Supreme
Court of
103 R.I.
597, 239 A.2d 725.
Facts: The defendants took out a loan secured by their
car. 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 defendants didn’t pay the
premiums, and neither did the plaintiff.
The car got totaled, but it wasn’t insured because nobody made the
insurance payments. The plaintiffs sued
for the balance of the loan, and the defendants counterclaimed on the basis
that they were relying on the plaintiffs to pay the insurance premiums.
Issue: Is the plaintiff barred from recovering on the loan because
it failed to fulfill its promise to make the insurance payments?
Rule: The doctrine of promissory estoppel can be applied
when:
1.
A
promise was made that the promisor should reasonably expect to induce reliance
on the part of the promisee.
2.
The
promisee relied on the promise.
3.
Injustice
can only be avoided if the promise is enforced.
Analysis: The court finds it unnecessary to use promissory
estoppel here, but, in dicta, it says that it would if it had to.
Instead, the court suggests
that paying the defendants’ policy premiums would have been a profitable
venture for the plaintiffs because they were going to charge interest on those
payments. That interest constitutes
valid consideration in the opinion of the court.
Conclusion: The plaintiff’s appeal is denied and the judgment for
the defendant is affirmed.
Question
I guess the question is which
element of promissory estoppel would be negated by this change in facts. It wouldn’t affect whether it’s reasonable
for the promisor to think the promise will be relied upon. I don’t think it would affect whether the
promise was actually relied upon, either.
I think the only thing that could be affected is the question of
injustice: if we think that the Geremias should have
just gotten insurance anyway and avoided doing so on purpose to take advantage
of their creditors, justice might not require us to relieve them of their debt.