In the 1940 case Griffin, Administrator v. McCoach, Trustee, the United States Supreme Court ruled on a matter concerning bankruptcy and trust funds. The central issue was whether or not an administrator of a bankrupt estate could recover payments made by the bankrupt party to a trustee before declaring bankruptcy. These payments were made from income that had been assigned to creditors as part of an earlier agreement between the debtor and his creditors in order to avoid bankruptcy proceedings. The court held that these payments were voidable preferences under Section 60b of the Bankruptcy Act because they allowed certain creditors (those who received payment through their trustee) to receive more than other creditors of equal standing would receive out of assets belonging to the bankrupt estate if those assets were distributed according to federal law rather than state law (which governed trusts). Therefore, it was decided that such preferential transfers could be recovered by administrators for distribution among all equally ranked creditors.

In the dissenting opinion for Griffin v. McCoach, Justice Frankfurter argued that the majority's decision to allow a state court to adjudicate on matters of federal bankruptcy law was incorrect and set a dangerous precedent. He contended that it undermined the uniformity of bankruptcy laws across states as mandated by Congress, which could lead to inconsistencies in their application. Furthermore, he believed this ruling violated principles of federalism by allowing state courts to interpret and apply federal law without any review or oversight from higher federal courts. This would potentially create confusion and conflict between different jurisdictions' interpretations of these laws. Thus, Justice Frankfurter felt strongly that such matters should be left solely within the purview of federal courts.