In the case of Samuel L. Forgay and Eliza Ann Fogarty, Wife of E. W. Wells v Francis B. Conrad, Assignee in Bankruptcy of Thomas Banks, the Supreme Court was asked to decide whether a state court could grant an injunction against a bankruptcy assignee who had taken possession of property belonging to bankrupts without first obtaining permission from the federal district court where proceedings were pending for their discharge under the Bankruptcy Act 1841 (the “Act”). The appellants argued that such an action would be contrary to Section 39 of the Act which provided that no suit should be brought or maintained against any person claiming title under any assignment made by such bankrupt until after his final discharge from all debts due at law or equity before he shall have obtained his certificate therefor; and if it appears upon trial that he is entitled thereto then judgment shall be rendered in favor thereof accordingly. The Supreme Court held that while it was true that Section 39 prohibited suits being brought against persons claiming title under assignments made by bankrupts prior to their final discharge, this did not mean they were exempt from equitable remedies like injunctions granted by state courts as long as those remedies did not conflict with other provisions contained within the Act itself or with its general purpose and policy.

In this case, the Supreme Court was asked to decide whether a debt owed by Thomas Banks could be collected from his assignee in bankruptcy. The majority opinion held that since the debt had been assigned before Bank's bankruptcy proceedings began, it could not be collected from the assignee. However, Justice McLean dissented on the grounds that Congress had intended for all debts of bankrupts to pass through their assignees and thus should have been collectible. He argued that if creditors were allowed to bypass an assignment process and instead directly pursue a debtor’s assets during bankruptcy proceedings, then they would receive preferential treatment over other creditors who followed proper procedure when attempting to collect their debts. Therefore, he concluded that allowing such behavior would undermine Congressional intent and lead to unfair outcomes for those involved in similar cases in future.