In the case of American Railway Express Company v. Lindenburg, 1922, the U.S Supreme Court ruled in favor of American Railway Express Company (AREC). The dispute arose when AREC refused to pay a claim made by Mr. Lindenburg for lost goods that were shipped via their service on grounds that he had not declared their value at the time of shipment as required by company policy. The court held that this stipulation was reasonable and did not violate any laws or regulations governing common carriers like AREC. It further noted that such policies are necessary for companies to assess risks and calculate rates accordingly. Therefore, since Mr. Lindenburg failed to declare the value of his goods prior to shipping them with AREC, he could not hold them liable for full compensation following loss during transit.

In the dissenting opinion for American Railway Express Company v. Lindenburg, Justice Holmes disagreed with the majority's ruling that a contract clause limiting liability was unenforceable due to public policy. He argued that there was no legal precedent or statute prohibiting such clauses in contracts and therefore it should be enforceable as agreed upon by both parties involved. Furthermore, he contended that if one party willingly agrees to limit another party’s liability in exchange for lower rates, they are essentially assuming some of the risk themselves which is not against public interest but rather an exercise of their freedom to contract on terms they find acceptable. Thus, according to him, courts should not interfere unless there is clear evidence of fraud or overreaching.