The Geremias (defendants) took out a loan from the East Providence Credit Union (EPCU) (plaintiff) in exchange for a promissory note. The note was secured by a mortgage on the Geremias’ ranch wagon. The mortgage required that the Geremias have insurance on the vehicle, and that if they did not maintain insurance, EPCU could pay the insurance premium and apply that amount to the Geremias’ loan. If this occurred, EPCU could also calculate interest and add that to the loan as well. The Geremias bought an insurance policy, but their payments became overdue. The insurance company sent a cancellation notice to the Geremias and to EPCU, alerting them both of the overdue amount. EPCU then wrote a letter to the Geremias stating that if they did not pay the overdue balance, EPCU would pay it and apply the payment to the loan. The Geremias consented to EPCU paying the outstanding balance on the insurance policy. About two months later, the Geremias’ vehicle was in an accident and was totaled. However, EPCU had never paid the overdue balance on the insurance policy, and the insurance company had cancelled the policy as a result. The value of the totaled vehicle was more than the amount the Geremias owed on the loan. EPCU brought suit to recover the outstanding balance on the loan. The trial court dismissed the claim. EPCU appealed.