## Facts

- A shipper contracted to transport lumber by sea on the S.S. *Pacific Cedar* from Pacific Coast ports to Philadelphia and New York.
- The freight rate was set at $10 per thousand feet, but the agreement required use of a lower rate if a regular intercoastal carrier contemporaneously offered to carry similar cargo for less.
- The cargo was carried and delivered, and the shipper paid freight at the $10 rate at delivery.
- The shipper later learned that a regular intercoastal carrier had carried similar cargo at $8.50 per thousand feet during the relevant period.
- The shipper sued the owner in personam to recover the overpayment and filed an in rem proceeding against the vessel asserting a maritime lien for the overcharge.
- The court of appeals allowed the in personam recovery but rejected the in rem claim, concluding no maritime lien existed for the overpayment.

## Issues

1. Whether collection of freight in excess of an affreightment contract’s applicable rate gives the cargo a maritime lien on the vessel for the amount overpaid, enforceable in rem.
2. Whether the lien is defeated because the overpayment occurred through mutual mistake and resembles a common-law claim for money had and received.

## Decision

- The Supreme Court reversed the judgment rejecting the in rem libel.
- The Court held that the vessel’s obligations under a contract of affreightment include a duty not to exact more freight than the contract allows.
- When excessive freight is collected at delivery under circumstances requiring repayment, the cargo has a maritime lien on the vessel for the overpayment.
- The lien exists even if both parties were unaware at payment that the demanded freight was excessive.
- Characterizing the claim as “money had and received” at common law did not bar admiralty relief; the claim’s substance was breach of a maritime contract.

## Legal Principles

- A contract of affreightment creates ship–cargo obligations that support reciprocal maritime liens when those obligations are breached, including the duty to charge only the contract freight.
- Excess freight collected at delivery, when repayment is equitable and required, supports a maritime lien in favor of the cargo for the overpayment, enforceable by an in rem proceeding.
- Mutual mistake about the applicable freight rate does not negate the contractual duty or the lien arising from its breach.
- Admiralty focuses on the substance of the maritime demand rather than the common-law form of action.
- Although maritime liens are stricti juris and not expanded by implication, liens should be recognized when the claim falls within accepted maritime-lien principles, even if the fact pattern is uncommon.

## Conclusion

The Court recognized an in rem remedy for freight overcharges by holding that over-exaction of freight breaches the contract of affreightment and gives the cargo a maritime lien on the vessel for the amount overpaid, notwithstanding mutual mistake or common-law labeling.


Krauss Bros. Lumber Co. v. Dimon S.S. Corp. (The Pacific Cedar), 290 U.S. 117 (1933)