In the 1971 case Caplin, Trustee v. Marine Midland Grace Trust Co. of New York, the United States Supreme Court addressed whether a trustee in bankruptcy could assert claims on behalf of creditors against third parties for alleged fraudulent conveyances and preferences. The court held that under Section 70(e) of the Bankruptcy Act, only a creditor - not a trustee - has standing to sue third parties who allegedly received preferential or fraudulent transfers from the debtor prior to bankruptcy. The decision was based on an interpretation of statutory language and legislative history indicating that Congress intended such suits to be brought by individual creditors rather than trustees acting on their behalf.

In the dissenting opinion for Caplin v. Marine Midland Grace Trust Co., Justice Douglas argued that a bankruptcy trustee should be allowed to sue on behalf of creditors, even if those claims are not part of the bankrupt estate's assets. He believed that this would help ensure fair treatment for all creditors and prevent preferential treatment or fraudulent transfers. Furthermore, he contended that denying trustees this power could lead to inefficient and costly litigation as each creditor would have to individually pursue their own claims against third parties instead of having them consolidated under one lawsuit by the trustee. This approach, according to Justice Douglas, contradicts the purpose of bankruptcy law which is designed to simplify and expedite proceedings while maximizing returns for creditors.