In the case of Erie Railroad Company v. Stone et al., the U.S. Supreme Court ruled in favor of Stone & Noble, a business that had sued for damages after one of their horses was killed by a train from the Erie Railroad Company. The horse had wandered onto an unfenced part of the railroad's track and was struck by a passing train. The court upheld New York state law which required railroads to fence their tracks or be held liable for any livestock killed on unenclosed sections, regardless if negligence could be proven or not. This ruling reinforced states' rights to regulate businesses within their borders and confirmed that federal courts must apply state laws in such cases.

The dissenting opinion in the case of Erie Railroad Company v. Stone & Noble argued that the railroad company should not be held liable for damages caused by a fire started by sparks from one of its locomotives. The dissenters believed that there was no negligence on part of the railroad company, as it had taken all reasonable precautions to prevent such an incident and could not have foreseen or prevented this particular accident. They contended that holding companies responsible for damages resulting from unforeseeable accidents would place an undue burden on businesses and stifle economic growth. Furthermore, they disagreed with the majority's interpretation of state law regarding liability for fires caused by locomotive engines, arguing instead that such laws were intended to protect against intentional harm rather than accidental damage.