The U.S. Supreme Court case Charlotte, Columbia and Augusta Railroad Company v. Gibbes in 1891 revolved around a dispute over the sale of railroad property to settle debts owed by the South Carolina Railway Company (SCRC). The plaintiff, William C. Gibbes, was a trustee for bondholders who held first mortgage bonds issued by SCRC and argued that they had priority claim on the railway's assets over other creditors due to their secured status. However, the defendant - Charlotte, Columbia & Augusta Railroad Co., which purchased some of these assets at auction - contested this assertion based on an earlier court ruling that deemed all claims against SCRC as unsecured debt due to irregularities in how its mortgages were executed. The Supreme Court ruled in favor of Gibbes stating that despite procedural errors during execution of mortgages; it did not invalidate them entirely or strip away rights from first-mortgage bondholders like him who acted in good faith under belief they were secured creditors with priority claim on certain assets if default occurred.

In the dissenting opinion for Charlotte, Columbia and Augusta Railroad Company v. Gibbes, Justice Lamar disagreed with the majority's decision to uphold a South Carolina law that allowed state officials to sell property of insolvent corporations to satisfy debts. He argued that this violated the Fourteenth Amendment’s due process clause as it deprived companies of their property without fair procedures. Furthermore, he contended that such laws could potentially lead to abuse by state officials who might seize and sell corporate assets under questionable circumstances or at undervalued prices. This would not only harm corporations but also undermine public confidence in business operations and economic stability within states.