In the Magnolia Petroleum Co. v. Hunt case of 1943, the U.S Supreme Court ruled on a conflict between Texas and Oklahoma state laws regarding oil royalties. The dispute arose when Hunt, an Oklahoma resident, leased land in Texas to Magnolia Petroleum for oil extraction but later declared bankruptcy under Oklahoma law which allowed him to retain his royalty rights from the lease agreement despite his financial status. However, this conflicted with Texas law that stated these rights should be used to pay off creditors in such situations. The court had to decide whether full faith and credit should be given to the public acts (laws), records and judicial proceedings of another State as per Article IV Section I of the Constitution - also known as Full Faith and Credit Clause. The Supreme Court held that while states must respect each other's laws under this clause, they do not have absolute obligation especially if it infringes upon their own legitimate public policy interests; hence ruling in favor of Magnolia Petroleum Company by upholding Texas' right over its own property within its jurisdiction against conflicting claims made under different state's legislation.

In the dissenting opinion for Magnolia Petroleum Co. v. Hunt, Justice Frank Murphy argued that the majority's decision violated principles of full faith and credit by allowing Texas to ignore a valid judgment from Oklahoma courts. He contended that this case was not about conflicting laws between states but rather involved a single contract interpreted by an Oklahoma court whose jurisdiction was never questioned. The issue at hand, according to him, was whether Texas could refuse to recognize and enforce this valid judgment on grounds of public policy or any other reason without violating constitutional requirements of full faith and credit towards judgments in sister states. He believed it couldn't as such refusal would undermine national unity by encouraging state isolationism where each state disregards legal proceedings in others whenever they find them disagreeable.