In Empire Trust Company v. Cahan (1926), the U.S Supreme Court ruled on a case involving the interpretation of New York's inheritance laws in relation to federal estate tax law. The dispute arose after an individual, who had established a trust for his wife and children, passed away. Under New York law, such trusts were considered part of the deceased's estate and thus subject to state inheritance taxes; however, under federal law they were not included in calculating federal estate taxes. The trustee argued that since these assets weren't taxable at the federal level they should also be exempt from state taxation. However, both lower courts disagreed with this argument and held that these funds could indeed be taxed by New York State. Upon appeal to the Supreme Court it was decided that while there may have been some conflict between state and federal interpretations of what constitutes an 'estate', it did not warrant interference from them as long as states didn't infringe upon any rights granted or protected by Federal Constitution or laws enacted under its authority.

In the dissenting opinion for Empire Trust Company v. Cahan, Justice Stone argued that the majority's decision to allow a creditor to recover from a debtor who had fraudulently transferred property was inconsistent with New York law and precedent. He contended that under New York law, fraudulent transfers could only be set aside at the request of an existing creditor at the time of transfer or if there was intent to defraud future creditors. In this case, he believed neither condition applied as Empire Trust became a creditor after the alleged fraudulent transfer occurred and there was no evidence suggesting intent to defraud future creditors by Mr. Cahan. Therefore, he disagreed with allowing recovery in such circumstances which would essentially change state laws governing fraudulent conveyances.