In the case of Scotten v. Littlefield, Trustee of Brown, Bankrupt (1914), the United States Supreme Court was tasked with determining whether a bankruptcy trustee could recover payments made by a bankrupt debtor to his creditor within four months prior to filing for bankruptcy. The debtor in question had borrowed money from several creditors and repaid one creditor using funds obtained from another loan before declaring bankruptcy. The trustee argued that this payment constituted an unlawful preference under Section 60b of the Bankruptcy Act because it allowed one creditor to receive more than others would in proportion to their claims against the estate. The court ruled in favor of the trustee, holding that such transactions were indeed preferential and therefore voidable by trustees under federal law if they occurred within four months before filing for bankruptcy. This decision reinforced existing laws designed to ensure equitable distribution among all creditors during insolvency proceedings.

In the dissenting opinion for Scotten v. Littlefield, the justice argued that a trustee in bankruptcy should not have been allowed to recover payments made by an insolvent debtor prior to declaring bankruptcy. The justice contended that these payments were made in good faith and with no intention of defrauding other creditors. He believed it was unjust for the trustee to reclaim such funds as they had already been used by their recipients who had no reason to suspect insolvency at the time of payment. This would result in undue hardship on those who received and utilized these funds under legitimate circumstances, while providing an unfair advantage to other creditors during distribution of assets from bankruptcy proceedings.