In the case of Fidelity & Deposit Co. v. Pink, Superintendent of Insurance of New York (1937), the U.S. Supreme Court ruled in favor of Louis H. Pink, who was acting as liquidator for an insolvent insurance company under New York law and had sued to recover on a fidelity bond issued by Fidelity & Deposit Company (F&D). The court held that despite language in the bond limiting liability to losses discovered during its term or within three months after its termination, F&D was liable for losses occurring during the term but not discovered until more than three months after it ended because state law required such bonds to cover all defaults occurring during their terms regardless when they were discovered.

In the dissenting opinion for Fidelity & Deposit Co. v. Pink, Justice McReynolds disagreed with the majority's decision to uphold New York state law that allowed a superintendent of insurance to liquidate an insolvent foreign corporation and distribute its assets among local creditors before paying off out-of-state claimants. He argued this was unconstitutional as it violated the Full Faith and Credit Clause by not recognizing judgments from other states where claims against the company had already been established. Moreover, he contended that it infringed upon interstate commerce rights by giving preferential treatment to in-state creditors over those from other states. Lastly, he believed such laws could lead to unfair practices between states if each one adopted similar legislation favoring their own citizens at others' expense.