In the 1918 case of Wise, Trustee in Bankruptcy of Stannard v. United States, the Supreme Court was asked to determine whether a bankruptcy trustee could recover payments made by an insolvent debtor prior to declaring bankruptcy. The debtor had paid taxes owed to the U.S government within four months before filing for bankruptcy. Under Section 60b of the Bankruptcy Act, such preferential transfers could be recovered if they were made while insolvent and within four months before filing for bankruptcy. However, under another law (Section 3466), claims by the U.S government were given priority over other creditors in cases where a person indebted to it went bankrupt or insolvent. The court ruled that Section 3466 did not protect these tax payments from being reclaimed because this would undermine one of key purposes behind enacting federal bankruptcy laws: equitable distribution among all creditors. Therefore, even though claims by US Government generally have priority over others due to section 3466; when it comes to preference recovery provisions like those found in Section 60b which are designed specifically for ensuring fair treatment among all creditors during insolvency proceedings - such governmental priorities do not apply.

In the dissenting opinion for Wise, Trustee in Bankruptcy of Stannard v. United States, Justice Holmes argued that the government should not be able to claim a priority status on debts owed by bankrupt individuals or entities. He disagreed with the majority's interpretation of Section 3466 of the Revised Statutes which gave such privilege to federal claims over those held by private creditors in cases involving insolvent debtors. According to him, this statute was intended only for situations where an individual died without leaving enough assets to cover all their debts and did not apply when bankruptcy proceedings were initiated while they were still alive. Furthermore, he contended that even if it did apply in these circumstances, it would violate constitutional principles because it unfairly discriminated against other creditors who had equally valid claims on debtor’s estate.