In the case of Herbring v. Lee, Insurance Commissioner of Oregon (1929), the U.S Supreme Court was tasked with determining whether an insurance company could be compelled to pay a claim that had been filed after it had gone into receivership. The plaintiff, Mr. Herbring, held a policy with an insurance company that subsequently went bankrupt and was placed under the control of Mr. Lee, as receiver. After this occurred but before he knew about it, Mr. Herbring suffered injuries in an accident and sought payment from his insurer for medical expenses incurred due to these injuries. The court ruled against him on grounds that once a company goes into receivership all claims must cease until assets are liquidated and distributed among creditors; any new claims arising during this period cannot be paid out directly by the receiver because they would unfairly prejudice other creditors who have prior claims on those same assets. This decision established important precedent regarding how insurance companies' obligations are handled when they go bankrupt or otherwise become insolvent: namely that their duty to honor policies ceases at point of insolvency/receivership unless there is sufficient surplus remaining after paying off existing debts.

The dissenting opinion in the case of Herbring v. Lee, Insurance Commissioner of Oregon argued that the majority's decision to uphold a state law requiring insurance companies to maintain reserves for all outstanding policies was an overreach of state power and violated the Due Process Clause. The dissent contended that this requirement placed an undue burden on insurance companies by forcing them to set aside funds for potential future claims, even if those claims were unlikely or far off in the future. This could potentially lead to financial instability or insolvency for these businesses. Furthermore, it was argued that such laws interfered with interstate commerce by imposing different standards and requirements across states, creating inconsistencies and inefficiencies within the industry as a whole.