In the case of Erie Railroad Company v. Purdy, decided in 1901, the U.S Supreme Court ruled on a dispute involving land rights and railroad construction. The plaintiff, Mr. Purdy, owned land that was bisected by tracks laid down by the Erie Railroad Company without his permission or any legal right to do so. He sued for damages and won at both trial court level and on appeal at New York's highest state court before it reached the Supreme Court. The central issue revolved around whether federal courts should apply federal common law or state law when deciding cases concerning property disputes under diversity jurisdiction (where parties are from different states). The Supreme Court upheld previous rulings in favor of Mr. Purdy based on principles established in Swift v Tyson (1842), which stated that federal courts sitting in diversity should apply general federal common law rather than state laws unless there is a relevant statute enacted by Congress. This decision affirmed that railroads could not simply take private property without proper authority even if they were federally chartered corporations operating across multiple states.

In the dissenting opinion for Erie Railroad Company v. Purdy, it was argued that the majority's decision to hold a railroad company liable for damages caused by sparks from its locomotive engine contradicted established precedent. The dissenting justices contended that previous rulings had determined railroads were not responsible for such "inevitable" accidents unless negligence could be proven, which was not the case here. They believed this ruling unfairly burdened railway companies and would have far-reaching implications on their operations and financial stability. Furthermore, they asserted that if railroads were held accountable in these circumstances, then other industries should also bear similar responsibilities - an idea they deemed impractical and unjustifiable under existing law.