In the case of National Bank of Athens v. Shackelford, Trustee in Bankruptcy for Webb (1915), the United States Supreme Court ruled on a dispute involving bankruptcy law and banking regulations. The National Bank of Athens had loaned money to Mr. Webb, who later declared bankruptcy before repaying his debt fully. The bank claimed that it should be considered a preferred creditor because it held collateral security - specifically cotton warehouse receipts issued by an insolvent warehouse company which was also indebted to the bank. However, Shackelford, as trustee for Webb's estate argued that these receipts were not valid collateral since they represented unsegregated goods stored in common with other depositors' goods at the same warehouse. The court sided with Shackelford stating that under Georgia state law where this case originated from; such receipts did not constitute legal liens or special property rights unless specific goods could be identified and separated from others'. Therefore, they could not provide preferential treatment to any creditors including banks during bankruptcy proceedings.

In the dissenting opinion for National Bank of Athens v. Shackelford, Justice Holmes argued that the bank's claim should not have been dismissed. He contended that when a debtor is insolvent and has given a preference to one creditor over others, it is within the rights of other creditors or their representatives to challenge this preferential treatment even if they were unaware of it at the time. In his view, such preferences are inherently fraudulent because they favor one creditor at the expense of others in violation of bankruptcy laws designed to ensure equitable distribution among all creditors. Therefore, he disagreed with majority’s decision which upheld dismissal based on trustee's lack knowledge about insolvency or preferential transfer during two-year limitation period under bankruptcy act.