In the 1936 case of Mechanics Universal Joint Co. et al. v. Culhane, Receiver, the U.S Supreme Court dealt with a dispute over patent rights and royalties between two companies - Mechanics Universal Joint Company and Borg-Warner Corporation (formerly known as Marvel Heat Corporation). The court ruled in favor of Culhane, who was acting as receiver for Mechanics Universal Joint Company during its bankruptcy proceedings. The main issue revolved around an agreement made in 1928 where Marvel agreed to pay royalties to Mechanics for using their patented technology in manufacturing universal joints. However, after several years of payments, Marvel stopped paying these royalties claiming that they had developed a new non-infringing product. Mechanics sued them for breach of contract but before the case could be resolved it went into receivership due to financial difficulties. As part of this process all lawsuits were stayed including this one against Marvel. When the stay was lifted by lower courts allowing Culhane (the receiver) to continue with lawsuit against Marvel; they appealed arguing that only original party can lift such stays not receivers or trustees appointed later on behalf of bankrupt company. However Supreme Court upheld lower court's decision stating that under Bankruptcy Act trustee/receiver has same rights & powers as debtor company itself thus he can proceed with lawsuit.

In the dissenting opinion for Mechanics Universal Joint Co. et al. v. Culhane, Receiver, it was argued that the majority's decision to uphold a lower court ruling allowing a receiver to recover payments made by an insolvent company prior to bankruptcy proceedings was incorrect and inconsistent with previous rulings of the Court on similar matters. The dissenting justices believed that such payments were not fraudulent transfers under Section 67e of the Bankruptcy Act because they did not deplete assets available for distribution among creditors but rather reduced claims against those assets. They also contended that these transactions should be considered in light of their actual effect on creditors' rights and interests rather than being automatically deemed voidable preferences simply because they occurred within four months before bankruptcy filing as per Section 60b of said Act.