KRS 355.7-503: Document of title to goods defeated in certain cases.

(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 covering the goods to the bailor

or the bailor's nominee with actual or apparent authority to ship, store, or sell;

with power to obtain delivery under KRS 355.7 -403; or with power of

disposition under KRS 355.2 -403, 355.2A -304(2), 355.2A-305(2), or 355.9 -

320 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 cov ering the

goods has been duly negotiated. That title may be defeated under KRS 355.7 -504 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 of this article

pursuant to its own bill of lading discharges the carrier's obligation to deliver.