In the case of People of the State of New York v. Gamble Latrobe, Jr., et al., Trustees in Bankruptcy of the Thermiodyne Radio Corporation (1928), the Supreme Court was asked to determine whether a state could tax a bankrupt corporation's property while it was under federal jurisdiction during bankruptcy proceedings. The court ruled that states cannot impose taxes on such properties because they are considered to be within exclusive federal jurisdiction once bankruptcy proceedings have begun. This decision upheld the supremacy clause in Article VI, Clause 2 of the U.S Constitution which establishes that federal law takes precedence over state laws and regulations when there is conflict between them.

The dissenting opinion in the case of People of the State of New York v. Gamble Latrobe, Jr., et al., Trustees in Bankruptcy of the Thermiodyne Radio Corporation argued that bankruptcy trustees should not be held liable for unpaid sales taxes owed by a bankrupt corporation. The dissenters contended that such liability would place an undue burden on trustees and potentially deter qualified individuals from serving in this capacity. They also pointed out that it was unfair to hold trustees accountable for debts they did not personally incur or have control over prior to their appointment as trustee. Furthermore, they asserted that allowing states to pursue claims against bankruptcy estates could deplete resources meant for creditors and undermine federal bankruptcy laws designed to ensure equitable distribution among all claimants.