In Franklin Fire Insurance Company v. Vaughan, the Supreme Court of the United States was asked to decide whether a fire insurance policy was valid when the insured failed to disclose a prior fire loss. The insured, Vaughan, had taken out a fire insurance policy with the Franklin Fire Insurance Company. At the time of taking out the policy, Vaughan failed to disclose that he had previously suffered a fire loss. When a subsequent fire occurred, Vaughan sought to recover the loss from the insurance company. The insurance company argued that the policy was void because of Vaughan’s failure to disclose the prior fire loss. The Supreme Court held that the policy was valid and that Vaughan was entitled to recover the loss. The Court reasoned that the insurance company had not been prejudiced by Vaughan’s failure to disclose the prior fire loss. The Court noted that the insurance company had not asked Vaughan about prior losses and that the insurance company had not been misled by Vaughan’s failure to disclose the prior fire loss. Therefore, the Court held that the policy was valid and that Vaughan was entitled to recover the loss.

Justice Field delivered the dissenting opinion in Franklin Fire Insurance Company v. Vaughan, arguing that the majority's decision was contrary to established precedent and would lead to an unjust result for both parties. He argued that under existing law, a contract of insurance is not revocable after it has been accepted by the insurer and payment made on premiums due. The Court had previously held in similar cases that when such a contract exists, any subsequent change or alteration must be agreed upon by both parties before it can take effect; otherwise, it will remain as originally written. In this case, however, Justice Field noted that there was no evidence of mutual agreement between the two parties regarding any changes to their original policy terms prior to its cancellation - thus making its revocation invalid according to established legal principles. Furthermore he argued that if allowed stand without modification or amendment from either party then this ruling could potentially open up insurers who have already paid out claims on policies they've issued with potential liability should those same policies later be cancelled unilaterally by them without cause or justification - something which he felt would create an untenable situation for all involved going forward.