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Siegel v. Spear & Co - 234 N.Y. 479, 138 N.E. 414 (1923)

Rule:

A mere agreement to undertake a trust, in futuro, without compensation, it is true, is not obligatory; but when once undertaken, and the trust actually entered upon, the bailee is bound to perform it, according to the terms of his agreement. The confidence placed in him, and his undertaking to execute the trust, raise a sufficient consideration; a contrary doctrine would tend to injure and deceive his employer, who might be unwilling to consent to the bailment on any other terms.

Facts:

Plaintiff Siegel brought an action to recover his loss sustained by failure of defendant Spear and Co. to insure his household furniture. He purchased the furniture from Spear and gave it two chattel mortgages, which provided for monthly payments on the purchase price and prohibited the bailor from removing the furniture from his apartment without the bailee's consent.  Spear’s creditman allegedly told Siegel that it would procure insurance to cover the goods, but the warehouse and the furniture were destroyers by fire without insurance. The lower courts ruled in favor of Siegel and Spear and Co. sought review.

Issue:

Did Spear, who repossessed Siegel's furniture, have the duty to insure the furniture under their bailment agreement?

Answer:

Yes.

Conclusion:

The court affirmed the appellate court's judgment in favor of Siegel, the bailor, for damage to his furniture stored by Spear, the bailee, finding sufficient consideration for the promise to procure insurance. Once the promise was made and the bailor took action to store the furniture at the warehouse, the bailee entered upon execution of the trust and was bound to perform under the terms of the agreement.

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