We must decide whether a non-vessel-operating common carrier has a maritime lien against cargo in its possession for unpaid freight.
I
Logistics Management Inc., dba. TWI Ocean Logistic Services (“TWI”), appeals the district court’s dismissal for lack of subject matter jurisdiction over TWI’s admiralty action seeking to collect tariff charges and to foreclose a maritime lien against an item of cargo: One (1) Pyramid Tent Arena (“the Pyramid”), a five-story modular tent-like structure transported by TWI from England to California.
Pebbles Music, Inc. (“Pebbles”) owns the Pyramid. On February 24, 1994, Pebbles leased the Pyramid to Diamond Entertainment II, Inc. (“Diamond”), which is the predecessor in interest to Chariot Entertain
Appellant TWI, a non-vessel-operating common carrier (“NVOCC”),
TWI contracted with an ocean carrier, Maersk Pacific, Ltd. (“Maersk”), to transport the Pyramid from Felixstowe, England to Newark, New Jersey on Maersk’s vessel, the Lauren.
Six weeks later, the Pyramid was delivered to a rail carrier for transport to Long Beach, California. The Pyramid arrived in Long Beach on June 1, 1994, but TWI refused to deliver the Pyramid to Las Vegas, claiming that Diamond and Chariot failed to pay freight and related charges of more than $250,000.
On June 27, 1994, TWI filed a verified complaint for foreclosure of a maritime lien against the Pyramid in rem, and for collection of tariff charges against Diamond and Chariot in personam. TWI also filed an ex parte application for maritime arrest of the Pyramid. The district court granted the application for maritime arrest, ordering Maersk to be appointed the Pyramid’s substitute custodian (in lieu of the U.S. Marshal) pending TWI’s action.
In July 1994, intervenor-claimant Pebbles filed a verified claim to the Pyramid and applied for a mandatory injunction against Diamond and Chariot, seeking an order compelling them to pay TWI for the freight and related charges involved in transporting the Pyramid. The district court denied the request for an injunction.
On October 12, 1994, without presenting factual findings or legal analysis, the district court granted Pebbles’ motion to dismiss for lack of subject matter jurisdiction (under Federal Rule of Civil Procedure 12(b)(1)) as to TWI’s in rem action against the Pyramid, and further ordered the dismissal of TWI’s in personam action against Diamond and Chariot. TWI filed a timely notice of appeal.
In August 1995, this court dismissed Diamond and Chariot as appellees for failure to appoint new counsel.
II
As a threshold matter, Pebbles contends that the determination of a valid lien is a prerequisite for jurisdiction over TWI’s
In The Rock Island Bridge,
Thirty years after The Rock Island Bridge, the Supreme Court indicated that the minimum requirements for admiralty jurisdiction are the res and a maritime contract. In The Resolute, the Supreme Court stated:
Jurisdiction is the power to adjudicate a case upon the merits, and dispose of it as justice may require. As applied to a suit in rem for the breach of a maritime contract, it presupposes, first, that the contract sued upon is a maritime contract; and, second, that the property proceeded against is within the lawful custody of the court. These are the only requirements necessary to give jurisdiction. Proper cognizance of the parties and subject-matter being conceded, all other matters belong to the merits.
.... In fact, the question of lien or no hen is not one of jurisdiction, but of merits.
It is true that there can be no decree in rem against the vessel except for the enforcement of a hen given by the maritime law, or by a state law; but if the existence of such a hen were a question of jurisdiction, then nearly every question arising upon the merits could be made one of jurisdiction.
The Resolute,
The Supreme Court’s statement that “the question of a hen or no hen is not one of jurisdiction, but of merits” has been cited with approval by this court. See, e.g., Mel-wire Trading Co. v. M/V Cape Antibes,
Since TWI’s bill of lading, which contains a clause reserving a hen on the cargo for freight, is a maritime contract (involving ocean carriage)
Accordingly, the district court erred in dismissing TWI’s action against the Pyramid for lack of subject matter jurisdiction. Ordinarily, this conclusion would end our inquiry and necessitate a remand to give the district court an opportunity to consider the legal question of whether an NVOCC such as TWI is entitled to a maritime hen on cargo. However, because the district court dismissed TWI’s in rem action on the ground that an NVOCC cannot claim a maritime hen on cargo,
Ill
The issue of whether an NVOCC can have a maritime lien on cargo is a matter of first impression nationwide.
A
Pebbles argues that TWI is not entitled to a maritime lien on the Pyramid because, as an NVOCC, TWI was not the vessel owner in possession of the cargo and, therefore, lacks standing to assert a maritime lien. We are not persuaded.
Pebbles correctly notes that courts are reluctant to recognize new forms of maritime liens. See Melwire,
We do not beheve that recognizing an in rem hen on cargo in favor of NVOCCs would appreciably expand the universe of maritime hens. The carrier’s hen for ocean freight is well-established and NVOCCs are common carriers regulated by the Federal Maritime Commission (“FMC”). Although TWI neither owned nor operated the vessel transporting the Pyramid, TWI nonetheless assumed responsibility for the transportation as a “carrier” within the meaning of that term in maritime law.
For centuries, courts have held that people who own and operate a vessel have a lien on the cargo transported on their ships. The Bird of Paradise,
NVOCCs assume the same responsibility for the delivery of cargo as do vessel owners or operators. 46 U.S.C.A.App. § 1702(17) (“[an NVOCC is] a common carrier”); 46 U.S.C.A.App. § 1702(6)(A) (“[a common carrier is] a person that ... assumes responsibility for the transportation from the port or point of receipt to the port or point of destination ...”); Fireman’s Fund Am. Ins. Co. v. Puerto Rican Forwarding Co., Inc.,
Moreover, we note that TWI specifically reserved a lien on the Pyramid in its contract of carriage with Diamond. Contractual provisions regarding Kens on cargo for freight are enforceable in admiralty. The Bird of Paradise,
Even if TWI has standing to assert a maritime Ken, Pebbles contends that the Ken was extinguished by the deKvery of the Pyramid to the rail carrier and by TWI’s full payment to the ocean carrier. These arguments are meritless and wiK be addressed in turn.
Unlike a maritime Ken that attaches to the vessel itself, a Ken on cargo for freight is lost by an unqualified delivery of the cargo. 4,885 Bags of Linseed,
However, courts have emphasized that the preservation of the cargo Ken does not require that the cargo remain on the vessel. Provided that the carrier has not unconditionaKy deKvered the cargo to the consignee, the carrier may preserve the Ken by maintaining actual or constructive possession of the cargo. See 4,885 Bags of Linseed,
TWI preserved its cargo lien by maintaining actual or constructive possession of the Pyramid until the district court granted TWI’s application for its arrest.
In addition, by paying Maersk for the freight due on the bill of lading between Maersk and TWI, TWI by no means extinguished its lien for the freight due on its bill of lading with Diamond and Chariot. By definition, NVOCCs such as TWI have an obligation to pay the freight to the actual water carrier, while expecting to receive from the shipper a slightly higher freight. TWI fulfilled its obligation to Maersk, but Diamond and Chariot failed to satisfy their obligation to pay the freight charged by TWI.
B
Pebbles goes on to contend that the notation “FREIGHT PREPAID” on TWI’s bill of lading equitably estops TWI from claiming that Diamond and Chariot did not actually pay the freight. This argument is without merit.
“The estoppel doctrine requires that the consignee be in good faith and rely upon the false bill of lading. Without reliance, the holder of the bill cannot have been harmed by any false description of the goods and cannot recover.” 2 Schoenbaum § 10-12, at 56 (footnotes omitted); see Portland Fish Co. v. States S.S. Co.,
Diamond and Chariot cannot show good faith or detrimental reliance since they did not actually pay the freight to TWI.
In its verified complaint, TWI asserted an in personam cause of action against Diamond and Chariot for collection of tariff charges under the Shipping Act of 1984.
In response to Pebbles’ motion to dismiss TWI’s in rem action against the Pyramid under a cargo lien theory, the district court dismissed not only TWI’s in rem lien action, but also TWI’s in personam action against Diamond and Chariot. The district court dismissed the latter action even though (1) Pebbles’ motion referred only to the in rem action, and (2) Diamond and Chariot never moved to dismiss the in personam action against them. Cf. Melwire,
This court has clearly held “that an implied private cause of action under the Shipping Act allows carriers to sue shippers to collect fees owed pursuant to the published tariffs.” Sea-Land Service, Inc. v. Murrey & Son’s Co. Inc.,
Accordingly, the district court erred in dismissing TWI’s in personam action against Diamond and Chariot under the Shipping Act.
V
For the foregoing reasons, we reverse the district court’s dismissal of TWI’s in rem and in personam actions, and remand for further proceedings with specific instructions that the district court (1) recognize TWI’s lien on the Pyramid, and (2) reinstate TWI’s in personam action against Diamond and Chariot.
REVERSED and REMANDED.
Notes
. An NVOCC is "[a] consolidator who acts as a carrier by arranging for the transportation of goods from port to port....” National Labor Relations Bd. v. International Longshoremen's Ass’n, AFL-CIO,
. The "shipper” is the party who supplies the goods to be transported, and the "carrier” is the transporter. 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 10-5, at 28 (2d ed.1994). “Freight" refers to the carrier’s charge for transportation. 2 id. § 10-6, at 31. As an NVOCC, TWI is a common carrier with respect to Diamond as shipper, and a shipper with respect to the vessel Lauren and her owner, Maersk. 2 id. § 10-7, at 34-35.
. Although Gilmore maintains that The Resolute confirmed the notion that a lien is a prerequisite to an in rem action, see Gilmore & Black, The Law of Admiralty § 9-19, at 622 n. 76, Gilmore does not discuss the Supreme Court’s express language that "the question of lien or no lien is not one of jurisdiction, but of merits.” The Resolute,
. See The Eddy,
. The district court simply stated that it was granting Pebbles’ motion to dismiss for lack of subject matter jurisdiction. In its motion, Pebbles did not dispute the existence of TWI’s maritime contract or the district court's custody of the Pyramid; rather. Pebbles argued that TWI’s in rem action should be dismissed on the ground
. In Melwire, this court specifically noted "that, although the district court dismissed Melwire's in rem claims ‘for lack of jurisdiction,’ the actual basis for the district court's dismissal was its conclusion that none of Melwire's claims gave rise to a maritime lien enforceable in an action in rem."
. But see 1 Schoenbaum § 9-1, at 486 (citations omitted) ("There are sometimes statements in judicial opinions that admiralty law has ceased to recognize new forms of maritime liens. In fact, courts will not readily expand the body of recognized liens, most of which are well established by long practice. Nevertheless, the federal courts have full authority to update old doctrines and to recognize new forms of liens if wárranted by new conditions.”); see, e.g., Exxon Corp. v. Central Gulf Lines, Inc.,
. TWI’s counsel of record in this appeal, Thomas A. Russell, authored chapters 2 and 3 of volume 2 of Benedict on Admiralty.
. On April 1, 1994, the Lauren unloaded the Pyramid in Newark, New Jersey. On April 22, 1994, TWI's attorney notified Diamond's attorney by letter that TWI would exercise its possessory lien rights unless Diamond arranged to pay the freight and related charges for the transAtlantic journey. TWI stored the Pyramid in a Newark warehouse for six weeks before sending the structure by rail to Long Beach, California.
. As an alternative theory in support of reversal of the district court’s dismissal, TWI argues that the doctrine of advances grants TWI the maritime lien on cargo possessed by Maersk. Since we reverse the district court’s dismissal on other grounds, we need not reach this issue.
. In a letter (dated Apr. 8, 1994) to Frank Campanelli of TWI, Diamond’s attorney conceded that Diamond was having financial difficulties, but claimed that the company intended to pay its “shipping obligations to TWI." If Diamond recognized that it owed TWI the freight for the trans-Atlantic voyage on April 8 (one week after the Pyramid arrived in Newark), then Diamond cannot have detrimentally relied on the "FREIGHT PREPAID” notation stamped on the March 23 bill of lading.
. Ordinarily, the terms of a bill of lading are strictly construed against the carrier. See Toyo Kisen Kaisha v. W.R. Grace & Co.,
. The Shipping Act of 1984 (codified as amended at 46 U.S.C.A.App. §§ 1701-1721 (West Supp. 1996)) regulates the common carriage of goods by water in interstate and foreign commerce. The Act prohibits carriers from collecting charges that differ from those set forth in their filed tariffs. 46 U.S.C.A.App. § 1709(b)(1); see Sea-Land Service,
. All Pacific Trading,
