In the 1910 case of Martinez v. International Banking Corporation, the U.S. Supreme Court ruled in favor of the defendant, International Banking Corporation (IBC). The plaintiff, Martinez, had sued IBC for damages after it refused to honor his withdrawal request from a deposit he made at its branch in Manila during the Philippine-American War. However, due to war conditions and an order by military authorities prohibiting banks from paying out more than 20% on deposits without their permission - which was not granted - IBC could not fulfill this request. The court held that under these circumstances where compliance with contractual obligations became impossible due to changes in law or government orders arising out of war conditions beyond control of parties involved; such contracts are suspended until those impediments are removed and no liability can be attached for non-performance during that period.

In the dissenting opinion for Martinez v. International Banking Corporation, Justice Holmes disagreed with the majority's interpretation of Puerto Rico's status in relation to U.S. law and its application to this case. He argued that when Congress passed legislation allowing Puerto Rico to create a civil government, it did not intend for all federal laws to automatically apply there as if it were a state or territory within the continental United States. Instead, he believed that Congress intended for local laws and customs in Puerto Rico to continue unless explicitly overridden by federal statute or inconsistent with constitutional principles. Therefore, he contended that New York’s Negotiable Instruments Law should not have been applied in this case involving a promissory note executed and payable in Puerto Rico because no specific federal law mandated such application.