In the case of Sovereign Camp Woodmen of the World v. O'Neill et al., 1924, the U.S. Supreme Court was asked to determine whether a fraternal benefit society could change its constitution and bylaws in such a way that it would affect benefits promised under existing contracts with members. The court ruled that while these societies have broad powers to alter their rules and regulations, they cannot do so in ways that impair contractual obligations made to members when they joined. In this particular case, Mr. O’Neill had taken out an insurance policy with Woodmen of the World which guaranteed certain death benefits for his family upon his passing away; however, after he died, changes were made within the organization reducing those benefits significantly from what was originally agreed upon at time of contract signing. The court held that these alterations were not permissible as they violated rights protected under contract law principles.

In the dissenting opinion for Sovereign Camp Woodmen of the World v. O'Neill et al., Justice McReynolds disagreed with the majority's decision to uphold a Nebraska law that required fraternal benefit societies to provide reserve funds for insurance benefits. He argued that this law violated due process rights under the Fourteenth Amendment because it interfered with existing contracts between these societies and their members, which did not originally include such provisions. Furthermore, he contended that there was no compelling public interest justifying this interference as these organizations were private entities operating on a voluntary basis rather than commercial insurance companies subject to state regulation in order to protect policyholders from insolvency risks. Thus, according to him, while states could regulate them in terms of ensuring fair dealing and preventing fraud or misrepresentation, they had no right to fundamentally alter their contractual obligations by imposing additional financial burdens without consent from all parties involved.