East Providence Credit Union v. Geremia
Rhode Island Supreme Court
239 A.2d 725 (1968)
East Providence Credit Union (EPCU) (plaintiff) held a mortgage on the Geremias' (defendants) vehicle requiring insurance, with a provision letting EPCU pay overdue premiums and add the cost, plus interest, to the loan. When the Geremias' policy lapsed into cancellation, EPCU wrote promising to pay the overdue balance if the Geremias did not, and the Geremias relied on that promise and did not pay it themselves; EPCU never actually paid, the insurer canceled the policy, and the vehicle was later totaled in an accident worth more than the outstanding loan balance.
Whether a gratuitous promise made by one to procure insurance on the promisee's property is made enforceable by the promisee's reliance thereon and his forbearance to procure such insurance himself.