In the case of Gray v. Taylor et al., and Lincoln County, Territory of New Mexico (1912), the U.S Supreme Court ruled in favor of plaintiff William H. Gray who had sued for compensation after his property was taken by local authorities to build a road without providing him with just compensation as required under the Fifth Amendment's Takings Clause. The court held that even though New Mexico was only a territory at that time, its government still had to abide by federal constitutional protections when dealing with private property rights. This decision established an important precedent affirming that territorial governments were subject to certain key provisions of the United States Constitution, including those protecting individual property rights against uncompensated governmental takings.

In the dissenting opinion for Gray v. Taylor et al., and Lincoln County, Territory of New Mexico, Justice Holmes disagreed with the majority's decision to reverse a lower court ruling that had dismissed a complaint against county officials who allegedly failed to maintain safe roads. He argued that the plaintiff did not have sufficient grounds for his claim because he could not prove negligence on part of the defendants. According to him, it was unreasonable to expect local authorities in rural areas like Lincoln County - which were often sparsely populated and financially constrained -  to keep all public roads in perfect condition at all times. Furthermore, he contended that even if there was some neglect on their part, it would be difficult for anyone using these roads regularly (like Gray) not to notice such conditions over time; thus they should bear some responsibility too.