Milos Product Tanker Corporation v. Valero Marketing and Supply Company

Under maritime law, a receiver of cargo who has not paid freight, and who (before exercising dominion over the cargo) is given notice to pay freight to the carrier, and with such knowledge then exercises dominion thereof by taking delivery, accepts an implied obligation to pay freight to the carrier. Besides ensuring that a carrier is paid for its services—and that vessels are freed for subsequent shipments and that ports are not filled with vessels awaiting payment—that rule is consistent with the vast majority of other maritime jurisdictions worldwide, including English law, which serves as a global standard for the law of maritime commerce. The effect of this consistency allows for a well-functioning global trade and shipping system, unhindered by significant deviations in local practice. Yet the Ninth Circuit disrupted a previously uniform practice (observed around the country) by creating a private-versus-common carrier distinction, and holding for the first time that the obligation to pay freight to the carrier in these circumstances does not exist in the private carriage context. That distinction does not exist in prior Ninth Circuit precedent and— as the Ninth Circuit admitted—directly conflicts with caselaw from other Circuits. Further, the Ninth Circuit engaged in improper fact-finding by reversing the District Court’s finding that the receiver of cargo here exercised dominion over that cargo. This case thus presents two related questions. (1) Whether maritime law recognizes a private-versus-common carrier exception to the general rule that