2006 New York Code - Negotiation And Transfer

 
  Section 7--502. Rights Acquired by Due Negotiation.
    (1)  Subject to the following section and to the provisions of Section
  7--205 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  Article.  In  the  case  of  a
             delivery  order  the  bailee's  obligation  accrues only upon
             acceptance and the obligation acquired by the holder is  that
             the  issuer  and  any indorser will procure the acceptance of
             the bailee.
    (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.