We recently purchased a dining room chair set from Restoration
Hardware. The first shipment came with our chairs excluding our bar
stools. The second order arrived (supposed to be 2 bar stools) and it
included the 2 bar stools and the entire first order. They called me
the day it arrived informing me of the mistake and requested that I
ship it back. The items have not been shipped back yet because they
could not get UPS out. It has been 3 months and I have not heard back
from them. Am I legally supposed to send the chairs back to them?
Grantid, I know the ethical & moral answer here is yes but I am
looking more for the legal responsibility on my part. Any ideas?

They should have had a company pick up the items,then pack them and send them back.

You could write them and offer to purchase the items at cost.  That
saves them shipping and packing costs etc.  You could sell the items
for market value and send them the money - minus a reasonble
($50-100)fee.

You haven't mention what state you are in, but its law is probably
quite similar to that of Virginia, as discussed in this question:
http://answers.google.com/answers/threadview?id=706807

I don't think you can dispose of the goods without specific approval to do so.

I live in California. Initially they called me and left a voicemail. I
then returned the call promtly and spoke with the person. They told me
they could arrange for UPS to come out and pick up the chairs.

In the instance, the chairs are worth about $3500. I doubt if I sold
the chairs that I would get anywhere near what I paid because they are
custom chairs that match the interior of my house.

One more thing......

The caveat to this is that nobody in my family accepted ownership of
the order when UPS dropped it off. Both times they showed up, my
neighbor signed for it.

I am going to contact them about picking the chairs up, I am just
curious as to what my legal requirements are.

If it has been more than 3 months, google California's law on Abandonment. 

it is THEIR mistake, it is THEIR responsibility to pick them up!! not yours

it is THEIR property, it is THEIR promise to you that they WILL pick em up.. 

NJ law states after 6 months property belongs to you after its
abandoned (owner never picks up)

So google your county/State's law ;)

Send them a letter 
- make sure that it is what we in the UK call 'recorded delivery'
- that it needs to be signed for

Be polite, friendly, praise their workmanship, suggest that a small
paperwork mixup landed you with more chairs than you can use.

Say that you are more than happy with what they sent you, but you are
NERVOUS of misunderstandings because they have over delivered.

Realistically they don't care, the people who screwed up are pretty
low level, the person you talked to on the 'phone is pretty low level,
all of them would like to bury the problem ... but there is a 1%
chance it might come back to you, so it makes sense to cover your
posterior.

They ended up calling and scheduling a pickup for next week. And now
they are hounding me with another phone call today saying they haven't
heard back from me even though they spoke with my wife last week.

Anyhow, I appreciate the responses. I would like to pay someone the
$20 for their answer but I don't know who to give it to. I guess it's
up to you guys to choose.

Thanks

None of the commenters are G-A Researchers, those with blue names who
can post an official answer and be paid the price.  Your good luck! 
You have had enough hassle with the problem.
Cheers

You just don't have a problem.

It is just an internal cockup on their part.

However, there is a lot to be said for keeping a pen and an A4 bound
logbook by the 'phone, and meticulously recording all conversations
- you'll know when to let them know that you are writing it down.

Jerks try to intimidate people
- it is very easy to intimidate jerks

Just don't worry about it 
- you are paying the price of being honest
- $ 0.50c and some annoying telephone calls

I appreciate the comments that you all posted and wish you all the
best. They finally came out today and picked up the chairs. The funny
thing was that they had no clue their shipping department had it all
scheduled for today. We made sure to get a shipping receipt from them
showing the inventory......!