In the case of Schoenthal et al. v. Irving Trust Co., 1932, the U.S Supreme Court was tasked with determining whether a bankruptcy court had jurisdiction to adjudicate a claim by an alleged secured creditor who did not file their claim in accordance with Section 57n of the Bankruptcy Act. The plaintiffs were creditors who held notes secured by second mortgages on real estate owned by bankrupts and they sought to have their claims allowed as unsecured debts for any deficiency remaining after foreclosure sales of mortgaged properties. However, they failed to present these claims within time limits set out under Section 57n. The Supreme Court ruled against Schoenthal and his co-plaintiffs, stating that failure to comply with filing requirements meant that bankruptcy courts could not allow such claims or determine them in subsequent suits brought by trustees in bankruptcy for recovery of preferences or conveyances fraudulent under federal law. This decision reinforced strict adherence to procedural rules outlined in the Bankruptcy Act.

In the dissenting opinion for Schoenthal et al. v. Irving Trust Co., Justice Cardozo disagreed with the majority's interpretation of Section 77B of the Bankruptcy Act, arguing that it did not bar state courts from adjudicating claims against bankrupt estates. He contended that Congress intended to allow concurrent jurisdiction between federal and state courts over such matters, as long as they didn't interfere with bankruptcy proceedings or contradict federal law. The justice believed this approach would promote efficiency by allowing multiple cases related to a single bankruptcy to be resolved simultaneously in different forums rather than forcing all litigation into one court system. Furthermore, he argued that denying states their traditional role in resolving property disputes could lead to unfair results and undermine public confidence in the legal system.