In the case of Franklin Sugar Refining Company v. United States in 1905, the Supreme Court ruled on whether a sugar refining company could claim damages from the U.S. government for losses incurred due to an erroneous interpretation of tariff laws by customs officials. The court held that even if customs officers misinterpreted or misapplied tariff laws, they were not liable for any resulting damage unless their actions were proven to be malicious or negligent beyond simple error. Therefore, Franklin Sugar Refining Company was not entitled to compensation as there was no evidence suggesting malice or negligence on part of the custom officers who had acted under their understanding and interpretation of law at that time.

The dissenting opinion in the case of Franklin Sugar Refining Company v. United States argued that the Sherman Act did not apply to this particular situation, as it was intended to prevent restraints on trade and monopolies, rather than regulate commerce between states. The justices believed that Congress had overstepped its constitutional authority by attempting to control a business within a single state under the guise of regulating interstate commerce. They also contended that if every act affecting commerce could be regulated by Congress, then there would essentially be no limit to their power. Furthermore, they disagreed with the majority's interpretation of what constituted "direct" versus "indirect" effects on interstate commerce. In their view, only actions directly impacting such trade should fall under federal jurisdiction; otherwise virtually any activity could potentially have some indirect effect and thus become subject to regulation.