The case of Atwater v. Guernsey et al., Trustees in Bankruptcy of Atwater, et al., 1920 revolved around a dispute over the bankruptcy proceedings of the Atwaters. The Supreme Court was asked to determine whether certain assets were part of the bankrupt estate and thus subject to distribution among creditors or if they belonged exclusively to Mrs. Atwater as her separate property. The contested assets included stocks that Mr. Atwater had purchased with his wife's money but which were registered under his name, and dividends from these stocks that he had deposited into their joint bank account without her knowledge or consent. The court ruled in favor of Mrs. Atwater, holding that she did not lose ownership rights over these assets simply because they were temporarily held by her husband or mixed with other marital property; rather, she retained an equitable interest in them at all times due to having provided the funds for their acquisition initially. This decision affirmed women's right to maintain control over their separate property within marriage and set important precedents regarding how such property should be treated during bankruptcy proceedings.

In the dissenting opinion for ATWATER v. GUERNSEY et al., Justice McReynolds argued that the majority's decision was a departure from established principles of bankruptcy law and an unwarranted expansion of trustee powers. He contended that trustees in bankruptcy should not have authority to recover property transferred by insolvent debtors prior to their declaration of bankruptcy unless there is evidence of fraudulent intent or collusion between the debtor and transferee. In this case, he believed no such evidence existed, making it unjust for Guernsey and other trustees to seize Atwater's assets. Furthermore, he disagreed with the majority’s interpretation of “fair consideration” under Section 67e of Bankruptcy Act as merely equivalent value; instead, he asserted it must involve good faith without knowledge or reasonable cause to believe insolvency exists at time transaction occurred. Thus, according to Justice McReynolds' view, since Atwater received fair consideration when transferring his property before declaring bankruptcy without any proof showing otherwise on part of transferees’ knowledge about his impending insolvency status then these transactions should be deemed valid rather than voidable.