In W. B. Worthen Co. et al v Thomas, 1933, the U.S Supreme Court ruled that a state law cannot interfere with or limit the rights of bondholders as stipulated in their contract without violating the Contract Clause of the Constitution (Article I, Section 10). The case involved an Arkansas statute which limited how much money could be collected by creditors from defaulting debtors' wages and property to pay off bonds issued by local governments. The court held that this legislation impaired contracts between bondholders and municipalities because it reduced what bondholders could recover if municipalities defaulted on their debts. Therefore, such laws were deemed unconstitutional under federal law for infringing upon contractual obligations.

In the dissenting opinion for W. B. Worthen Co. et al v Thomas, Justice McReynolds disagreed with the majority's decision to uphold a state law that allowed an insurance company to claim exemption from paying its debts due to financial hardship during the Great Depression era. He argued that this ruling violated contract clauses in both federal and state constitutions by impairing contractual obligations between private parties without providing just compensation or public purpose justification as required by law. Furthermore, he contended that such exemptions were not only unfair but also detrimental to creditors who relied on these payments for their livelihoods and businesses' survival during economic downturns like the one experienced at that time.