In the case of National Surety Co. et al. v. Coriell et al., 1932, the U.S Supreme Court ruled in favor of National Surety Company and other insurance companies who had issued bonds to a bank that later failed due to fraudulent activities by its officers. The court held that these sureties were entitled to reimbursement from dividends paid out by the receiver on claims against insolvent banks before any distribution was made to general creditors or shareholders, including those whose shares were owned outright or as collateral security for loans made by them which remained unpaid at time of insolvency. The decision clarified how funds should be distributed following a bank's failure and emphasized that bondholders have priority over shareholders when it comes to receiving payouts from an insolvent institution’s assets. This ruling helped establish legal precedence regarding creditor hierarchy during bankruptcy proceedings.

In the dissenting opinion for the National Surety Co. et al. v. Coriell et al., Justice Stone argued that the majority's decision to allow a state court to determine whether an insurance company was insolvent, and thus trigger its liability under a surety bond, undermined federal authority over bankruptcy proceedings. He contended that this ruling could potentially lead to conflicting decisions between state and federal courts regarding a company's solvency status, creating legal uncertainty and undermining uniformity in bankruptcy law enforcement across states. Furthermore, he believed it would be more appropriate for such determinations of insolvency to be made by federal courts due to their expertise in handling bankruptcy cases.