Opinion ID: 894694
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Heading: Common Law Historical Development

Text: In considering duress, it is useful to review its historical context. The early common law restricted duress to imprisonment or threats sufficient to put a brave man in fear of loss of life or limb or of imprisonment of himself or a member of his immediate family. RESTATEMENT (SECOND) OF TORTS § 892B cmt. j (1977). We characterized duress as the result of threats which render persons incapable of exercising their free agency and which destroy the power to withhold consent. Dimmitt v. Robbins, 74 Tex. 441, 12 S.W. 94, 96-97 (1889). The common law concept of duress was later enlarged. Akin Prods. Co., 286 S.W.2d at 111 (The early common-law doctrine of duress has been expanded and many courts have adopted the modern doctrine of `business compulsion' . . . .); see also Ward v. Scarborough, 236 S.W. 434, 437 (Tex.Com.App. 1922). The Restatement of Restitution defined duress less restrictively as a serious risk of imprisonment or of the loss of possession of his things or of other substantial loss and a reasonable anticipation by the payor of substantial risk of loss or serious inconvenience if the payment is not made. RESTATEMENT (FIRST) OF RESTITUTION § 75(1)(b) cmt. f (1937). Many courts have recognized an additional, modern type of duress often referred to as business compulsion or economic duress. Akin Prods. Co., 286 S.W.2d at 111; Crow, 209 S.W.2d at 924; PROSSER AND KEETON ON TORTS § 18, at 121 (5th ed.1984). We have referred to business compulsion and economic duress as implied duress, because the pressure to pay these government exactions is indirect and flows from statutes or ordinances. See Miga v. Jensen, 96 S.W.3d 207, 211, 224-25 (Tex.2002) (compulsion implied by the threat of statutory penalties and accruing interest constitutes economic duress); Powell, 640 S.W.2d at 237 (holding that duress may be implied from a statute which imposes a penalty and interest for failure to timely pay a tax); Austin Nat'l Bank, 71 S.W.2d at 246; Nabisco, 135 S.W.2d at 692-93. We have also held that business compulsion [7] may constitute duress and allow recovery of the payment of an illegal tax or fee. In Crow we held that a city ordinance compelling a choice between paying an illegal license fee to operate a cab or cab company and forfeiting one's livelihood or right to do business constitutes business compulsion, or implied duress, as a matter of law. 209 S.W.2d at 924-25. We also determined that if, due to imposition of taxes on packaged citrus fruit, a reasonably prudent man finds that in order to preserve his property or protect his business interest it is necessary to make a payment of money which he does not owe, the taxes were paid under duress. Akin Prods. Co., 286 S.W.2d at 111. Failure to pay the mandatory citrus tax would have resulted in the businessman suffering a daily penalty and interest. Id. In another circumstance, the National Biscuit Company (Nabisco) paid franchise and permit fees for several years rather than pay a penalty of twenty-five percent of the fees and forfeit its right to do business in Texas. Nabisco, 134 Tex. 293, 135 S.W.2d 687. After the fees were declared unconstitutional, Nabisco sued to recover them. We held that, where a statute imposed the penalties at issue, the taxes were paid under duress and the taxpayer need not take the risk of incurring the statutory punishments while the case was being litigated. Id. at 693. Finally, we held that Highland Church of Christ's payment of a judgment for ad valorem taxes on an office building it owned was involuntary. Highland Church of Christ v. Powell, 640 S.W.2d 235 (Tex.1982). The Church paid the judgment to avoid penalties and interest which would accrue while the case was on appeal, and this Court held that the judgment was therefore not voluntarily paid. Id. at 237. This Court has consistently recognized business compulsion arising from payment of government fees and taxes coerced by financial penalties, loss of livelihood, or substantial damage to a business. See Metro. Life Ins. Co. of N.Y. v. Mann, 140 Tex. 450, 168 S.W.2d 212 (1943) (threatened revocation of certificate of authority to transact insurance business for failure to pay void occupation taxes); Union Cent. Life Ins. v. Mann, 138 Tex. 242, 158 S.W.2d 477 (1941) (threatened revocation of certificate of authority to transact insurance business for failure to pay void taxes on annuity premiums); Austin Nat'l Bank of Austin v. Sheppard, 123 Tex. 272, 71 S.W.2d 242 (1934) (holding that duress was established when a company showed that the Secretary of State's refusal to file an amended charter of asphalt company jeopardized its ability to do business unless a second filing fee was paid). A common element of duress in all its forms (whether called duress, implied duress, business compulsion, economic duress or duress of property) is improper or unlawful conduct or threat of improper or unlawful conduct that is intended to and does interfere with another person's exercise of free will and judgment. See In re Oakwood Mobile Homes, Inc., 987 S.W.2d 571, 574 (Tex.1999) (defining duress as a threat to do some act which the threatening party has no legal right to do); Ward v. Scarborough, 236 S.W. 434, 437 (Tex. Com.App.1922) (The restraint, intimidation, or compulsion is sufficient if it induces... some act ... contrary to his will.); RESTATEMENT (SECOND) OF TORTS §§ 892B cmt. j, 871 cmt. f(1979); Crow, 209 S.W.2d at 925. The compulsion must be actual and imminent, and not merely feigned or imagined. See Ward, 236 S.W. at 437; Dimmitt, 12 S.W. at 96-97. We have repeatedly held that duress is established where the unauthorized tax or fee is required, necessary, or shall be paid to avoid the government's ability to charge penalties or halt a person from earning a livelihood or operating a business. Crow, 209 S.W.2d at 924; Metro. Life Ins. Co., 168 S.W.2d at 215; Union Cent. Life Ins., 158 S.W.2d at 481; Nabisco, 135 S.W.2d at 692-93; Austin Nat'l Bank, 71 S.W.2d at 246. Succinctly, the decision faced is to comply or close up. Akin Prods. Co., 286 S.W.2d at 111; Ward, 236 S.W. at 437 (The restraint must be imminent and such as to destroy free agency without present means of protection.).