In the 1892 case of Barnum v. Okolona, the United States Supreme Court ruled on a dispute involving railroad bonds issued by the town of Okolona in Mississippi. The town had issued these bonds to aid in constructing a railway line but later refused to pay them off, arguing that they were not legally authorized under state law and therefore void. However, an investor named Barnum who purchased some of these bonds sued for payment. The Supreme Court held that even if there was any irregularity or illegality in issuing such bonds initially, it could not be raised as a defense against paying them back once they have been sold to innocent purchasers like Barnum who bought them without knowledge of any potential legal issues.

In the dissenting opinion for Barnum v. Okolona, the justice argued that a municipality should not be held liable for bonds issued by its officials if those officials acted outside of their authority. The majority ruled that because the town had benefited from the railroad built with bond proceeds, it was obligated to repay them even though they were issued without proper authorization. However, in his dissenting opinion, Justice Brewer contended that this ruling would set a dangerous precedent where municipalities could be held responsible for any unauthorized act committed by an official as long as some benefit resulted from it. He believed this decision undermined local control and autonomy and unfairly burdened taxpayers who had no say in these unauthorized actions.