In certain circumstances, carriers are authorized to exercise their common law and contractual rights to place a “`carrier’s lien’’ on freight. But what are those circumstances? If the carrier improperly asserts “dominion and control’’ over freight, in the form of a lien, and the carrier has no authority to do so, it may be liable for conversion. If a practitioner’s client is holding the freight, the client must be advised as to whether it is properly doing so. If it is not properly holding the freight, the client must be advised promptly about other potential alternate modes of recourse. If the practitioner’s client’s freight is being held, the client must be expeditiously advised about how to either force the issue of return of the freight, effectuate a prompt overall resolution, or post appropriate security to have the freight returned in advance of final resolution. Often in these situations, the consequential damages in the marketplace to the shipper or consignee whose freight is being held mount rapidly. If a lien is alleged to be improperly asserted, many components of those damages could be passed on to the carrier if it is indeed improperly asserting the lien.

Creation and Extinguishment -

The “life’’ of a carrier’s lien is generally a short one. The carrier has a lien upon the goods for its lawful charges, arising when it picks up the freight. The lien is discharged when the carrier is paid for the goods. This discharge contemporaneously entitles the consignee to the goods. See Pittsburgh, Cincinnati, Chicago & St. Louis Railway Co. v. Fink, 250 U.S. 577, 582, 40 S.Ct. 27 (1919); Texas & Pacific Ry. Co. v. Mugg, 202 U.S. 242, 26 S.Ct. 628 (1906). (A statutory credit arrangement may also authorize receipt of the goods before payment. 49 U.S.C. §10743(a)).

Originally published in CCH Federal Carriers Reporter on April 12, 2001.