In the Supreme Court case of Supreme Lodge, Knights of Pythias v. Mims in 1915, the court ruled on a dispute between an individual and a fraternal organization regarding insurance benefits. The plaintiff, Mims, was a member of the Knights of Pythias who had taken out an insurance policy with them. After suffering from illness and being unable to work or pay his dues for several months, he was expelled from the group without notice which resulted in loss of his insurance coverage. He sued for reinstatement and recovery of his policy's value but lost at trial level due to lack of jurisdiction over fraternal societies by civil courts. The Supreme Court reversed this decision stating that while such organizations have broad powers to govern their internal affairs including expulsion procedures; they must still comply with basic principles fairness under law when dealing with members' property rights like life-insurance policies. Therefore it held that if proper notice wasn't given before expulsion causing significant harm (like losing valuable insurance), then legal action could be pursued against them despite their status as private associations.

In the dissenting opinion for Supreme Lodge, Knights of Pythias v. Mims, Justice Holmes disagreed with the majority's decision to uphold a state law that required fraternal benefit societies to pay death benefits directly to beneficiaries rather than through lodges. He argued that this interfered with freedom of contract and was not justified by any legitimate public interest. According to Justice Holmes, it is not within the power of a state legislature to dictate how private organizations should distribute their funds or conduct their internal affairs unless there is some compelling public need for such interference. In his view, no such need existed in this case because members joined these societies voluntarily and could leave if they were dissatisfied with its rules or practices.