84-7-502. (a) Subject to K.S.A. 2023 Supp. 84-7-205 and 84-7-503, and amendments thereto, a holder to which a negotiable document of title has been duly negotiated acquires thereby:
(1) Title to the document;
(2) title to the goods;
(3) all rights accruing under the law of agency or estoppel, including rights to goods delivered to the bailee after the document was issued; and
(4) the direct obligation of the issuer to hold or deliver the goods according to the terms of the document free of any defense or claim by the issuer except those arising under the terms of the document or under this article, but in the case of a delivery order, the bailee's obligation accrues only upon the bailee's acceptance of the delivery order and the obligation acquired by the holder is that the issuer and any indorser will procure the acceptance of the bailee.
(b) Subject to K.S.A. 2023 Supp. 84-7-503, and amendments thereto, title and rights acquired by due negotiation are not defeated by any stoppage of the goods represented by the document of title or by surrender of the goods by the bailee and are not impaired even if:
(1) The due negotiation or any prior due negotiation constituted a breach of duty;
(2) any person has been deprived of possession of a negotiable tangible document or control of a negotiable electronic document by misrepresentation, fraud, accident, mistake, duress, loss, theft, or conversion; or
(3) a previous sale or other transfer of the goods or document has been made to a third person.
History: L. 2007, ch. 90, § 31; July 1, 2008.
KANSAS COMMENT, 1996
Subsection (1) revises and consolidates former K.S.A. 82-141. This subsection states the rights of a holder who has acquired a negotiable document of title by "due negotiation." The rights acquired by the holder under this provision are expressly limited by 84-7-503 and 84-7-205, but are superior to a prior perfected secured party under the terms of 84-9-309. But see Kansas Comment 1996 to 84-7-503. K.S.A. 34-281 states in similar terms the rights of a person to whom a negotiable warehouse receipt covering grain has been duly negotiated.
Subsection (2) is based on similar provisions found in former K.S.A. 82-147 and 82-149 and is in substantial accord with present K.S.A. 34-287 and 34-288. Rights acquired by due negotiation are superior to and free from impairment from any kind of stoppage, not only a stoppage in transit under 84-2-705.
Revisor's Note:
Former section 84-7-502 repealed by L. 2007, ch. 90, § 78 and the number reassigned to the current text.
Law Review and Bar Journal References:
"Agricultural Credit and The Uniform Commercial Code: A Need for Change?" Keith G. Meyer, 34 K.L.R. 469, 486 (1986).
CASE ANNOTATIONS
1. Bankruptcy rule requiring acceptance of warehouse receipt, etc. as prima facie evidence of ownership not inconsistent with Kansas law. In re Eston Grain Co., Inc., 55 B.R. 308, 315 (1985).
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