Case Name: SMITH v. HEWLETT ROBIN CO.
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1910-04-04
Citations: 178 F. 271
Docket Number: No. 173
Parties: SMITH v. HEWLETT ROBIN CO.
Judges: Before EACOMBE, CONE, and WARD, Circuit Judges.
Reporter: Federal Reporter
Volume: 178
Pages: 271–271

Head Matter:
SMITH v. HEWLETT ROBIN CO.
(Circuit Court of Appeals, Second Circuit.
April 4, 1910.)
No. 173.
Bankruptcy (§ 166 ) — Compromise Duty or Creditors.
When an offer to compromise is made, creditors are not bound to investigate the debtor’s ability to pay the amount offered, and if it is his intent to pay it to all creditors alike, but are entitled to believe that the offer is made in good faith to all creditors, unless something occurs to put them on inquiry.
[Ed. Note. — For other cases, see Bankruptcy, Bee. Dig. § 166.*]
Appeal from the District Court of the United States for the Southern District of New York.
Action by William A. Smith, as trustee in bankruptcy, against the Hewlett Robin Company. Judgment for defendant, and plaintiff appeals.
Affirmed.
W. C. Dow and Henry Hoelljes, for appellant.
A. R. Page, for appellee.
Before EACOMBE, CONE, and WARD, Circuit Judges.
For other cases see same topic & § Number in Dec. & Am. Digs. 1907 to dato, & Rep’r Indexes

Opinion:
PER CURIAM.
This is an action by the trustee to recover from the defendant $1,275 as a preference voidable under section 60b of the bankrupt act (Act July 1, 1898. c. 541, 30 Stat. 562 [U. S. Comp. St. 1901, p. 3445]), which provides for setting aside a preference where the party receiving it has reasonable cause to believe that a preference was intended. The District Court found that there was insufficient evidence to warrant the conclusion that the defendant had cause to believe that it was receiving more than the other creditors. No fraud is proved, and none is asserted. The onerous duty of creditors, which is asserted by the appellant, to investigate when an offer of compromise is made, to ascertain if the debtor can pay the amount offered and intends to pay it to all creditors alike, places too heavy a burden upon the creditors. When an offer of compromise is made, the creditors are justified in believing that it is made in good faith to all creditors, unless something occurs to put them upon inquiry.
The decree of the District Court was right, and should be affirmed.