In the 1946 case of Gardner, Trustee v. New Jersey, the U.S. Supreme Court ruled that a bankruptcy trustee could challenge the constitutionality of a state tax claim in federal court. The State of New Jersey had filed claims for unpaid taxes against two bankrupt corporations whose assets were being administered by Gardner as their trustee in bankruptcy proceedings under federal law. When he objected to these claims on constitutional grounds, his objections were overruled by lower courts which held that only states themselves can raise such challenges based on principles of sovereign immunity and comity among states. However, upon appeal to the Supreme Court it was decided that while normally states are immune from suits brought in federal court without their consent due to Eleventh Amendment protections; this did not apply here because New Jersey voluntarily submitted itself to jurisdiction when it filed its tax claims against the bankrupt companies' estates within those proceedings. Therefore, they waived any immunity they might have otherwise enjoyed and opened themselves up for counter-challenges like those raised by Gardner.

In the dissenting opinion for Gardner v. New Jersey, Justice Frankfurter argued that the majority's decision was a departure from established principles of federal jurisdiction and bankruptcy law. He contended that the case should not have been considered by the Supreme Court as it involved a state tax claim against a bankrupt corporation, which he believed fell under state jurisdiction rather than federal. Furthermore, he disagreed with the majority's interpretation of "property" in bankruptcy proceedings to include potential future income or profits. According to him, this broadened definition could lead to complications and uncertainties in future cases involving similar issues. In his view, only tangible assets owned by a debtor at the time of filing for bankruptcy should be considered property within such proceedings.