State highway-contract scandals developed within a few months, and the attorney general prosecuted cases to set aside "unconscionable" highway contracts. After these cases were won, he became the likely candidate to oppose Mrs. Ferguson when she sought a second term. The campaign has been characterized as one of the most spectacular in Texas history. Moody's platform supported prohibition, woman suffrage, and other anti-Ferguson positions. After winning the first 1926 primary with 49.9 percent of the vote, Moody defeated Ferguson 495,723 to 270,595 in a runoff. He won renomination for the governorship in the first Democratic primary of 1928 with a clear majority. In the presidential campaign of 1928 the state Democratic party was rent with dissension on the prohibition and Catholic issues. Despite Governor Moody's appeals for support of the Democratic slate from top to bottom, Herbert Hoover won Texas. As governor, Moody pursued a strong reform program. He halted a liberal convict-pardon policy initiated by the Fergusons; he also inaugurated a reorganization of prison management. He instituted a complete reorganization of the state highway system, including a program for a connected network of roads; the cost of highways was cut by almost half from that under the Ferguson administration. The office of state auditor and the auditing of state accounts were begun during his administration. Although his proposals were in accord with the thought of the progressive forces of his time, he was not successful in changes he proposed in the Constitution and laws, such as a strong civil service law, the reorganization of the state government, the authorization of the governor to appoint executive officers elected under the Constitution of 1876, and constitutional change to permit the legislature to enact laws separating the subjects of taxation. He also wanted to relocate all state prison properties in a central penal colony near Austin.
In 1931, when he retired from the governorship, he remained in Austin and again entered private law practice. At the request of President Franklin D. Roosevelt in 1935, he served as special assistant to the United States attorney general, in charge of prosecuting income-tax-evasion cases in Louisiana. He represented Texas in State of Texas v New Mexico, a boundary dispute, and represented the governor of Texas in cases involving the right of the governor to declare martial law in the mid-1930s. He last entered active politics in the primary of 1942 as a candidate for the United States Senate against former governors W. Lee O'Daniel and James Allred. Moody came in third in the race. It was his only political defeat. He became a recognized leader of opposition to the New Deal and the renomination of President Franklin D. Roosevelt in 1944. Although most of the conservative "Texas Regular" delegates in the convention walked out, Moody, an organizer of this anti-Roosevelt movement, did not. He stayed on and cast half of the Texas nominating votes for a conservative presidential aspirant; then he stayed within the Democratic party in the general election. He represented former Governor Coke R. Stevenson in his unsuccessful legal challenge to Lyndon B. Johnson's narrow victory over Stevenson in the controversial 1948 United States Senate election. Although a Democrat, he supported Republican Dwight D. Eisenhower for president in 1952 and 1956 and Republican Richard M. Nixon in 1960. Moody served on numerous committees of the State Bar of Texas. One that he chaired was the special committee to study all phases of the lawyer-client relationship when the lawyer is a member of the legislature. The University of Texas School of Law honored him in 1959 by dedicating its Law Day activities to him. He served as a trustee of the University of Texas Law School Foundation. Moody married Mildred Paxton of Abilene on April 20, 1926, and they had two children. He died on May 22, 1966, in Austin and was buried in the State Cemetery. Source
Texas State Cemetery