The U.S. Supreme Court case Pennsylvania Fire Insurance Company of Philadelphia v. Gold Issue Mining and Milling Company in 1916 revolved around a dispute over an insurance policy claim following a fire at the mining company's property. The insurance company, based in Pennsylvania, had issued the policy to the Colorado-based mining firm but included a clause stating that any legal disputes would be settled under Pennsylvania law - which did not permit certain types of damages claims that were allowed under Colorado law. When the fire occurred and Gold Issue filed its claim, it sought to have the matter adjudicated according to Colorado law instead of Pennsylvania's rules due to this difference. However, upon reaching court, it was ruled by Justice Mahlon Pitney that parties can contractually agree on which state’s laws will govern their agreement as long as there is no fraud or violation of public policy involved; hence upholding validity of such clauses in contracts.

In the dissenting opinion for Pennsylvania Fire Insurance Company of Philadelphia v. Gold Issue Mining and Milling Company, Justice Holmes argued that the insurance company should not be held liable for damages because it was not explicitly stated in the contract that they would cover losses caused by war or military action. He believed that such a significant risk should have been clearly specified in the agreement if it were to be covered. Furthermore, he pointed out that at the time when this policy was issued, there was no war going on nor any foreseeable threat of one; thus making it unreasonable to assume coverage for such an eventuality without explicit mention. Therefore, according to him, since these conditions were absent from their contract with Gold Issue Mining and Milling Company, Pennsylvania Fire Insurance shouldn't bear responsibility for losses incurred due to Mexican revolutionaries' actions during a civil war.