In the case of Kothe, Trustee v. R.C. Taylor Trust in 1929, the U.S Supreme Court was tasked with determining whether a trust deed could be considered valid if it included a provision that allowed for its cancellation upon payment of an agreed sum by the debtor to the creditor. The court ruled that such provisions did not invalidate a trust deed and were enforceable under Texas law where this case originated from. This decision upheld previous rulings which stated that creditors have rights to protect their interests and can include conditions within contracts or deeds as long as they are reasonable and do not violate any laws or public policy.

In the dissenting opinion for Kothe, Trustee v. R.C. Taylor Trust, Justice Stone disagreed with the majority's decision to allow a trustee in bankruptcy to recover payments made by an insolvent debtor on account of antecedent debts within four months prior to filing for bankruptcy. He argued that such transactions should not be deemed fraudulent and voidable unless they were made with actual intent to defraud creditors or if they resulted in the debtor retaining some benefit from transferred property. According to him, these conditions weren't met as there was no evidence showing that either party had intended fraud or that any benefit remained with the debtor after payment was made; hence he believed it unjustifiable under Bankruptcy Act Section 60b (now 11 U.S.C §548) which allows trustees in bankruptcy cases only those rights held by unsecured creditors at time of transfer.