East Providence Credit Union v. Geremia,

103 R.I. 597, 239 A.2d 725 (1968)

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Nature of the Case

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Facts

East Providence (P) loaned $2,350.28 to Geremia (D) for which D gave their promissory note. The payment of the note was secured by a chattel mortgage on Ds' 1962 ranch wagon. The loan required D to keep insurance on the car, and if D failed to insure the car, P had an option to pay the insurance premium and add that sum to D's outstanding loan. D let the premiums lapse. The insurance company informed both P and D. D then got a 10-day notice to pay the insurance premiums or P would obtain insurance. D testified that she telephoned P’s office and talked to the treasurer's assistant; that she told this employee to go ahead and pay the premium; that she explained to the employee that her husband was sick and they could not pay the insurance premium and the payment due on the loan. For some unknown reason P did not pay the premium, and the policy was canceled. D was not aware that the insurance had not been paid. The car was damaged and the insurance company refused to pay. P sued D for the balance of the loan. D counterclaimed for a breach of contract by P for P's failure to buy the insurance. The trial court found for D. P was estopped from denying that they were exercising the right that they had under the original mortgage. The superior court further found that Ds were justified in believing in P's assurance that it would pay the overdue premium. P appealed.