The case of Gardner v. Chicago Title & Trust Company, 1922, revolved around the bankruptcy proceedings of O'Gara Coal Company and the role played by La Salle Street Trust & Savings Bank as a creditor. The bank had loaned money to the coal company secured by its accounts receivable. When the coal company went bankrupt, Gardner was appointed trustee in bankruptcy and sought to recover these funds for distribution among all creditors. However, Chicago Title & Trust Company (as receiver for La Salle) argued that it should be paid first from those specific assets because they were pledged as collateral on their loan. The Supreme Court ruled in favor of Gardner stating that under federal law governing bankruptcies at that time (the Bankruptcy Act), a pledgee's lien on an insolvent debtor's property is not valid against other creditors unless it has been "perfected" before insolvency - meaning steps have been taken to give public notice or possession has changed hands which wasn't done here. Therefore, even though La Salle held security interests over certain assets of O’Gara Coal Co., they weren’t entitled to priority payment from those particular assets.

In the dissenting opinion for Gardner v. Chicago Title & Trust Company, Justice Holmes argued that the majority's decision was not in line with established principles of bankruptcy law. He contended that a trustee in bankruptcy should be able to recover any property transferred by the bankrupt party within four months prior to filing for bankruptcy if such transfer was made while insolvent and preferential to one creditor over others. In this case, O'Gara Coal Company had transferred assets as security for loans from La Salle Street Trust & Savings Bank during this period. However, the majority ruled these transfers were not voidable preferences because they did not diminish the estate available to other creditors since they were secured by previously unpledged assets of equivalent value. Holmes disagreed with this interpretation and believed it allowed an unfair preference towards certain creditors at a time when all should share equally in losses.