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Lien on Me
In order to ensure payment of freight charges, common carriers such as railroads and motor carriers are provided with a lien on the goods in their possession that are being shipped, often referred to as a common carrier lien. The origin of common carrier liens can be found in common law.' Today, however, in most instances, common carrier liens are a function of statute. For example, §80109 of title 492 provides that when a common carrier issues a negotiable bill of lading, the carrier is provided a lien on the goods covered by the bill for:
1 . charges for storage, transportation, and delivery (including demurrage and terminal charges), and expenses necessary to preserve the goods or incidental to transporting the goods; and
2. other charges specifically subject to lien as set forth in the bill and which are allowable by law.
When a common carrier issues a nonnegotiable bill of lading, a carrier's obligation to deliver the goods to the consignee named in the non-negotiable bill is conditioned on the consignee's offer to satisfy the lien of the carrier in the goods.3
Similar to the protections provided by title 49, the Uniform Commercial Code (UCC) also provides common carriers with a lien on goods in their possession during transport. Pursuant to UCC §7307(a), a common carrier is granted a lien on goods covered by a bill of lading for all charges arising after the date the carrier received the goods.4
Regardless of the underlying legal basis, all common carrier liens share a critical characteristic: They are possessory in nature. In other words, the lien is only perfected and enforceable while the common carrier is in possession of the debtor's goods. As soon as the common carrier delivers the goods and relinquishes possession, the lien is extinguished.5 To the extent freight charges were not paid at or prior to delivery, the common carrier becomes a mere unsecured creditor.
The need for a common carrier to retain possession of the goods in order to perfect and enforce its common carrier lien can place a carrier in a difficult position when the party obligated to pay freight and associated charges files a bankruptcy petition. Consider the following example:
Shipper tenders goods to...