In the case of Reider v. Thompson, Trustee, Missouri Pacific Railroad Co., 1949, the U.S Supreme Court was tasked with deciding whether a bankruptcy trustee could recover payments made by an insolvent debtor to its creditor within four months of filing for bankruptcy. The debtor in this case was a railroad company that had entered into contracts with coal companies and continued to make payments on these contracts even after it became insolvent. When the railroad company eventually filed for bankruptcy, its trustee sought to recover these payments from the coal companies under Section 60b of the Bankruptcy Act which allows trustees to reclaim preferential transfers made while insolvent. The court ruled in favor of the trustee stating that such transactions were indeed voidable preferences under Section 60b as they allowed certain creditors (the coal companies) to receive more than their fair share at expense of other creditors. This decision upheld principles underlying US bankruptcy law - equitable distribution among all creditors and discouragement against dismemberment of debtor's estate prior insolvency proceedings.

In the dissenting opinion for Reider v. Thompson, Trustee, Missouri Pacific Railroad Co., Justice Jackson disagreed with the majority's interpretation of Section 77 of the Bankruptcy Act. He argued that it was not intended to allow a trustee in bankruptcy to avoid state law limitations on venue and bring suit wherever he pleased. Instead, he believed that Congress had intended to preserve traditional restrictions on venue in order to prevent forum shopping and protect defendants from being sued in distant or inconvenient locations. Furthermore, Justice Jackson contended that allowing such broad discretion would undermine federalism by diminishing the role and authority of state courts.