In the 1903 case of Damon v. Hawaii, the United States Supreme Court dealt with a dispute over land ownership in Hawaii following its annexation by the U.S. The plaintiff, Samuel M. Damon, claimed that he had purchased certain lands from Princess Pauahi Bishop before her death and thus was entitled to them under Hawaiian law at the time of purchase. However, after annexation occurred in 1898, these lands were declared public property by virtue of being "crown lands" (lands owned by former monarchs). The court ruled against Damon's claim stating that upon annexation all crown lands became part of public domain as per American law regardless of any private transactions made prior to it. This ruling established an important precedent regarding how laws change when territories are incorporated into U.S., particularly concerning property rights.

In the dissenting opinion for Damon v. Hawaii, it was argued that the Hawaiian Organic Act did not intend to grant absolute power over private property rights to the territorial government. The dissenting justices believed that this interpretation of the act would be contrary to its purpose and spirit, which aimed at preserving existing laws and rights in Hawaii after its annexation by the United States. They contended that a more reasonable reading of the act would allow for changes in property law only when necessary for public use or benefit, with just compensation provided as required by U.S constitutional standards. Thus, they disagreed with majority's decision upholding an uncompensated taking of land under a reclamation project authorized by local legislation.