East Providence Credit Union v. Geremia

Supreme Court of Rhode Island, 1968.

103 R.I. 597, 239 A.2d 725.

Dawson, pp. 259-262


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 didnít get paid, the creditor would pay the premiums and apply them toward the balance of the loan.The defendants didnít pay the premiums, and neither did the plaintiff.The car got totaled, but it wasnít 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 defendantsí 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 plaintiffís appeal is denied and the judgment for the defendant is affirmed.




I guess the question is which element of promissory estoppel would be negated by this change in facts.It wouldnít affect whether itís reasonable for the promisor to think the promise will be relied upon.I donít 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.


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