Carrier’s Possessory Lien and Holding a Shipment Hostage

John Anderson Contracts, Q & A, Transportation

Facts:  A broker dispatched a carrier at an agreed upon rate set forth in a load confirmation. While en route a destination changed and a drop was added. The broker orally agreed to pay a higher rate. However, when the carrier made the first drop he called the broker and demanded a substantially greater amount be paid ($800) before he would make the second delivery.

Question:  Is it ever okay for a carrier to hold a shipment hostage under these circumstances?

Answer:   A carrier has a possessory lien for the agreed upon freight charges for the shipment it is transporting and has the right to be paid those freight charges before making delivery.  Since this is a possessory lien, the carrier loses it once it makes delivery.

In this case, the load confirmation set out the details of the shipment and was binding until the service requirements changed. Once the service requirements changed, the load confirmation became void as to the affected legs of the shipment. Although a new rate for the remaining legs was discussed, and maybe even agreed to verbally, it does not appear that a new load confirmation or any sort of written memo was prepared or signed confirming the new agreement.  As a result, the situation was a “broker says, carrier says” situation that the carrier took advantage of. This does not mean that the carrier was justified in doing what he did, but it highlights the need to document your agreements, which is what the carrier did when it sent an email stating that he needed an additional $800. That email appears to be the only writing regarding the subsequent agreement.

I do not believe it is ethical or moral for the carrier to do what he did, but I also do not believe you can prove that he acted illegally, that is, I do not believe he violated any law since he did not delay delivery.

Recommendations:

Again, this problem could have been avoided with a comprehensive contract. The contract could have addressed this problem and provided that in no event will the carrier refuse to deliver any shipment because of a rate dispute or other disagreement. The contract could contain a provision that imposed liability on the carrier for interest, attorney fees and possibly forfeiture of any other freight charges owed.

If you find yourself in this sort of position, you also could pay the demanded amount “under protest,” which would have to be noted in writing via fax, email or some other means. If you delivered payment to the carrier by check, the check should state “paid under protest” on the memo line. This preserves your right to file a civil lawsuit against the carrier, probably in small claims court, although you could also make a claim for “conversion,” which essentially is the civil counterpart to criminal theft.