In the 1906 case of Gila Valley, Globe and Northern Railway Company v. Lyon, the U.S. Supreme Court ruled in favor of the railway company against a landowner who claimed that his property was damaged by smoke and soot from passing trains. The court held that railroads were not liable for incidental damages caused by normal operations unless negligence could be proven or there was a violation of statutory duty. In this case, it was determined that no such negligence or violation existed as railways are expected to emit some level of smoke and soot during regular operation which is considered an inevitable consequence rather than an actionable nuisance under law. This ruling reinforced the principle that businesses cannot be held accountable for unavoidable impacts associated with their lawful activities.

In the dissenting opinion for Gila Valley, Globe and Northern Railway Company v. Lyon, Justice Harlan disagreed with the majority's interpretation of Arizona territorial law regarding taxation of railroad property. He argued that the majority had misinterpreted a statute which allowed railroads to deduct their debts from their taxable property value. According to Harlan, this provision was intended only as a measure of relief for struggling businesses and should not be applied in cases where it would result in no taxes being paid at all. Furthermore, he contended that even if such deductions were permissible under territorial law, they violated principles of equal protection by giving preferential treatment to certain types of corporations over individual taxpayers or other kinds of businesses.