Issue link: https://jocdigital.uberflip.com/i/871052
Q&A 44 THE JOURNAL OF COMMERCE www.joc.com SEPTEMBER 18.2017 By Colin Barrett Q: I'M AN OWNER-OPERATOR who does business with a number of regulated motor carriers under trip- leasing arrangements. I was hired recently by a carrier to run a particular load. Shortly after I picked up the load, the carrier went out of business. I was naturally concerned that I wouldn't get paid for this load. I contacted the carrier's people about that and was told they wouldn't be paying me. I then got in touch with the shipper, but it wouldn't respond. The same thing happened when I tried to contact the consignee. I decided it was a bad idea to deliver the load without getting my money. I have put the load in stor - age for now, but I still can't get any response from the shipper or the con- signee. At this point, I have no idea what to do. Can you help me under- stand what my options are? I'm having to pay for the storage, but I'm afraid that if I go ahead and make delivery, I'll never see a penny from anyone. A: I HAVE TO CONFESS THAT I haven't quite encountered exactly this situation before. In the past, I've dealt with carriers that have had trouble collecting on undelivered shipments, but they've been work- ing under bill-of-lading contracts that entitle them to payment, which isn't quite your case. Still, I think I can draw some reasonable parallels to similar situ- ations in other industries. In real estate, for example, there is some- thing called a "mechanic's lien" on houses, office buildings, etc., that gives construction workers and others a means of enforcing pay - ment for work done on the property and benefiting the property owner. Something similar may apply here. It's pretty well established that a motor carrier has a lien on property tendered it for transportation, and has the right to withhold delivery of a shipment until it's been paid for the transportation. That's set forth in the Uniform Commercial Code, Section 7-307. But that right is based on the B/L agreement entitling the carrier to that payment from the shipper or the consignee. You have no such agreement with either. Your agreement is the trip-lease with the carrier hired by the shipper to per- form the transportation. Therefore, your circumstance isn't the same. However, just as with a construction worker not hired by the property owner, but rather by a contractor doing work on behalf of the property owner, you're entit led to pay ment for your labor, and if you can't collect from the contractor who engaged your services, it seems to me that the law would reasonably g ive you recourse against the party for whom the contractor was working. Your problem is exacerbated by the apparent reluctance of the ship- per and the consignee to respond to your efforts to contact them and resolve the situation. Given that you're holding the freight and refus- ing to make delivery, I find their silence inexplicable. You'd think that one or both would be a little concerned about that and would at least be saying something to you. In these circumstances, I think your proper answer would be to exercise your lien. At the same time, you need to be careful to follow legal procedures exactly. A lien of this sort ultimately gives you the right to dispose of the goods that are the subject of the lien unless the under- lying obligation is satisfied. But you can do so only if you fulfill specified conditions beforehand involving notification to the owner. Because you know the identities of the shipper and the consignee, it may well be that a written notice to both of them, demanding pay- ment of your charges and stating that otherwise the goods will be disposed of, will satisfy your legal obligation. Then the law says you must wait a reasonable time for a response before taking any further action. Absent a response, you can then proceed to sell the goods for the money you're owed, including stor- age charges. Don't, however, act on my advice without consulting an attorney well versed in this area of the law. I'm extrapolating rather considerably in offering this suggestion to you, and although I think I'm correct in telling you the bottom line, the laws of your state may vary as to the procedures that you're obliged to follow, the time period you have to wait after notification, the man- ner of notification, and so on. Make sure you dot all the i's and cross all the t's. JOC Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, SC 29455; phone, 843 559 1277; email BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010. MISSING PAYMENT? LOOK TO A LIEN Given that you're holding the freight and refusing to make delivery, I find their silence inexplicable.