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A document of title is a document used in the ordinary course of business in the

sale or transfer of goods as proof of possession/control of the goods or
authorizing/purporting to authorize the holder of the document to transfer the
goods represented by the document or receive them by either by declivity or
indorsement. A document of title is negotiable if it states that the goods indicated
on it will be delivered to the bearer or the order of the person named in the
document. It's non-negotiable if deliverable to a specific person.

Negotiating a negotiable document of title may be done by the indorsement of

the person to whose order the goods are deliverable by the document's terms.
The indorsement may be in blank, to bearer or a specified person. If it's indorsed
to a specific person, he can negotiate it further also in blank, to bearer or a specific
person. This is true even if the document is marked "non-negotiable."

Functions:

1.) A contract
2.) Evidence of receipt of goods
3.) Represents the goods/control over the goods

Common Documents of Title

1.) Bill of Lading

A contract and receipt for the transport and delivery of goods to the bearer of
order of the person indicated on it. It is issued by a common carrier and is
essentially a contract of carriage even if it isn't normally signed by the parties.

2.) Quedan

A warehouse receipt that covers sugar.

3.) Warehouse Receipt

A contract and receipt for goods deposited with a warehouseman to be delivered

to the bearer or to the order of a person indicated on it. It is issued by a
warehouseman engaged in the business of storing goods for a fee.

4.) Dock Warrant

An instrument a dock owner issues to an importer of goods as evidence of his

title to the goods warehoused on the dock upon the faith of the bills of lading.

If the owner of a negotiable document of title loses a case, the winner can't have
the goods attached or levied by ordinary legal process upon if the goods are in
the possession of a bailee (warehouseman, etc.) The bailee is obliged to retain
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possession of the goods for the original owner of the document or to the holder
if the document was negotiated. The remedy is to either surrender the document
or have the court enjoin the negotiation. If the document was negotiated to
another person in good faith, the negotiation is valid and an injunction won't
affect it.

If a seller learns that his buyer is insolvent, he can only invoke his right to
stoppage in transitu if the document of title wasn't negotiated to a purchaser in
good faith and for value. The innocent buyer's right to receive the goods is
considered superior to the unpaid seller's rights to stoppage in transitu or
exercising a lien over the goods.

DOCUMENTS OF TITLE

not creation of law but by merchants to allow them to deal with merchandise without having to
physically carry them around

pertains to specific type of movables only : GOODS

2 FUNCTIONS

1. evidence of existence & possession of goods described therein

2. medium by which seller is able to transfer possession of goods

2 FORMS

1. negotiable

a. deliver to bearer (negotiation by mere delivery)

b. deliver to specific person or his order (negotiation by endorsement + delivery)

even if face of instrument says NON-NEGOTIABLE, it is still NEGOTIABLE; limiting words does not
destroy negotiability

if order instrument & no endorsement was made equivalent to assignment

2. non-negotiable

IMPORTANT CONSIDERATIONS

1. Negotiation gives better right than assignment

NEGOTIATION
transferor/holder acquires title to goods

bailee has direct obligation to holder as if directly dealt with him

ASSIGNMENT
acquires title to goods against transferor
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acquires right to notify bailee so that he acquires obligation of bailee to hold goods for him

2. Assignee takes document with defects of the assignor

]3. Obligation of bailee bailee is immediately bound to the document

WARRANTIES ON NEGOTIATION/ASSIGNMENT THE SAME

1. the document is genuine

2. he has legal right to negotiate or transfer it

3. he has knowledge of no fact which would impair the validity or worth of the document

4. he has right to transfer title to goods and goods are merchantable/fit

RULES OF LEVY/GARNISHMENT OF GOODS COVERED BY DOCUMENTS OF TITLE

1. Non negotiable

Notification is operative act to transfer title/possession of goods in favor assignee

Before notification can still be garnished

2. Negotiable

Can not be levied or garnished when documents are already with purchaser in good faith, unless:

a. Document is first surrendered

b. Document is pounded by court

c. Negotiation is enjoined