In the case of McHarg, Receiver et al., v. Staake (1905), the United States Supreme Court dealt with a dispute over railroad bonds and their associated interest coupons. The plaintiff, McHarg as receiver for the St. Louis, Iron Mountain & Southern Railway Company, sought to prevent Staake from collecting on these bonds and coupons due to an alleged agreement that they would not be presented for payment until after certain other debts were settled. However, no written evidence of this agreement could be produced by either party involved in the lawsuit. The court ruled in favor of Staake stating that there was insufficient proof to establish such an arrangement existed between both parties regarding postponement of bond payments; hence it cannot serve as a defense against collection efforts by bondholders like Staake who had purchased them without knowledge or notice about any such agreements made priorly. Furthermore, it was also noted that even if such an agreement did exist but wasn't disclosed at time of sale then too it wouldn't bind subsequent purchasers unless they had actual notice about its existence before purchasing those securities.

In the dissenting opinion for McHarg, Receiver et al., v. Staake, Justice Holmes disagreed with the majority's decision to allow a creditor to collect from an insolvent debtor's estate before other creditors had been paid in full. He argued that this ruling contradicted established principles of equity and bankruptcy law, which generally require all creditors to be treated equally unless there is a valid reason for preferential treatment. Furthermore, he contended that allowing one creditor to collect ahead of others could lead to unfair outcomes and potentially encourage fraudulent behavior by debtors seeking favor certain creditors over others. In his view, the court should have upheld lower courts' decisions denying the plaintiff's claim on these grounds.