In the case of Federal Housing Administration v. The Darlington, Inc., the U.S. Supreme Court ruled in favor of the Federal Housing Administration (FHA). The FHA had sued Darlington, a corporation that owned an apartment building constructed with federal aid under Section 608 of the National Housing Act. After operating for only two years, Darlington dissolved and distributed its assets to shareholders who were also original investors in order to avoid rent restrictions imposed by federal law on properties financed under Section 608. The court held that this dissolution was not permissible because it violated both the spirit and letter of Section 608's provisions intended to ensure affordable housing for low-income individuals over a long-term period (a minimum of twenty-five years). Therefore, even though legal title passed from one entity to another due to corporate dissolution or reorganization, if beneficial ownership remained substantially similar before and after such transactions then these actions would be considered as attempts at evasion which are prohibited by law.

In the dissenting opinion for Federal Housing Administration v. The Darlington, Inc., it was argued that the majority's decision to allow a private corporation to benefit from public funds intended for low-income housing was inconsistent with both the intent of Congress and previous court rulings. It was pointed out that this ruling could potentially open up loopholes allowing corporations to exploit federal funding programs meant for public welfare. The dissent also criticized the majority's interpretation of "public use," arguing that it should be more narrowly defined in order to prevent misuse of government resources by private entities. Furthermore, they contended that even if such projects were considered as serving a public purpose, there should still be restrictions on profits made by private companies from these publicly funded projects.