In the 1940 case, Reconstruction Finance Corp. et al. v. Prudence Securities Advisory Group et al., the U.S Supreme Court ruled in favor of the Reconstruction Finance Corporation (RFC). The RFC had sued Prudence Securities Advisory Group for misrepresentation and breach of contract related to a loan agreement between them. The court held that since RFC was a federal agency, it could sue in any district where its opponent resided or did business without regard to its own residence or place of business under Section 24(1) of Judicial Code which provides for jurisdiction over all suits brought by United States corporations created by an Act of Congress. This ruling clarified that federally-created corporations have broad rights when seeking legal remedies against other entities.

In the dissenting opinion for the case of Reconstruction Finance Corp. et al. v. Prudence Securities Advisory Group et al., Justice Black argued that the majority's decision to allow a federal agency to sue in state court without its consent was inconsistent with principles of sovereign immunity and violated constitutional law. He contended that allowing such lawsuits would open up federal agencies to litigation in any state, potentially subjecting them to conflicting judgments and undermining their ability to carry out national policies effectively. Furthermore, he expressed concern about potential abuses of this power by private parties seeking damages from federal agencies or attempting to interfere with their operations through litigation tactics.