In the case of Bybee v. Oregon and California Railroad Company (1890), the U.S Supreme Court was tasked with determining whether a land grant given to the Oregon and California Railroad Company by Congress could be taxed by local authorities in Jackson County, Oregon. The railroad company had been granted over 3 million acres of public lands for construction purposes under an act passed in 1866. However, they failed to sell these lands within a specified period as required by law, leading to their taxation by local authorities. The railroad company contested this action arguing that it violated federal law which exempted such grants from state or local taxation until sold or used outside of what was stipulated in the grant agreement. The court ruled against the railroad company stating that once they failed to comply with conditions set out in their land grant contract - specifically selling off parcels within a certain timeframe - those lands became taxable just like any other property owned privately would be subject to tax laws applicable at county level where properties were located.

The dissenting opinion in the case of Bybee v. Oregon and California Railroad Company argued that the majority's decision was incorrect because it failed to properly interpret the law regarding land grants. The dissent believed that Congress had intended for these lands to be used for specific purposes, such as supporting schools or other public institutions, rather than being sold off to private entities like railroads. They contended that this interpretation was supported by both legislative history and previous court decisions on similar issues. Furthermore, they disagreed with the majority's assertion that there were no restrictions on how these lands could be disposed of once they were granted to a state; instead, they maintained that states were obligated under federal law not only to use them for their designated purpose but also not sell them below a certain price per acre. Finally, they criticized the majority for ignoring evidence suggesting fraudulent behavior by railroad companies in acquiring these lands.