In the case of Lowden et al., Trustees v. Northwestern National Bank & Trust Co., 1935, the U.S Supreme Court was tasked with determining whether a trust deed could be enforced by bondholders after defaulting on interest payments. The trustees had issued bonds secured by a trust deed to finance railroad construction and defaulted on interest payments due to financial difficulties during the Great Depression. The Northwestern National Bank & Trust Company, acting as trustee for bondholders, sought to enforce their rights under the trust deed which included taking possession of and selling property pledged as security in order to satisfy unpaid debt obligations. However, Lowden et al., argued that enforcement would cause undue hardship given economic conditions at that time. The court ruled in favor of Northwestern National Bank & Trust Co., stating that while they sympathized with hardships faced by businesses during difficult economic times, contracts must still be upheld unless there are compelling reasons not to do so (such as fraud or mistake). They found no such reason existed in this case and therefore held that bondholders were entitled to enforce their contractual rights under the terms set out in the trust deed.

In the dissenting opinion for Lowden et al., Trustees, v. Northwestern National Bank & Trust Co., Justice Cardozo disagreed with the majority's ruling that a trust company acting as trustee could not be held liable for losses incurred due to its own negligence in managing and investing trust assets. He argued that this decision was contrary to established principles of fiduciary duty and responsibility, which require trustees to exercise reasonable care and skill in managing trust property. Furthermore, he pointed out that under common law rules applicable at the time of the case, a trustee would have been personally liable for such losses even if they were caused by mere negligence rather than willful misconduct or gross negligence. Therefore, he believed that it was inappropriate to grant immunity from liability to corporate trustees simply because they are corporations rather than individuals.