In the case of Rock Island Plow Company v. Reardon, Trustee in Bankruptcy of Brown (1911), the U.S Supreme Court was tasked with determining whether a bankruptcy trustee could set aside payments made by an insolvent debtor to a creditor within four months prior to filing for bankruptcy. The debtor had purchased goods from Rock Island Plow Company and paid for them while insolvent but before declaring bankruptcy. The trustee argued that these payments constituted preferential transfers under Section 60b of the Bankruptcy Act, which should be voided and returned to the estate for equal distribution among all creditors. The court ruled in favor of Reardon, holding that such transactions were indeed preferential if they allowed one creditor to receive more than they would have under normal bankruptcy proceedings. This decision established important precedent regarding preference law in American bankruptcies: it clarified that even ordinary business transactions can be considered preferential if they occur during insolvency and result in unequal treatment of creditors.

In the dissenting opinion for Rock Island Plow Company v. Reardon, it was argued that the majority's decision to uphold a state law allowing creditors to reclaim goods sold on credit from bankrupt buyers contradicted previous rulings of the Court. The dissenting justices believed that this ruling undermined federal bankruptcy laws designed to ensure equal distribution among all creditors in bankruptcy cases. They contended that such state laws allowed certain privileged creditors an unfair advantage over others by enabling them to retrieve their full claim rather than sharing proportionally with other debtors as intended under federal law. This, they argued, violated principles of equity and fairness central to bankruptcy proceedings and disrupted uniformity in how these matters were handled across different states.