In the case of New York Foundling Hospital v. Gatti in 1906, the U.S Supreme Court ruled on a dispute involving child custody and adoption laws. The New York Foundling Hospital had placed an Italian immigrant child with an adoptive family in Arizona without obtaining legal consent from his natural parents or following proper procedures under Arizona law. When the biological father, Mr. Gatti, discovered this he sued for custody of his son. The court held that while states generally have jurisdiction over domestic relations within their borders, they must respect decisions made by institutions operating under other state jurisdictions if those decisions were made legally and in good faith - even if they would not be legal under local law. However, because the hospital did not follow due process when placing the child out-of-state it was found to have acted unlawfully; thus Mr.Gatti's rights as a parent had been violated and he was awarded custody.

In the dissenting opinion for New York Foundling Hospital v. Gatti, it was argued that the child in question should not be removed from his foster parents and returned to the hospital. The dissenting justices believed that while technically illegal, placing a child with a family without formal adoption proceedings was done out of necessity due to an overburdened system and lack of available homes. They felt this practice served the best interests of children who would otherwise remain institutionalized indefinitely. Furthermore, they contended that once placed with a suitable family willing to care for them as their own, removing such children could cause significant emotional harm and disrupt their ability to form stable attachments. Therefore, despite recognizing legal irregularities surrounding these placements by charitable institutions like New York Foundling Hospital, they disagreed with majority's decision on grounds of compassion towards affected children's welfare.