In the 1945 case American Surety Co. of New York v. Sampsell, Trustee in Bankruptcy, the U.S Supreme Court was tasked with deciding whether a bankruptcy trustee could recover payments made by an insolvent debtor to a creditor within four months prior to filing for bankruptcy if those payments were preferential and enabled the creditor to receive more than their fair share of the debtor's assets. The court ruled that such preferential transfers are voidable under Section 60b of the Bankruptcy Act even when they involve non-bankrupt partners' interests in partnership property. This decision clarified that all creditors should be treated equally during bankruptcy proceedings and any attempts by debtors or creditors to circumvent this principle would not be tolerated.

In the dissenting opinion for American Surety Co. of New York v. Sampsell, Justice Frankfurter argued that the majority's decision to allow a bankruptcy trustee to recover funds from an insolvent debtor's insurance policy was inconsistent with California law and previous Supreme Court rulings. He contended that under California law, which should govern this case as it is where the contract was made and performed, an insured person cannot assign their rights under a liability insurance policy without consent from the insurer - something not obtained in this instance. Furthermore, he pointed out that prior decisions by the court had established that state laws determine property interests in bankruptcy cases unless they conflict with federal statutes or impede on national policies; neither of which were applicable here according to him. Therefore, he believed allowing recovery would be unjust enrichment at expense of innocent third parties (the insurers) who did not agree nor anticipate such risk when issuing coverage.