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Dunham v. Kudra

Decided: April 16, 1957.

S. P. DUNHAM & COMPANY, A NEW JERSEY CORPORATION, PLAINTIFF-RESPONDENT,
v.
GEORGE M. KUDRA, T/A KUDRA FURS, AND THE HOUSE OF KUDRA FURS, A NEW JERSEY CORPORATION, DEFENDANTS-APPELLANTS



Clapp, Jayne and Francis. The opinion of the court was delivered by Clapp, S.j.a.d.

Clapp

Plaintiff, S. P. Dunham & Company, sued defendants for the restitution of $3,232.55 paid them allegedly under business compulsion. The trial court, sitting without a jury, gave judgment for the plaintiff in the amount stated. Defendants appeal.

Plaintiff has for over a century operated a department store in Trenton. For some three years it had leased its fur department to a concessionaire, Elmer A. Hurwitz & Co., but the business of the department was so conducted as to appear to customers to have been a part of plaintiff's operations. During these three years fur coats, left by customers with Hurwitz for storage and cleaning, were turned over by him to the defendants Kudra who stored and cleaned them pursuant to an agreement with Hurwitz. Plaintiff knew something of Hurwitz' arrangement with Kudra.

In November 1955 Hurwitz went bankrupt and Dunham thereupon cancelled his concession. However, winter was coming on, and Dunham's customers wanted their coats. On November 23, 1955 Kudra had possession of 412 garments, on which Hurwitz owed Kudra $622.50. This sum plaintiff offered to pay Kudra in return for the garments. But Hurwitz owed Kudra an additional $3,232.55 with respect to other garments that had been delivered back to customers during the preceding two years; and on November 23, Kudra announced that the 412 coats would not be turned over unless plaintiff paid the total sum of $3,855.05. One of the owners of Dunham, much upset, asked Kudra for a few days to think the matter over and consult with counsel. Apparently at about that time, the temperature had dropped to 15 degrees; many substantial customers of the store demanded their coats. When both owners of Dunham then sought to negotiate further, Kudra came up with the proposition that it would deliver the garments directly to plaintiff's customers without charge to the plaintiff, if plaintiff would turn over their names; not only would plaintiff thus place the names of customers in the hands of a competitor in the fur business, but Kudra apparently purposed to bill them directly for Hurwitz' total charges on the coats, which totalled some $4,000. Plaintiff flatly rejected this proposition and on November 29 yielded to Kudra's original demand, paying the $3,855.05. Allegedly, three days later it sought the return of $3,232.55 and on December 15 commenced this action.

Plaintiff seeks the restitution of the $3,232.55 on the ground that the money was paid to defendants, not voluntarily, but under a species of duress, sometimes known as "business compulsion." It claims that defendants, taking advantage of its plight, sought to squeeze it between their own improper demands and the complaints of its customers. Indeed, the predicament in which it was placed was so embarrassing a matter that one of the owners of the store, apprehensive of a serious impairment in its good will, himself spent hours in the fur department talking to customers.

There is little doubt but that the pressure which defendants brought to bear upon the plaintiff was an inducing (Restatement, Contracts , § 492 f), indeed the sole cause of its payment of the $3,232.55.

A slight examination of the subject will demonstrate that the law of duress is in the process of development. 5 Williston, Contracts (rev. ed. 1937), § 1603; Dawson, "Economic Duress -- An Essay in Perspective ," 45 Mich. L. Rev. 253 (1947); Dalzell, "Duress by Economic Pressure ," 20 No. Car. L. Rev. 237, 341 (1942). Thus in New Jersey, after some conflicting decisions on the point, our courts have finally rejected the objective test, namely, that duress is irremediable unless it is of such severity as to overcome the will of a person of ordinary firmness; the test now is simply this -- has the person complaining been constrained to do what he otherwise would not have done? Rubenstein v. Rubenstein , 20 N.J. 359, 366 (1956); Miller v. Eisele , 111 N.J.L. 268, 275 (E. & A. 1933), a case of business compulsion; but see King v. Margolis , 133 N.J. Eq. 61 (Ch. 1943), affirmed at 617 (E. & A. 1943); Hochman v. Zigler's Inc. , 139 N.J. Eq. 139 (Ch. 1946); Talbott, "Contracts ," 11 Rutgers L. Rev. 238, 243 (1956).

Apropos of this, attention may be directed to a point brought up by the respondent. It has repeatedly been held in our cases that a person cannot claim to have made a payment under duress if, before he made the payment, there was available to him an immediate and adequate remedy in the courts to test or resist it. Among the recent cases are Miller v. Eisele , 111 N.J.L. 268, 280 (E. & A. 1933), and cases cited; Sutton v. Metropolitan Casualty Ins. Co., N.Y. , 117 N.J.L. 21 (Sup. Ct. 1936); Meier v. Nightingale , 134 N.J.L. 275 (E. & A. 1946). This harsh rule has been rejected by the Restatement, Contracts , § 493, Illustrations 8, 9, and also by Williston. Williston points out that

"the only reason which could be given for such a rule is that a threat of this sort should not terrify a person of" ordinary firmness. "But, though such statements are still repeated, the rule is artificial and, so far as it would require a person threatened with

injury necessarily to endure the injury because the law provides a remedy for it, cannot be ...


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