In the 1942 case of Hoopeston Canning Co. et al. v. Cullen, Superintendent of Insurance of New York, et al., the U.S Supreme Court ruled on a dispute involving insurance regulation and interstate commerce laws. The Hoopeston Canning Company had purchased an insurance policy from an Illinois-based company that was not licensed to operate in New York State where it also did business. When the insurer went bankrupt, its assets were seized by Illinois authorities who intended to distribute them among all policyholders nationwide under Illinois law which favored local creditors over out-of-state ones like Hoopeston's NY operations. The issue before the court was whether this violated principles of full faith and credit or interfered with interstate commerce regulations as argued by Superintendent Cullen representing NY interests against such distribution plan favoring only one state’s residents. The Supreme Court upheld lower courts' decisions ruling that while states have broad powers to regulate insurance within their borders, they cannot interfere with other states’ rights or federal authority over interstate commerce through preferential treatment for local creditors at expense of those from other jurisdictions thereby affirmatively answering both constitutional questions raised.

In the dissenting opinion for Hoopeston Canning Co. v. Cullen, Justice Frank Murphy argued that the majority's decision to uphold New York's law requiring out-of-state insurance companies to deposit securities with the state before doing business there was a violation of the Commerce Clause of the U.S. Constitution. He believed that this requirement placed an undue burden on interstate commerce and gave preferential treatment to in-state businesses over their out-of-state counterparts, which is contrary to principles of free trade among states as envisioned by framers of constitution. Furthermore, he contended that such laws could lead other states to enact similar protectionist measures thereby creating barriers for national economic unity and growth.