Sec. 45.07.504. - Rights acquired in absence of due negotiation; effect of diversion; stoppage of delivery. - Alaska Statutes

(a) A transferee of a document of title, whether negotiable or nonnegotiable, to whom the document has been delivered but not duly negotiated, acquires the title and rights that the 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 who could treat the transfer as void under AS 45.02.402 or AS 45.12.308 ;

(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 that 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 under a nonnegotiable document of title may be stopped by a seller under AS 45.02.705 or a lessor under AS 45.12.526 , subject to the requirement of due notification in those sections. A bailee who honors the seller's or lessor's instructions is entitled to be indemnified by the seller or lessor against a resulting loss or expense.