New Jersey § 12a:7-504

§ 12a:7-504.

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. b. In the case of a transfer 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: (1) by those creditors of the transferor which could treat the transfer as void under

12A:2-402 or 12A:2A-308; (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; (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 (4) as against the bailee, by good-faith dealings of the bailee with the transferor. 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. d. Delivery of the goods pursuant to a nonnegotiable document of title may be stopped

by a seller under 12A:2-705 or a lessor under 12A:2A-526, 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.