<html xmlns="http://www.w3.org/1999/xhtml"><head><meta charset="UTF-8" /><meta http-equiv='content-language' content='en-us'/><title>SDLRC - Codified Law 57A-7-504 - Rights acquired in absence of due negotiation--Effect of diversion--Stoppage of delivery. </title><meta name="Generator" content="PowerTools for Open XML" /><style>span { white-space: pre-wrap; } p.s2073575Normal { text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; margin-right: 0; margin-bottom: .001pt; } span.s2073575SENU { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } span.s2073575CL { font-family: 'Times New Roman', 'serif'; font-size: 12pt; font-style: normal; font-weight: bold; margin: 0; padding: 0; } p.s2073575Normal-000000 { text-indent: 0.50in; text-align: justify; font-family: 'Times New Roman', 'serif'; font-size: 12pt; line-height: 108%; margin-top: 0; margin-left: 0; 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margin: 0; padding: 0; } body { text-decoration-skip-ink: none; } </style></head><body><div><p dir="ltr" class="s2073575Normal"><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=57A-7-504"><span class="s2073575SENU">57A-7-504</span></a><span xml:space="preserve" class="s2073575SENU">. </span><span class="s2073575CL">Rights acquired in absence of due negotiation--Effect of diversion--Stoppage of delivery.</span></p><p dir="ltr" class="s2073575Normal-000000"><span class="s2073575DefaultParagraphFont">(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.</span></p><p dir="ltr" class="s2073575Normal-000001"><span class="s2073575DefaultParagraphFont">(b) In the case 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:</span></p><p dir="ltr" class="s2073575Normal-000002"><span xml:space="preserve" class="s2073575DefaultParagraphFont">(1)    By those creditors of the transferor that could treat the transfer as void under § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=57A-2-402"><span class="s2073575DefaultParagraphFont">57A-2-402</span></a><span xml:space="preserve" class="s2073575DefaultParagraphFont"> or 57-2A-308;</span></p><p dir="ltr" class="s2073575Normal-000002"><span class="s2073575DefaultParagraphFont">(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;</span></p><p dir="ltr" class="s2073575Normal-000002"><span class="s2073575DefaultParagraphFont">(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</span></p><p dir="ltr" class="s2073575Normal-000002"><span class="s2073575DefaultParagraphFont">(4)    As against the bailee, by good faith dealings of the bailee with the transferor.</span></p><p dir="ltr" class="s2073575Normal-000001"><span class="s2073575DefaultParagraphFont">(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.</span></p><p dir="ltr" class="s2073575Normal-000001"><span xml:space="preserve" class="s2073575DefaultParagraphFont">(d) Delivery of the goods pursuant to a nonnegotiable document of title may be stopped by a seller under § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=57A-2-705"><span class="s2073575DefaultParagraphFont">57A-2-705</span></a><span xml:space="preserve" class="s2073575DefaultParagraphFont"> or a lessor under § </span><a href="https://sdlegislature.gov/Statutes/Codified_Laws/DisplayStatute.aspx?Type=Statute&amp;Statute=57A-2A-526"><span class="s2073575DefaultParagraphFont">57A-2A-526</span></a><span class="s2073575DefaultParagraphFont">, subject to the requirements of due notification in those sections. A bailee honoring the seller's or lessor's instructions is entitled to be indemnified by the seller or lessor against any resulting loss or expense.</span></p><p dir="ltr" class="s2073575Normal"><span xml:space="preserve" class="s2073575000003"> </span></p><p dir="ltr" class="s2073575Normal"><span class="s2073575SCL">Source:</span><span xml:space="preserve" class="s2073575SCL-000004"> SL 2009, ch 254, § 7-504.</span></p></div></body></html>