In the 1904 case of Riverdale Cotton Mills v. Alabama and Georgia Manufacturing Company, the U.S Supreme Court was tasked with determining whether a contract for cotton futures could be enforced if it violated state law. The petitioner, Riverdale Cotton Mills had entered into a contract to sell cotton at future dates to Alabama and Georgia Manufacturing Company but failed to deliver as per agreement terms. When sued by the manufacturing company for breach of contract, Riverdale argued that since such contracts were illegal under Georgia state law where they operated from, they couldn't be held liable for non-delivery. The court ruled in favor of Alabama and Georgia Manufacturing Company stating that while certain types of speculative contracts might indeed violate public policy or even specific statutes in some states; this did not automatically render all such agreements unenforceable everywhere else. It further noted that federal courts are not bound by individual states' interpretations on matters involving interstate commerce which is governed primarily by federal laws.

The dissenting opinion in the case of Riverdale Cotton Mills v. Alabama and Georgia Manufacturing Company argued that the majority's decision was inconsistent with previous rulings on similar cases, particularly those involving property rights and contracts. The dissenting justices believed that the contract between Riverdale Cotton Mills and Alabama & Georgia Manufacturing Co., which involved a lease agreement for water power, should have been upheld as valid under state law. They contended that by invalidating this contract, the Court had overstepped its bounds by interfering with private contractual agreements without sufficient cause or justification. Furthermore, they expressed concern about potential negative implications of this ruling on future business transactions and economic development within states if such contracts could be so easily dismissed by federal courts.