In the case of Earle & Stoddart, Inc., et al. v. Ellerman's Wilson Line, Ltd., 1932, the U.S Supreme Court was tasked with determining whether a clause in a bill of lading that limited liability for damages to goods during transportation could be enforced if it contradicted federal law. The dispute arose when Earle & Stoddart shipped goods via Ellerman's Wilson Line and those goods were damaged during transit due to negligence on part of the carrier’s employees. Despite having signed a contract limiting their liability for such damage, Ellerman's argued they should not have to pay full compensation as per Harter Act (a federal statute). However, the court ruled against them stating that any contractual provision contradicting federal laws would be deemed unenforceable; thus upholding supremacy of Federal Law over private contracts.

In the dissenting opinion for Earle & Stoddart, Inc., et al. v. Ellerman's Wilson Line, Ltd., it was argued that the majority had erred in their interpretation of the Harter Act and its application to this case. The dissenting justices believed that under Section 3 of the Harter Act, a shipowner is not exempt from liability if they fail to properly load and stow cargo on board their vessel. They contended that there was sufficient evidence presented during trial showing negligence on part of Ellerman’s Wilson Line in loading and stowing cargo which led to damage during transit; thus making them liable for damages incurred by Earle & Stoddart as per provisions laid out in section 3 of the Harter Act.