In the 1947 case Hurd et ux. v. Hodge et al., the U.S Supreme Court ruled that racially restrictive covenants, agreements inserted into property deeds for the purpose of prohibiting purchase, lease, or occupation by a particular racial group (in this case African Americans), could not be enforced in court as they were in violation of the Fourteenth Amendment's Equal Protection Clause and federal anti-discrimination laws. The plaintiffs were black homeowners who had purchased homes with such covenants unknowingly and faced legal action from white neighbors seeking to enforce them. The court held that while private parties may voluntarily adhere to such restrictions, courts cannot enforce them without contravening public policy and constitutional rights against discrimination.

In the dissenting opinion for Hurd et ux. v. Hodge et al., Justice Reed argued that while racial discrimination is indeed reprehensible, it should not be within the Supreme Court's jurisdiction to interfere with private contracts between individuals, such as racially restrictive covenants on property sales. He contended that these agreements are a matter of personal liberty and freedom of contract, which should only be regulated by state law rather than federal intervention unless they violate specific constitutional rights or federal laws. Furthermore, he expressed concern over potential implications this ruling could have on other types of contractual restrictions beyond those based on race.