Digital Edition

Apr.3, 2017

Issue link:

Contents of this Issue


Page 53 of 57

Q&A 52 THE JOURNAL OF COMMERCE APRIL 3.2017 By Colin Barrett HOLDING THIS SHIPMENT AMOUNTS TO THEFT Q: I'M A SMALL business owner, and we ship with a carrier on account. We have terms with the carrier and, because of cash flow issues, try to get payment to it on a consistent basis. It's not what the carrier wants, I understand that, but as business to business, we are trying to establish trust and a relationship. Now I have a shipment the carrier is holding hostage and won't release until all of the account is paid. To me, that's a devastating blow, because I acknowledge the debt and will pay it in time. I'm wondering if it's an illegal act of collusion for a carrier to hold my shipment hostage for a past due balance that has nothing to do with the current shipment? If so, what is the applicable law? Can I pay for the particular shipment held hostage and deal with the rest later? A: YOU ACTUALLY SEEM TO HAVE something of a handle on this, at least the basic idea, and the carrier appears to be legally clueless. Under the Uniform Commercial Code, UCC Section 7-307(1), a carrier has a lien on any shipment tendered to it until freight charges on that shipment have been paid. That is, it's within its rights to hold the shipment and refuse to make delivery until you've ponied up what you owe it for moving that shipment, as the final line of your note to me recognizes. However, with one exception that I'll discuss shortly, that lien doesn't extend to any other money you may owe the carrier, whether for prev ious shipments or a ny other reason. This issue has been litigated repeatedly. See Corpus Juris Secundum, 13 C.J.S. Carriers Section 484, citing Miller v. Eco- nomics Laboratory, 410 So.2nd 642, and there are other similar cases. In other words, the carrier has no legal right to hold your shipment "hostage," as you put it, no matter how much you may be past due with it for other shipments you've tendered it. Now, the exception I mentioned to this rule applies only within California. Pursuant to Section 3051.5 of that state's Civil Code, a carrier's lien on freight extends to any and all monies the shipper owes it. Perhaps (though I'm not aware of them) the laws of one or two other states also contain such a provision. Because this is strictly state law, however, that exception would come into play only if the shipment the carrier was holding was an i nt ra st ate one, mov i ng solely within the borders of California (or some other state that might have a similar statute). If the shipment was in interstate commerce, state law doesn't gover n, even if it happens to be momentarily in that state. Per the Constitution, federal law controls shipments moving, or even intended to move, across state lines, and the UCC prevails. (Note, though, that this applies only to the shipment the carrier is holding, not to the other past shipments for which it's seeking payment.) So your final suggestion is the course you ought to follow: Offer to pay the carrier whatever you owe it for the shipment it's seized and demand that it thereupon release the shipment and make proper delivery. The likely reality is that it won't do that and will continue to demand you pay those past due bills immediately, or at least some sizable portion thereof. At this juncture, it'll be time for you to get nasty. As I've said, the carrier has no legal right to hold your shipment, and there's a word for taking goods without legal authority: theft. You'll probably need a lawyer at your side to make this stick, but you can go to the cops, and you should. You can also civilly claim against the carrier for the value of the goods on the basis of conversion — converting them unlawfully to its own interest (not "collusion," which mea ns something else) — and I'd so advise. My guess is that you've been running a little later than you've told me with your payments to this carrier, and it's become fed up. It, too, has legal rights to the money you owe it, but it has to exercise them in a legal way, and it hasn't done that with the course it's cho- sen. Two wrongs don't make a right, and this carrier has gotten in over its head with its attempt to pressure you for payment. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843 559 1277; email, Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. In other words, the carrier has no legal right to hold your shipment "hostage."

Articles in this issue

Links on this page

Archives of this issue

view archives of Digital Edition - Apr.3, 2017