The Cornell Steamboat Company v. Phoenix Construction Company case in 1913 revolved around a dispute over liability for damages caused by the sinking of a barge owned by the Phoenix Construction Company. The barge sank after it was hit by ice while being towed by one of Cornell's tugboats on Hudson River, New York. The Supreme Court ruled that the Cornell Steamboat Company was not liable for damages because they had exercised due diligence and care in their towing operations, and could not have foreseen or prevented the incident with ice which led to damage. This decision established an important precedent in maritime law regarding negligence and liability: if a company has taken all reasonable precautions to prevent harm, it cannot be held responsible for unforeseeable accidents.

In the dissenting opinion for Cornell Steamboat Company v. Phoenix Construction Company, Justice Holmes disagreed with the majority's ruling that a tugboat company was liable for damages caused by ice it had broken up and left in a navigable channel. He argued that there was no precedent or statute making such an action illegal or negligent. Furthermore, he contended that breaking up ice to make way for navigation is generally considered beneficial rather than harmful activity. Therefore, any damage resulting from this should be viewed as an unfortunate but unavoidable risk of river navigation during winter months - not something one party should bear full responsibility for causing. The justice also pointed out inconsistencies in how liability was assigned between different parties involved in similar incidents on waterways.