Garageman’s Lien Bonds

Case Study

Garageman’s Lien Bonds

Following an accident on I–85, ABC Towing Company arrived to the scene of spilled ice cream from an 18-wheeler on its side in wet conditions. The work began with two phases: 1) to clean up the ice cream melting on the road and 2) to right the semi and tow it to their garage for repairs.

Significant efforts were made and soon the tractor–trailer was at the garage and traffic was flowing. When ABC Towing Company delivered its bill for services to XYZ Hauling, Inc., the bill was significantly more than anticipated so the motor carrier disputed the amount with ABC. As a result, the tractor–trailer would remain with the tower until the bill for services would be paid, which put XYZ Hauling, Inc. in a difficult position.  Without access to its big rig, the company had no way to generate revenue and was left to either pay a significant bill or enter litigation.

XYZ reluctantly chose litigation, but it still did not have access to its trucking asset so it applied to the court for relief and in exchange for access to its units, XYZ posted a garageman’s lien bond with the court to secure the tower’s invoice until a compromise was reached. Several months later, a lesser sum was paid by XYZ to ABC and the bond was returned for cancellation.  In the meantime, XYZ was able to use its units.