In the Hansberry v. Lee case of 1940, the U.S Supreme Court ruled that racially restrictive housing covenants could not be enforced in courts. The case was brought by Carl A. Hansberry, an African American man who bought a house in a neighborhood where there was an agreement among homeowners to exclude non-Caucasians from owning property until 1948. When other residents tried to enforce this covenant and evict him, he sued for his right to keep his home. The court did not rule on whether such covenants were intrinsically valid or constitutional but rather focused on whether they could be legally binding if all affected parties had not agreed upon them - which they hadn't in this instance because only some of the homeowners had signed it originally. This ruling marked a significant step towards ending discriminatory practices against minorities within real estate transactions and set precedent for future cases involving racial discrimination in housing.

In the dissenting opinion for Hansberry v. Lee, Justice McReynolds expressed concern over the majority's decision to invalidate a racially restrictive covenant on procedural grounds rather than addressing its constitutionality directly. He argued that this approach could lead to uncertainty and confusion in future cases involving similar covenants. Furthermore, he disagreed with the majority's interpretation of res judicata (the principle that a matter already judged cannot be re-litigated), asserting that it should apply even when not all parties affected by an agreement were present during initial litigation. In his view, if those absent had been adequately represented in court previously or had chosen not to participate, they should still be bound by earlier judgments related to their property rights under such agreements.