In the 1905 case of Gila Bend Reservoir and Irrigation Company v. Gila Water Company, the U.S Supreme Court was tasked with resolving a dispute over water rights in Arizona. The plaintiff, Gila Bend Reservoir and Irrigation Company, claimed that it had prior appropriation to use certain waters from the Agua Fria River for irrigation purposes. However, the defendant, Gila Water Company argued that they also had rights to these waters due to their construction of a dam on said river which predated any claims by the plaintiff. The court ruled in favor of Gila Bend Reservoir and Irrigation company stating that under Arizona law at this time (prior appropriation doctrine), priority is given to those who first put water resources into beneficial use for irrigation purposes rather than those who merely construct infrastructure such as dams or reservoirs without immediate utilization plans. Therefore, despite having constructed a dam earlier than when plaintiffs started using these waters for irrigation; defendants were not entitled to exclusive usage rights since they did not immediately utilize these resources upon completion of their infrastructure project.

The dissenting opinion in the case of GILA BEND RESERVOIR AND IRRIGATION COMPANY v. GILA WATER COMPANY argued that the majority's decision was flawed because it failed to properly consider and apply Arizona territorial law regarding water rights. The dissent pointed out that under this law, a person who diverts water from its natural course does not acquire ownership of the water but merely has a right to use it. Therefore, according to the dissent, even if Gila Bend Reservoir and Irrigation Company had diverted more than their share of water from the river, they did not thereby become owners of this excess amount; rather they were simply using more than their allotted portion. Consequently, when they ceased these excessive diversions and allowed surplus waters to flow downstream where they could be used by others (including Gila Water Company), there was no transfer or sale of property taking place as claimed by plaintiffs - only an end to wrongful usage.