## Facts

- S.P. Dunham & Company operated a department store and leased its fur department to a concessionaire, Elmer A. Hurwitz & Co., while the fur operation appeared to customers to be part of Dunham’s store.
- Customers left fur garments for storage and cleaning; Hurwitz delivered many of those garments to George M. Kudra (Kudra Furs) under a separate arrangement between Hurwitz and Kudra.
- Hurwitz filed for bankruptcy in November 1955, and Dunham cancelled the concession agreement.
- Kudra then held 412 garments belonging to Dunham’s customers; Hurwitz owed Kudra $622.50 for services on those garments.
- Hurwitz also owed Kudra $3,232.55 for prior work on other garments that had already been returned to customers in earlier seasons.
- Dunham offered to pay the $622.50 attributable to the 412 garments to secure their return.
- Kudra refused to release the 412 garments unless Dunham paid $3,855.05 (the $622.50 plus the antecedent $3,232.55 debt).
- With winter conditions worsening and customers demanding immediate return of their coats, Dunham faced substantial risk of customer loss and reputational harm.
- Kudra also proposed delivering coats directly to customers if Dunham provided customer names, which would expose Dunham’s customer list to a competitor.
- Dunham paid the full amount demanded to obtain the garments, then sued to recover the $3,232.55 portion as an involuntary payment made under business compulsion.

## Issues

1. Whether Dunham’s payment of $3,232.55 was made under business compulsion (economic duress) such that restitution was available.
2. Whether Kudra had a valid lien or other legal right to retain the 412 garments to secure payment of Hurwitz’s antecedent debt.

## Decision

- The Appellate Division affirmed judgment for Dunham awarding restitution of $3,232.55.
- The court held the payment was not voluntary because it was induced by business compulsion arising from Kudra’s refusal to surrender the garments absent payment of an unrelated past-due balance.
- The court rejected Kudra’s asserted lien theory as a legal justification for holding the garments to force payment of the antecedent debt.

## Legal Principles

- A payment may be recovered in restitution when made under business compulsion, including when the payer reasonably lacks a practical alternative to avoid serious harm to business interests or goodwill.
- Wrongful retention of property to coerce payment of a third party’s antecedent debt can constitute economic duress when the holder lacks legal entitlement to withhold the property for that debt.
- Any lien for services on goods in the holder’s possession does not extend to unrelated, earlier debts for services on different goods already returned.
- The availability of theoretical legal remedies does not defeat duress where delay or publicity would likely cause immediate and substantial business harm, making litigation an impractical substitute for payment under protest.

## Conclusion

The court required restitution of the portion of Dunham’s payment attributable to Hurwitz’s prior debt because Kudra lacked legal authority to hold customer garments for that antecedent obligation, and the payment was compelled by immediate commercial pressure and risk to Dunham’s customer relationships and goodwill.


S.P. Dunham & Co. v. Kudra, 44 N.J. Super. 565, 131 A.2d 306 (App. Div. 1957)