In the case of Powell et al., Receivers, v. United States et al., 1936, the Supreme Court ruled on a dispute involving railroad receiverships and federal income tax liabilities. The court held that when a receiver is appointed to manage a bankrupt company's assets, they are not personally liable for any unpaid taxes owed by the company prior to their appointment. However, if there are sufficient funds in possession of the receiver from which such taxes can be paid without prejudice to other creditors' rights or impairing necessary operating expenses of business under receivership, then those funds should be used for payment. This decision clarified how federal tax obligations should be handled during bankruptcy proceedings and established important principles regarding priority of claims against insolvent entities.

In the dissenting opinion for Powell et al., Receivers, v. United States et al., Justice James Clark McReynolds argued that the majority's decision to uphold the constitutionality of a federal law regulating railroad pension plans was an overreach of Congressional power. He contended that Congress did not have authority under the Commerce Clause to regulate retirement pensions because they were not directly related to interstate commerce. Instead, he viewed them as matters of contract and personal rights between employers and employees which should be regulated by individual states rather than at a federal level. Furthermore, he expressed concern about potential abuses from such broad interpretation of Congressional powers under the Commerce Clause in future cases.