## Facts

- William Siegel bought household furniture from Spear & Co. and financed it through chattel mortgages with monthly payments.
- In 1918, Siegel planned to leave New York City and sought temporary storage for the furniture.
- Siegel and Spear’s creditman, McGrath, arranged that Siegel would transport the furniture to Spear’s warehouse and Spear would store it without charge.
- Before the furniture left Siegel’s possession, McGrath promised that Spear would procure insurance covering the furniture for Siegel’s benefit.
- Relying on that assurance, Siegel did not obtain his own insurance and delivered the furniture to Spear, creating a gratuitous bailment.
- Spear did not procure the promised insurance.
- A fire destroyed Spear’s warehouse and Siegel’s furniture.
- Siegel sued to recover the furniture’s value based on Spear’s failure to obtain insurance, not on negligence for causing the fire.

## Issues

1. Whether a gratuitous bailee is contractually bound to procure insurance for the bailor’s benefit when the promise is made as part of the storage arrangement and induces delivery and forbearance from obtaining other insurance.
2. Whether the bailor’s delivery of the goods and reliance-based forbearance supply sufficient consideration to make the promise to insure enforceable.
3. Whether the bailee is liable for the loss when the promised insurance was not obtained and the goods were destroyed by fire.

## Decision

- The New York Court of Appeals affirmed the judgment for Siegel.
- The evidence permitted a finding that Spear’s agent promised to procure insurance for Siegel as part of the storage transaction.
- The promise to insure was treated as part of the overall bailment arrangement, imposing an obligation comparable to the duty to care for the goods.
- Siegel’s delivery of the furniture and reliance (including forgoing his own insurance) provided sufficient consideration for an enforceable agreement to insure.
- Because Spear failed to procure insurance and the furniture was destroyed, Spear was liable for Siegel’s loss.

## Legal Principles

- A promise to procure insurance is enforceable when it is part of a broader transaction and supported by consideration arising from the promisee’s delivery of property and reliance-based change of position.
- A bailment may be gratuitous as to storage charges yet still contain enforceable ancillary contractual obligations undertaken in connection with the bailment.
- When a party undertakes and begins to carry out an agreed duty connected to entrusted property, it must perform that undertaking with due care; failure to do so can create liability for resulting loss.
- A merely gratuitous, standalone promise to insure without consideration is distinguishable from a promise integrated into an exchange-like arrangement involving delivery and reliance.

## Conclusion

The court held that Spear’s promise to procure insurance, made as part of the storage arrangement and inducing Siegel to deliver his furniture and forego other insurance, was supported by consideration and enforceable; Spear’s failure to obtain the insurance made it liable for the value of the furniture destroyed by fire.


Siegel v. Spear & Co., 234 N.Y. 479 (N.Y. 1923)