The Vinson Court ruled in the companion cases of Shelley v. Kraemer and McGhee v. Sipes 6–0 (Justices Stanley Reed, Wiley Rutledge, and Robert Jackson did not participate) that the judicial enforcing of racially discriminatory restrictive covenants violated the Equal Protection Clause of the Fourteenth Amendment.

Shelley v. Kraemer began when a Mr. Fitzgerald sold his house to J. D. Shelley, an African American. Louis Kraemer, a white neighbor, brought suit to void the sale of the home to Shelley. Kraemer cited a restrictive covenant signed in 1911 by thirty of the thirty-nine surrounding homeowners that prohibited the sale of homes to anyone who was not Caucasian. In a related case, Benjamin Sipes and his attorney, civil rights lawyer Thurgood Marshall, sought to enforce a similar restrictive covenant against African American Orsel McGhee in Detroit, Michigan. Kraemer and McGhee both asserted that the restrictive covenants violated their Fourteenth Amendment Equal Protection rights. The white homeowners countered that the covenants did not violate the Constitution in part because it was private, not state, action. State courts in Missouri and Michigan had ruled that the restrictive covenants were enforceable and that the Kraemers and McGhees had to move. They both appealed to the U.S. Supreme Court.

The Court agreed that the restrictive covenant itself was a form of private discrimination beyond the reach of the Fourteenth Amendment’s Equal Protection Clause. However, the Court also ruled that the enforcement of a restrictive covenant by a court amounted to state action. “State action, as that phrase is understood for the purposes of the Fourteenth Amendment, refers to exertions of state power in all forms,” Chief Justice Fred Vinson wrote for the Court. “We hold that in granting judicial enforcement of the restrictive agreements in these cases, the States have denied petitioners the equal protection of the laws and that, therefore, the action of the state courts cannot stand.”