In the Citizens' Bank v. Cannon case of 1896, the U.S Supreme Court ruled on a dispute involving a bank and its debtor over payment obligations. The defendant, Mr. Cannon, had taken out loans from Citizens' Bank using his property as collateral but failed to meet repayment deadlines due to financial difficulties caused by crop failure and other factors beyond his control. He then sought relief under an Alabama state law that allowed debtors in such circumstances to extend their loan repayments without losing their properties through foreclosure or sale. The bank challenged this law claiming it violated the contract clause of the Constitution which prohibits states from passing laws impairing contractual obligations between parties. However, after reviewing previous rulings on similar cases and considering arguments presented by both sides, the court upheld Alabama's law stating it did not violate any constitutional provisions since it was enacted before contracts were made between Mr.Cannon and Citizens' Bank. Therefore, according to this ruling; if a state passes legislation affecting contractual agreements prior to those contracts being formed then such legislation does not infringe upon constitutionally protected rights related with contract enforcement.

In the dissenting opinion for Citizens' Bank v. Cannon, it was argued that the majority's decision failed to properly consider and apply established principles of equity jurisprudence. The dissenting justices believed that Mrs. Cannon should not be held responsible for her husband's debt because she had no knowledge or involvement in his fraudulent activities when he mortgaged their property without her consent. They contended that a wife’s separate estate should be protected from being seized to pay off her husband’s debts unless there is clear evidence showing she directly benefited from those debts or participated in fraudulently securing them. In this case, they found no such evidence against Mrs.Cannon; thus, they disagreed with the majority ruling which allowed Citizen's Bank to foreclose on the property owned by Mr.and Mrs.Cannon as repayment for Mr.Cannon's debt.