In the case of Cotton v. Territory of Hawaii, 1908, the U.S. Supreme Court was asked to determine whether a law passed by the Hawaiian government that allowed for private property to be condemned and taken over for public use without just compensation was constitutional under U.S. law. The plaintiff, Mr. Cotton, argued that his land had been unjustly seized under this legislation and sought restitution from Superintendent Holloway who represented the Hawaiian government in this matter. The court ruled in favor of Mr.Cotton stating that while governments do have eminent domain powers (the right to take private property for public use), they must provide fair compensation as stipulated by the Fifth Amendment's Takings Clause which states "nor shall private property be taken for public use without just compensation". This ruling affirmed that all territories governed by United States are subject to its Constitution including its provisions on individual rights.

The dissenting opinion in the case of Cotton v. Territory of Hawaii, 1908, argued that the Supreme Court should not have jurisdiction over this matter as it pertains to a territorial dispute and thus falls under local Hawaiian law rather than federal law. The dissent further contended that Mr. Cotton's claim for damages was invalid because he had willingly entered into an agreement with the government knowing full well what it entailed and therefore could not later seek compensation for perceived losses or inconveniences resulting from said agreement. It also questioned whether Mr. Cotton truly suffered any actual damage at all, suggesting instead that his claims were speculative and hypothetical in nature rather than concrete or tangible harms which would warrant legal redress.