In the 1903 case of Crossman v. Lurman, the United States Supreme Court ruled on a dispute involving maritime insurance and ship damage. The plaintiff, Crossman, was an insurer who had provided coverage for a vessel owned by defendant Lurman. When the ship sustained damages during its voyage from New York to San Francisco via Cape Horn due to heavy weather conditions, Lurman sought compensation under his policy with Crossman. However, Crossman refused payment arguing that there were inherent defects in the construction of the vessel which contributed significantly to its damage and therefore it fell outside their agreement's scope. The court held in favor of Lurman stating that even if there were latent defects within the structure of a ship unknown at time of insuring or sailing out; unless these flaws directly caused or contributed towards any loss incurred they could not be used as grounds for denying claims made against policies covering perils encountered at sea such as bad weather conditions experienced by this particular vessel.

In the dissenting opinion for Crossman v. Lurman, Justice Harlan argued that the majority's decision was a departure from established principles of law and equity. He contended that it was not within the power of Congress to authorize any corporation or individual to commit acts abroad which would be illegal if committed in America. The case involved an American company operating a lottery in Honduras but advertising and selling tickets in the U.S., where lotteries were illegal under federal law. Harlan believed this violated public policy, as it allowed companies to circumvent domestic laws by conducting their operations overseas while still reaping benefits domestically. He also disagreed with the majority's interpretation of "commerce," arguing that selling lottery tickets did not constitute commerce because no goods or services were exchanged; rather, he saw it as gambling activity prohibited by state laws.