In the 1931 case Moore v. Bay, the United States Supreme Court was asked to determine whether a trustee in bankruptcy could recover payments made by an insolvent debtor during the preference period of four months before filing for bankruptcy. The debtor, Sassard & Kimball Inc., had made two payments to Bay within this period while insolvent. The court ruled that under Section 60b of the Bankruptcy Act, these payments constituted preferential transfers and were therefore voidable by the trustee if they enabled any creditor (Bay) to receive more than their fair share would have been in liquidation proceedings under federal law. This decision clarified that such preferences are determined not only by state laws but also federal laws governing bankruptcy.

In the dissenting opinion for Moore v. Bay, Justice Stone argued that the majority's decision to allow a bankrupt corporation's trustee to recover payments made by the corporation before bankruptcy was declared contradicted previous rulings and interpretations of Section 60b of the Bankruptcy Act. He contended that this section should be interpreted as only allowing recovery if it can be proven that both parties had reasonable cause to believe insolvency was imminent when they engaged in such transactions. In his view, there wasn't sufficient evidence presented in this case proving such knowledge existed at transaction time. Therefore, he disagreed with reversing lower courts' decisions which ruled against trustee’s right to recover those payments.