In the case of Davis, Director General of Railroads operating Philadelphia & Reading Railway v. Newton Coal Company (1924), the U.S. Supreme Court was tasked with determining whether a railroad company could be held liable for damages to coal that it had transported and stored during World War I when it was under federal control as part of war efforts. The Newton Coal Company argued that the railway had been negligent in its storage practices, leading to a loss in value for their product due to exposure to weather conditions. However, the court ruled in favor of Davis and thus, by extension, the railway company he represented. They determined that since railroads were acting under federal authority at this time due to wartime necessity - specifically under orders from President Woodrow Wilson - they could not be held responsible for such losses unless there was evidence of willful misconduct or gross negligence on their part.

In the dissenting opinion for Davis, Director General of Railroads, etc., operating Philadelphia & Reading Railway v. Newton Coal Company (1924), Justice McReynolds disagreed with the majority's decision to hold a railroad company liable for damages caused by an accident involving one of its coal cars. He argued that there was no evidence to suggest negligence on part of the railway company and thus it should not be held responsible for accidents occurring due to unforeseen circumstances or inherent risks associated with transporting goods like coal. Furthermore, he contended that such liability would place an undue burden on rail companies and could potentially disrupt commerce as they might become overly cautious in their operations out of fear of legal repercussions. This ruling, according to him, set a dangerous precedent where businesses could be held accountable even when they have taken all reasonable precautions against potential mishaps.