In the case of Prudential Insurance Company of America v. Cheek in 1921, the U.S. Supreme Court ruled on an issue related to insurance law and contract interpretation. The respondent, Mr. Cheek, had purchased a life insurance policy from Prudential Insurance Company but later stopped making payments due to financial difficulties during World War I. When he attempted to reinstate his policy after missing several premium payments, Prudential refused and claimed that the terms of their agreement did not allow for reinstatement under these circumstances. Mr.Cheek sued for breach of contract arguing that he was entitled to reinstatement because his failure to pay premiums was caused by conditions beyond his control (the war). The court sided with Mr.Cheek stating that if an insurer wishes to limit its liability or impose restrictions on the insured's rights under a policy it must do so explicitly within the language of its contracts. The ruling established important precedent regarding how courts interpret ambiguous provisions in insurance policies - they are generally construed against insurers and in favor of coverage.

In the dissenting opinion for Prudential Insurance Company of America v. Cheek, Justice McReynolds disagreed with the majority's view that a life insurance policy could be considered property within the meaning of due process clause in Fourteenth Amendment. He argued that this interpretation was too broad and would lead to an overextension of constitutional protections into areas traditionally governed by state law. Furthermore, he contended that it was not appropriate for federal courts to interfere with states' rights to regulate their own insurance industries as they saw fit. In his view, such interference undermined states' sovereignty and disrupted the balance between state and federal power established by Constitution. Therefore, he believed that Illinois had every right to pass laws regulating how its citizens could assign their life insurance policies without violating any constitutional provisions.