In the 1932 case Union Bank & Trust Co. v. Phelps, the U.S Supreme Court ruled in favor of Union Bank & Trust Company, reversing a decision made by the Supreme Court of Oklahoma. The dispute arose from an agreement between J.R. Phelps and his wife to mortgage their homestead as security for a loan from Union Bank & Trust Company (UBTC). After Mr.Phelps' death, Mrs.Phelps claimed that she had signed under duress and without understanding what she was signing due to her illiteracy; thus making it voidable under state law which protected homestead rights unless waived knowingly and intelligently by both spouses. The court held that while state laws protecting homestead rights were valid, they could not be used to invalidate contracts retrospectively where such contracts have been entered into in good faith reliance on existing laws at the time of execution - this would violate contractual obligations guaranteed by Article I Section 10 Clause 1 of US Constitution ("No State shall...pass any...Law impairing Obligation of Contracts"). Therefore, since UBTC acted within legal bounds when entering into contract with Mr.and Mrs.Phelps based on then-existing laws allowing spousal waiver through simple signature regardless of literacy level or comprehension ability - its enforcement couldn't be retroactively impaired.

In the dissenting opinion for Union Bank & Trust Co. v. Phelps, it was argued that the majority's decision to uphold a lower court ruling allowing a bank to foreclose on property due to unpaid debt was incorrect and unfair. The dissenting justices believed that there were significant issues with how the original loan agreement had been structured and executed, suggesting potential fraud or misrepresentation by the bank. They also pointed out inconsistencies in how similar cases had been handled in different jurisdictions, arguing for greater uniformity in legal interpretations of such matters across states lines. Furthermore, they expressed concern about potential negative impacts on borrowers' rights if banks could so easily seize properties without providing sufficient opportunities for repayment or negotiation of terms.