J. MILLARD TAWES, Governor                        899

(2) Subject to the following section, title and rights so acquired
are not defeated by any stoppage of the goods represented by the
document or by surrender of such goods by the bailee, and are not
impaired even though the negotiation or any prior negotiation con-
stituted a breach of duty or even though any person has been deprived
of possession of the document by misrepresentation, fraud, accident,
mistake, duress, loss, theft or conversion, or even though a previous
sale or other transfer of the goods or document has been made to a
third person.

7—503. Document of Title to Goods Defeated in Certain Cases.

(1)  A document of title confers no right in goods against a person
who before issuance of the document had a legal interest or a per-
fected security interest in them and who neither

(a)  delivered or entrusted them or any document of title covering
them to the bailor or his nominee with actual or apparent authority
to ship, store or sell or with power to obtain delivery under this Sub-
title (Section 7—403) or with power of disposition under this Article
(Sections 2—403 and 9—307) or other statute or rule of law; nor

(b)  acquiesced in the procurement by the bailor or his nominee of
any document of title.

(2)   Title to goods based upon an unaccepted delivery order is
subject to the rights of anyone to whom a negotiable warehouse re-
ceipt or bill of lading covering the goods has been duly negotiated.
Such a title may be defeated under the next section 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 anyone to whom a bill issued by
the freight forwarder covering such goods has been duly negotiated;
but delivery by the carrier in accordance with Part 4 of this Sub-
title pursuant to its own bill of lading discharges the carrier's obliga-
tion to deliver.

7—504. Rights Acquired in the Absence of Due Negotiation; Effect
of Diversion; Seller's Stoppage of Delivery.

(1)  A transferee of a document, whether negotiable or non-nego-
tiable, to whom the document has been delivered but not duly nego-
tiated, acquires the title and rights which his transferor had or had
actual authority to convey.

(2)  In the case of a non-negotiable document, until but not after
the bailee receives notification of the transfer, the rights of the
transferee may be defeated

(a)  by those creditors of the transferor who could treat the sale
as void under Section 2—402; or

(b)  by a buyer from the transferor in ordinary course of business
if the bailee has delivered the goods to the buyer or received notifi-
cation of his rights; or

(c)  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