Warehouse Receipts And Bills Of Lading: Miscellaneous Provisions - - CA Commercial Law

Section § 7601

If a document showing ownership of goods is lost, stolen, or destroyed, a court can order the release of the goods or issue a replacement document. For negotiable documents (those that can be transferred to others), the court usually requires a guarantee to protect anyone who might lose out from this order. For nonnegotiable documents, the court can also ask for such a guarantee. The court might require paying the storage holder's costs and legal fees. If someone without a court's permission delivers goods based on a missing negotiable document, they could be liable if it leads to losses. However, this delivery isn't illegal if the delivery is done sincerely and the claimant provides a security deposit worth double the goods' value to cover any potential claims within a year.

(a) If a document of title is lost, stolen, or destroyed, a court may order delivery of the goods or issuance of a substitute document and the bailee may without liability to any person comply with the order. If the document was negotiable, a court may not order delivery of the goods or issuance of a substitute document without the claimant’s posting security unless it finds that any person that may suffer loss as a result of nonsurrender of possession or control of the document is adequately protected against the loss. If the document was nonnegotiable, the court may require security. The court may also order payment of the bailee’s reasonable costs and attorney’s fees in any action under this subdivision.

(b) A bailee that, without a court order, delivers goods to a person claiming under a missing negotiable document of title is liable to any person injured thereby. If the delivery is not in good faith, the bailee is liable for conversion. Delivery in good faith is not conversion if the claimant posts security with the bailee in an amount at least double the value of the goods at the time of posting to indemnify any person injured by the delivery which files a notice of claim within one year after the delivery.

document of title lost document stolen document destroyed document court order negotiable document nonnegotiable document claimant security deposit reasonable costs attorney's fees liability good faith delivery conversion bailee

(Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)

Section § 7602

This law explains that if a good is under the control of a bailee (someone temporarily holding goods) and there’s a negotiable document of title (a paper showing who owns the goods), a court can’t put a lien (a claim) on these goods unless that document is handed over or its transfer is legally stopped. The bailee doesn’t have to hand over the goods because of court orders until they get the document or it’s given to the court. If someone buys this document in good faith without knowing about the court order, they get the goods free of any claims.

Unless a document of title was originally issued upon delivery of the goods by a person that did not have power to dispose of them, a lien does not attach by virtue of any judicial process to goods in the possession of a bailee for which a negotiable document of title is outstanding unless possession or control of the document is first surrendered to the bailee or the document’s negotiation is enjoined. The bailee may not be compelled to deliver the goods pursuant to process until possession or control of the document is surrendered to the bailee or to the court. A purchaser of the document for value without notice of the process or injunction takes free of the lien imposed by judicial process.

negotiable document of title bailee judicial process lien goods possession purchase for value possession surrender control of document document negotiation injunction purchaser rights free of lien court order goods delivery bailee obligations judicial lien enforcement

(Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)

Section § 7603

If someone is holding onto goods for someone else and more than one person says they own or have the right to those goods, the person holding the goods doesn't have to give them to anyone until they can figure out who is telling the truth. They can also go to court to sort out who the real owner is before giving the goods to anyone.

If more than one person claims title to or possession of the goods, the bailee is excused from delivery until the bailee has a reasonable time to ascertain the validity of the adverse claims or to commence an action for interpleader. The bailee may assert an interpleader either in defending an action for nondelivery of the goods or by original action.

adverse claims bailee goods possession interpleader nondelivery of goods title dispute validity of claims reasonable time delivery excused multiple claimants ownership dispute action for interpleader possession claims

(Repealed and added by Stats. 2006, Ch. 254, Sec. 49. Effective January 1, 2007.)