N.D. Cent. Code § 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.