DOCUMENTS OF TITLE

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

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