In the case of Schuyler v. Littlefield, Trustee of Brown & Co., 1913, the U.S Supreme Court was tasked with determining whether a trustee in bankruptcy could recover payments made by an insolvent debtor to a creditor within four months prior to filing for bankruptcy. The debtor had given promissory notes as payment which were later discounted at banks and paid directly to the creditor. The court ruled that these transactions constituted preferential transfers under section 60b of the Bankruptcy Act since they allowed one creditor (Brown & Co.) to receive more than it would have in proportionate distribution among all creditors during liquidation proceedings. Therefore, such payments were deemed voidable and subject to recovery by the trustee on behalf of all creditors involved in this bankruptcy case.

In the dissenting opinion for Schuyler v. Littlefield, it was argued that the majority's decision to allow a creditor to set aside a fraudulent conveyance made by an insolvent debtor was incorrect. The dissenting justices believed that this ruling contradicted established principles of equity and ignored the rights of innocent third parties who had no knowledge of any fraud when they received property from the debtor. They contended that such transactions should only be voidable if there is evidence showing actual intent to defraud on part of both parties involved in transaction - not just one party as majority suggested. Furthermore, they maintained that even if there were grounds for setting aside these transactions, creditors should not have priority over other claimants without proving their claims are superior under law or equity rules.