In the case of City National Bank of El Paso, Texas v. El Paso & Northeastern Railroad Company et al., 1922, the Supreme Court was asked to determine whether a bank could claim compensation for bonds it held that were issued by a railroad company which had since been sold. The bank argued that as bondholders they should be compensated from the proceeds of the sale. However, in this case, there was an existing agreement between all parties involved stating that if any part of the railway property were sold due to foreclosure or otherwise, then those who purchased would not have any liability towards bondholders like City National Bank except what is specified in their contract with them. The court ruled against City National Bank and stated that when purchasing assets under these circumstances (foreclosure), buyers are only liable for obligations explicitly mentioned in their purchase agreements. Therefore, unless specifically agreed upon during sale negotiations and documented within contracts signed at closing time - purchasers do not inherit responsibility for compensating previous debt holders such as banks holding bonds issued by former owners.

The dissenting opinion in the case of City National Bank of El Paso, Texas v. El Paso & Northeastern Railroad Company et al., argued that the majority's decision to allow a creditor (City National Bank) to recover its debt from a debtor (El Paso & Northeastern Railroad Company) by seizing and selling assets held by another company was unjust. The dissenting justices believed this violated principles of corporate separateness and fairness. They contended that each corporation is an individual entity with separate rights and liabilities, even if they share common ownership or management. Therefore, one corporation’s assets should not be used to satisfy another’s debts unless there is evidence of fraud or misuse of the corporate form for personal gain. In their view, allowing such seizure without proof undermines confidence in business transactions and could lead to abuse where creditors unfairly target certain corporations over others based on perceived ability to pay rather than legal obligation.