In the case of City of Dawson v. Columbia Avenue Saving Fund, Safe Deposit, Title and Trust Company (1904), the U.S Supreme Court ruled in favor of Columbia Avenue Saving Fund. The dispute arose when the City of Dawson issued bonds to finance public improvements but later refused to pay them off on maturity. The city argued that it was not liable because its population did not meet a statutory requirement for issuing such bonds at the time they were sold. However, this fact was unknown both to purchasers and even officials within the city itself until after their sale had been completed. The court held that since there was no fraud involved and given that all parties acted in good faith under a mutual mistake about an essential fact which formed basis for issuance of these bonds, equity demanded enforcement rather than avoidance or rescission as sought by City of Dawson.

In the dissenting opinion for City of Dawson v. Columbia Avenue Saving Fund, Safe Deposit, Title and Trust Company, it was argued that the city should not be held liable for damages caused by a fire started by one of its employees during work hours. The justice contended that while negligence may have been involved on part of the employee who accidentally started the fire while operating a steam roller, this did not automatically make his employer - in this case, the city - responsible for his actions. He further stated that there was no evidence to suggest any direct fault or neglect on part of the city itself which could warrant such liability. Therefore, he believed holding an employer accountable for every accident caused by their employees would set a dangerous precedent and unfairly burden employers with excessive liabilities they cannot control or predict.