In the 1919 case Eastern Extension, Australasia & China Telegraph Company, Limited v. United States, the Supreme Court ruled on a dispute over compensation for telegraph cable damages caused by U.S. naval vessels during World War I. The Eastern Extension company argued that it was entitled to full compensation from the U.S., while the government maintained that wartime conditions justified their actions and limited liability under international law principles of necessity and proportionality. The court sided with the government's argument in a unanimous decision written by Justice Mahlon Pitney, ruling that war circumstances can justify otherwise unlawful acts if they are necessary for national defense and not excessively harmful relative to military advantage gained.

In the dissenting opinion for Eastern Extension, Australasia & China Telegraph Company v. United States (1919), Justice McReynolds argued that the majority's decision to award damages to the U.S. government was incorrect because it failed to consider whether or not there had been any actual harm done by the telegraph company's actions. He believed that while a breach of contract may have occurred, no real damage resulted from this breach and therefore no compensation should be awarded. Furthermore, he contended that even if some harm had been caused, it would be impossible to accurately quantify such an abstract injury in monetary terms without resorting to speculation or conjecture which is against legal principles when determining damages.