East Providence Credit Union v. Geremia
103 R.I. 597, 239 A.2d 725 (R.I. 1968)

  • The Geremias took out a loan and used their car as collateral.  They promised to insure the car.  One time, their payments were late, and they received notice from the creditor that if the insurance didn’t get paid, the creditor would pay the premiums and apply them toward the balance of the loan.
    • The Geremias felt it was simpler to just let East Providence pay the premiums.  However, East Providence did not pay the premiums.
  • The car was damaged in an accident, but it wasn’t insured because nobody had made the insurance payments. East Providence sued for the balance of the loan, and the Geremias counterclaimed on the basis that they were relying on East Providence to pay the insurance premiums.
  • The Trial Court found for the Geremias.
  • The Appellate Court affirmed.
    • The Appellate Court noted that paying the Geremias’ policy premiums would have been a profitable venture for East Providence because they were going to charge interest on those payments.  That interest constitutes valid consideration which made it an enforceable contract.
    • The Court found it unnecessary to consider promissory estoppel in this case, but, in dicta, it says that it would if it had to.