In the case of Baltimore & Ohio Railroad Co. v. Kepner, 1941, the U.S Supreme Court ruled that a federal court could not enjoin a state court proceeding at the request of an insolvent debtor in possession under Section 77 of the Bankruptcy Act. The plaintiff, Kepner, had filed suit against his employer (Baltimore & Ohio Railroad) for personal injuries in West Virginia State Court while he was living there and after his employer had filed for reorganization under Section 77 in New York Federal District Court. The railroad company sought to prevent this action by obtaining an injunction from its bankruptcy proceedings' judge who granted it on grounds that all claims should be centralized within one jurisdiction to ensure equitable distribution among creditors. However, upon appeal by Kepner to higher courts including finally SCOTUS which reversed lower rulings stating such use of injunctions violated principles of comity between state and federal jurisdictions as well as exceeded powers given under section 77.

In the dissenting opinion for Baltimore & Ohio Railroad Co. v. Kepner, Justice Frank Murphy argued that the majority's decision was a misinterpretation of Section 33 of the Federal Bankruptcy Act and its intent to protect creditors from preferential transfers by insolvent debtors. He contended that this section should not be used to prevent an individual creditor from pursuing his own claim in state court after bankruptcy proceedings have begun, as long as he does not interfere with or diminish the assets available to other creditors in those proceedings. According to him, allowing such actions would promote justice and fairness among all parties involved without undermining federal control over bankruptcy matters.