In the 1948 case of Larson v. Domestic and Foreign Commerce Corp., the U.S. Supreme Court ruled on a dispute involving government contracts for surplus war materials after World War II. The plaintiff, Domestic and Foreign Commerce Corporation (DFCC), had entered into an agreement with the War Assets Administration to purchase surplus coal from European locations but later claimed that Arthur S. Flemming, acting as Surplus Property Administrator, unlawfully interfered with their contract by directing shipments elsewhere without proper authorization or justification. The court held that DFCC could not sue individual federal officers in this context because they were acting within their official capacities; instead, any legal action would have to be against the United States itself under sovereign immunity principles which protect governments from lawsuits unless they consent to being sued. Furthermore, it was determined that even if DFCC could prove its allegations about Flemming's actions being unauthorized or unjustified - thus potentially making him personally liable - there was no clear evidence showing he exceeded his authority or acted maliciously towards DFCC specifically rather than merely carrying out general policy decisions related to managing post-war resources.

In the dissenting opinion for Larson v. Domestic and Foreign Commerce Corp., Justice Frankfurter disagreed with the majority's interpretation of sovereign immunity, arguing that it was too broad. He contended that when a government official acts outside their authority or in violation of federal law, they should not be protected by sovereign immunity as they are no longer acting on behalf of the government. This would allow individuals to sue such officials directly without needing to sue the U.S. Government itself, which is generally immune from lawsuits under sovereign immunity principles. In his view, this approach would better balance individual rights with governmental interests while still respecting constitutional limits on judicial power over executive actions.