In the 1904 case of Smalley v. Laugenour, the United States Supreme Court dealt with a dispute over land ownership in California. The plaintiff, Smalley, claimed that he had purchased a piece of property from Laugenour and paid him in full but never received the deed to the property. He sued for specific performance to compel delivery of said deed. However, Laugenour argued that no such agreement existed and even if it did exist, it was not enforceable because it violated California's statute of frauds which required contracts for sale of real estate be written or they are void. The lower court ruled in favor of Smalley based on evidence presented including letters exchanged between parties indicating an agreement about price and terms as well as partial payment made by Smalley towards purchase price. Upon appeal by Laugenour to U.S Supreme Court arguing violation against state law (statute), SCOTUS upheld lower court's decision stating federal courts sitting in diversity must apply substantive state law but procedural matters were governed by federal common law where oral agreements could be enforced if proven through clear & convincing evidence like this case.

In the dissenting opinion for Smalley v. Laugenour, it was argued that the majority's decision to uphold a lower court ruling in favor of Mr. Laugenour was incorrect and inconsistent with established legal principles regarding property rights and contracts. The dissenting justices believed that Mrs. Smalley had been unfairly deprived of her rightful ownership stake in certain properties due to an improperly executed contract between her late husband and Mr. Laugenour prior to their marriage, which she had no knowledge or involvement in at the time it was made. They contended that this contract should not be legally binding on Mrs. Smalley as she did not consent to its terms nor receive any consideration for giving up her potential property rights upon marrying Mr.Smalley.