordance with part 4 pursuant to its own bill of lading discharges the carrier's obligation to deliver.
41-07-33. (7-504) Rights acquired in absence of due negotiation - Effect of diversion - 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.