In the case of Union Trust Company v. Grosman et al., 1917, the U.S Supreme Court was tasked with determining whether a New York law that allowed for the transfer of property to minors without their consent violated federal bankruptcy laws. The court ruled in favor of Union Trust Company, stating that while state laws can regulate property transfers, they cannot interfere with or contradict federal bankruptcy statutes. This decision upheld the supremacy clause in Article VI of the Constitution which states that when there is a conflict between state and federal law, federal law prevails. Thus, despite New York's attempt to protect minor children by allowing them to receive property without their consent (which could potentially shield assets from creditors), such provisions were deemed invalid if they conflicted with existing bankruptcy procedures under Federal Law.

In the dissenting opinion for UNION TRUST COMPANY v. GROSMAN et al., Justice Holmes disagreed with the majority's decision to uphold a lower court ruling that allowed Grosman and others to recover funds from Union Trust Company. He argued that the company was not liable because it had acted in good faith, without knowledge of any wrongdoing by its customers who were involved in fraudulent activities. According to Holmes, banks should not be held responsible for their clients' illegal actions unless they knowingly participate or assist in such activities. The justice emphasized that there was no evidence indicating Union Trust Company had been aware of or complicit in its customers' frauds when it accepted deposits from them.