2005 California Commercial Code Sections 7501-7509 AND TRANSFER

7501.  (1) A negotiable document of title running to the order of a
named person is negotiated by his indorsement and delivery.  After
his indorsement in blank or to bearer any person can negotiate it by
delivery alone.
   (2) (a) A negotiable document of title is also negotiated by
delivery alone when by its original terms it runs to bearer.
   (b) When a document running to the order of a named person is
delivered to him the effect is the same as if the document had been
negotiated.
   (3) Negotiation of a negotiable document of title after it has
been indorsed to a specified person requires indorsement by the
special indorsee as well as delivery.
   (4) A negotiable document of title is "duly negotiated" when it is
negotiated in the manner stated in this section to a holder who
purchases it in good faith without notice of any defense against or
claim to it on the part of any person and for value.
   (5) Indorsement of a nonnegotiable document neither makes it
negotiable nor adds to the transferee's rights.
   (6) The naming in a negotiable bill of a person to be notified of
the arrival of the goods does not limit the negotiability of the bill
nor constitute notice to a purchaser thereof of any interest of such
person in the goods.
7502.  (1) Subject to the following section and to the provisions of
Section 7205 on fungible goods, a holder to whom a negotiable
document of title has been duly negotiated acquires thereby:
   (a) Title to the document;
   (b) Title to the goods;
   (c) All rights accruing under the law of agency or estoppel,
including rights to goods delivered to the bailee after the document
was issued; and
   (d) 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 him except those arising under the terms of the document or
under this division.
   (2) Subject to the following section, title and rights so acquired
are not defeated by any stoppage of the goods represented by the
document or by surrender of such goods by the bailee, and are not
impaired even though the negotiation or any prior negotiation
constituted a breach of duty or even though any person has been
deprived of possession of the document by misrepresentation, fraud,
accident, mistake, duress, loss, theft or conversion, or even though
a previous sale or other transfer of the goods or document has been
made to a third person.
7503.  (1) A document of title confers no right in goods against a
person who before issuance of the document had a legal interest or a
perfected security interest in them and who neither
   (a) Delivered nor entrusted them nor any document of title
covering them to the bailor or his nominee with actual or apparent
authority to ship, store or sell or with power to obtain delivery
under this division (Section 7403) or with power of disposition under
this code (Sections 2403 and 9320) or other statute or rule of law,
nor
   (b) Acquiesced in the procurement by the bailor or his or her
nominee of any document of title.
   (2) Title to goods based upon a bill of lading issued to a freight
forwarder is subject to the rights of anyone to whom a bill issued
by the freight forwarder is duly negotiated; but delivery by the
carrier in accordance with Chapter 4 of this division pursuant to its
own bill of lading discharges the carrier's obligation to deliver.
7504.  (1) A transferee of a document, whether negotiable or
nonnegotiable, to whom the document has been delivered but not duly
negotiated, acquires the title and rights which his transferor had or
had actual authority to convey.
   (2) In the case of a nonnegotiable document, until but not after
the bailee receives notification of the transfer, the rights of the
transferee may be defeated
   (a) By those creditors of the transferor who could treat the sale
as void under Section 2402; or
   (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 his rights; or
   (c) 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 nonnegotiable bill of lading which causes the bailee
not to deliver to the consignee defeats the consignee's title to the
goods if they have been delivered to a buyer in ordinary course of
business and in any event defeats the consignee's rights against the
bailee.
   (4) Delivery pursuant to a nonnegotiable document may be stopped
by a seller under Section 2705, and subject to the requirement of due
notification there provided.  A bailee honoring the seller's
instructions is entitled to be indemnified by the seller against any
resulting loss or expense.
7505.  The indorsement of a document of title issued by a bailee
does not make the indorser liable for any default by the bailee or by
previous indorsers.
7506.  The transferee of a negotiable document of title has a
specifically enforceable right to have his transferor supply any
necessary indorsement but the transfer becomes a negotiation only as
of the time the indorsement is supplied.
7507.  Where a person negotiates or transfers a document of title
for value otherwise than as a mere intermediary under the next
following section, then unless otherwise agreed he warrants to his
immediate purchaser only in addition to any warranty made in selling
the goods
   (a) That the document is genuine; and
   (b) That he has no knowledge of any fact which would impair its
validity or worth; and
   (c) That his negotiation or transfer is rightful and fully
effective with respect to the title to the document and the goods it
represents.
7508.  A collecting bank or other intermediary known to be entrusted
with documents on behalf of another or with collection of a draft or
other claim against delivery of documents warrants by such delivery
of the documents only its own good faith and authority.  This rule
applies even though the intermediary has purchased or made advances
against the claim or draft to be collected.
7509.  The question whether a document is adequate to fulfill the
obligations of a contract for sale or the conditions of a credit is
governed by the divisions on sales (Division 2) and on letters of
credit (Division 5).